1
$250,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT,
dated as of May 21, 1997,
among
RED ROOF INNS, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
CIBC WOOD GUNDY SECURITIES CORP.
and THE HUNTINGTON NATIONAL BANK,
as Arrangers,
CIBC WOOD GUNDY SECURITIES CORP.,
as Syndication Agent and Documentation Agent
and
THE HUNTINGTON NATIONAL BANK,
as Administrative Agent and Collateral Agent
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...........................................................................1
SECTION 1.1. Defined Terms.....................................................................................1
SECTION 1.2. Use of Defined Terms.............................................................................23
SECTION 1.3. Cross-References.................................................................................23
SECTION 1.4. Accounting and Financial Determinations..........................................................23
ARTICLE II COMMITMENTS, BORROWING PROCEDURES, NOTES,
LETTERS OF CREDIT AND RELEASE OF COLLATERAL...............................................................24
SECTION 2.1. Commitments......................................................................................24
SECTION 2.1.1. Revolving Loan Commitment........................................................................24
SECTION 2.1.2. Swing Loan Commitment............................................................................24
SECTION 2.1.3. Lenders Not Permitted or Required to Make
Loans............................................................................................25
SECTION 2.2. Reduction of Commitment Amount...................................................................25
SECTION 2.2.1. Optional.........................................................................................25
SECTION 2.2.2. Mandatory........................................................................................26
SECTION 2.3. Borrowing Procedure..............................................................................28
SECTION 2.3.1. Revolving Loans..................................................................................28
SECTION 2.3.2. Swing Loans......................................................................................28
SECTION 2.4. Continuation and Conversion Elections............................................................29
SECTION 2.5. Funding..........................................................................................29
SECTION 2.6. Notes............................................................................................29
SECTION 2.7. Letter of Credit Procedure.......................................................................30
SECTION 2.8. Release of Collateral............................................................................31
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES................................................................32
SECTION 3.1. Repayments and Prepayments.......................................................................32
SECTION 3.1.1. Payment Terms....................................................................................32
SECTION 3.1.2. Special Swing Loan Provisions....................................................................33
SECTION 3.2. Interest Provisions..............................................................................35
SECTION 3.2.1. Rates............................................................................................35
SECTION 3.2.2. Post-Maturity Rates..............................................................................35
SECTION 3.2.3. Payment Dates....................................................................................35
SECTION 3.3. Fees.............................................................................................36
SECTION 3.3.1. Commitment Fee...................................................................................36
SECTION 3.3.2. Upfront Fees.....................................................................................36
SECTION 3.3.3. Letter of Credit Fees............................................................................36
SECTION 3.3.4. Agents' Fees.....................................................................................37
SECTION 3.4. Agreement to Repay Letter of Credit Drawings
with Revolving Loans.............................................................................37
SECTION 3.5. Letter of Credit Participations..................................................................38
ARTICLE IV CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS..............................................................39
SECTION 4.1. Eurodollar Rate Lending Unlawful.................................................................39
SECTION 4.2. Deposits Unavailable.............................................................................39
SECTION 4.3. Increased Costs, etc.............................................................................40
SECTION 4.4. Funding Losses...................................................................................41
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SECTION 4.5. Increased Capital Costs..........................................................................41
SECTION 4.6. Taxes............................................................................................42
SECTION 4.7. Payments, Computations, etc......................................................................44
SECTION 4.8. Sharing of Payments..............................................................................44
SECTION 4.9. Setoff...........................................................................................45
SECTION 4.10. Use of Proceeds..................................................................................46
SECTION 4.11. Discretion of Lenders as to Manner of Funding....................................................46
SECTION 4.12. Base Rate Loans Substituted for Affected
Eurodollar Rate Loans............................................................................46
SECTION 4.13. Substitution.....................................................................................47
ARTICLE V CONDITIONS TO BORROWING...................................................................................47
SECTION 5.1. Initial Borrowing................................................................................47
SECTION 5.1.1. Resolutions, etc.................................................................................47
SECTION 5.1.2. Delivery of Notes................................................................................48
SECTION 5.1.3. Realignment Agreement............................................................................48
SECTION 5.1.4. Pledge Agreement.................................................................................48
SECTION 5.1.5. Mortgages........................................................................................48
SECTION 5.1.6. Surveys..........................................................................................49
SECTION 5.1.7. Appraisals.......................................................................................49
SECTION 5.1.8. Environmental Audit..............................................................................50
SECTION 5.1.9. Consents, etc....................................................................................50
SECTION 5.1.10. Insurance Coverages..............................................................................50
SECTION 5.1.11. Title Endorsements...............................................................................50
SECTION 5.1.12. Availability Reduction...........................................................................50
SECTION 5.1.13. Solvency.........................................................................................51
SECTION 5.1.14. Opinions of Counsel..............................................................................51
SECTION 5.1.15. Closing Fees, Expenses, etc......................................................................51
SECTION 5.1.16. Loan Documents...................................................................................51
SECTION 5.2. All Borrowings...................................................................................51
SECTION 5.2.1. Compliance with Warranties, No Default, etc......................................................51
SECTION 5.2.2. Borrowing Request................................................................................52
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................................................53
SECTION 6.1. Organization, etc................................................................................53
SECTION 6.2. Due Authorization, Non-Contravention, etc........................................................53
SECTION 6.3. Government Approval, Regulation, etc.............................................................53
SECTION 6.4. Validity, etc....................................................................................54
SECTION 6.5. Financial Information............................................................................54
SECTION 6.6. No Material Adverse Effect.......................................................................54
SECTION 6.7. Litigation, etc..................................................................................54
SECTION 6.8. Subsidiaries.....................................................................................55
SECTION 6.9. Ownership of Properties..........................................................................55
SECTION 6.10. Compliance.......................................................................................55
SECTION 6.11. Pension Plans....................................................................................55
SECTION 6.12. Environmental Protection.........................................................................56
SECTION 6.13. Regulations G, U and X...........................................................................57
SECTION 6.14. Taxes............................................................................................57
SECTION 6.15. Accuracy of Information..........................................................................57
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ARTICLE VII COVENANTS.................................................................................................57
SECTION 7.1. Affirmative Covenants...............................................................................57
SECTION 7.1.1. Financial Information, Reports, Notices, etc........................................................58
SECTION 7.1.2. Compliance with Laws, etc...........................................................................60
SECTION 7.1.3. Construction and Maintenance of Properties,
Etc.................................................................................................61
SECTION 7.1.4. Insurance...........................................................................................61
SECTION 7.1.5. Books and Records...................................................................................62
SECTION 7.1.6. Environmental Covenant..............................................................................63
SECTION 7.1.7. Maintenance of Existence; Dividends from
Unrestricted Subsidiaries...........................................................................63
SECTION 7.1.8. Accuracy of Information.............................................................................64
SECTION 7.1.9. Additional Guaranties...............................................................................64
SECTION 7.1.10. Substitution of Collateral..........................................................................64
SECTION 7.2. Negative Covenants..................................................................................65
SECTION 7.2.1. Business Activities.................................................................................65
SECTION 7.2.2. Indebtedness; Preferred Stock.......................................................................65
SECTION 7.2.3. Liens...............................................................................................66
SECTION 7.2.4. Financial Condition.................................................................................68
SECTION 7.2.5. Investments.........................................................................................70
SECTION 7.2.6. Restricted Payments, etc............................................................................71
SECTION 7.2.7. Capital Expenditures, etc...........................................................................72
SECTION 7.2.8. Rental Obligations..................................................................................73
SECTION 7.2.9. Consolidation, Merger, etc..........................................................................73
SECTION 7.2.10. Asset Dispositions, etc.............................................................................74
SECTION 7.2.11. Modification of Certain Agreements..................................................................75
SECTION 7.2.12. Transactions with Affiliates........................................................................75
SECTION 7.2.13. Negative Pledges, Restrictive Agreements, etc.......................................................76
SECTION 7.2.14. Fiscal Year.........................................................................................76
ARTICLE VIII EVENTS OF DEFAULT..........................................................................................76
SECTION 8.1. Listing of Events of Default........................................................................76
SECTION 8.1.1. Non-Payment of Obligations..........................................................................76
SECTION 8.1.2. Breach of Warranty..................................................................................77
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations.........................................................................................77
SECTION 8.1.4. Non-Performance of Other Covenants and
Obligations.........................................................................................77
SECTION 8.1.5. Default on Other Indebtedness.......................................................................77
SECTION 8.1.6. Judgments...........................................................................................77
SECTION 8.1.7. Pension Plans.......................................................................................78
SECTION 8.1.8. Control of the Borrower.............................................................................78
SECTION 8.1.9. Bankruptcy, Insolvency, etc.........................................................................78
SECTION 8.1.10. Impairment of Security, etc.........................................................................79
SECTION 8.2. Action if Bankruptcy................................................................................79
SECTION 8.3. Action if Other Event of Default....................................................................79
ARTICLE IX THE AGENTS................................................................................................80
SECTION 9.1. Actions..........................................................................................80
SECTION 9.2. Funding Reliance, etc............................................................................81
SECTION 9.3. Exculpation......................................................................................81
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SECTION 9.4. Successor........................................................................................82
SECTION 9.5. Loans by HNB and CIBC............................................................................82
SECTION 9.6. Credit Decisions.................................................................................83
SECTION 9.7. Copies, etc......................................................................................83
ARTICLE X MISCELLANEOUS PROVISIONS.......................................................................................83
SECTION 10.1. Waivers, Amendments, etc.........................................................................83
SECTION 10.2. Notices..........................................................................................84
SECTION 10.3. Payment of Costs and Expenses....................................................................85
SECTION 10.4. Indemnification..................................................................................85
SECTION 10.5. Survival.........................................................................................86
SECTION 10.6. Severability.....................................................................................86
SECTION 10.7. Headings.........................................................................................86
SECTION 10.8. Execution in Counterparts, Effectiveness, etc....................................................87
SECTION 10.9. Governing Law; Entire Agreement..................................................................87
SECTION 10.10. Successors and Assigns...........................................................................87
SECTION 10.11. Sale and Transfer of Loans and Note;
Participations in Loans and Note.................................................................87
SECTION 10.11.1. Assignments......................................................................................87
SECTION 10.11.2. Participations...................................................................................89
SECTION 10.12. Other Transactions...............................................................................90
SECTION 10.13. Forum Selection and Consent to Jurisdiction......................................................90
SECTION 10.14. Waiver of Jury Trial.............................................................................91
SECTION 10.15. Amendment and Restatement........................................................................91
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, made as of May 21, 1997, by
and between RED ROOF INNS, INC., a Delaware corporation (the "BORROWER"), the
commercial lending institutions listed on the signature pages hereof
(collectively, the "LENDERS"), CIBC Wood Gundy Securities Corp. ("CIBC WOOD
GUNDY") and The Huntington National Bank ("HNB"), as arrangers (herein, in such
capacity, the "ARRANGERS"), HNB, as administrative and collateral agent (herein,
in such capacity, the "ADMINISTRATIVE AGENT" or "COLLATERAL AGENT") and CIBC
Wood Gundy, as syndication and documentation agent (herein, in such capacity,
the "SYNDICATION AND DOCUMENTATION AGENT"; the Syndication and Documentation
Agent and the Administrative Agent are herein collectively called the "AGENTS")
RECITALS:
WHEREAS, the Borrower, various commercial lending institutions (the
"EXISTING LENDERS") and HNB, as agent, are parties to that certain loan
agreement dated as of November 9, 1995, as amended (as so amended, the "EXISTING
CREDIT AGREEMENT"); and
WHEREAS, the Borrower desires to amend and restate the Existing Credit
Agreement for the purposes of, among other things, increasing and restructuring
the commitments thereunder, extending the Termination Date (as defined in the
Existing Credit Agreement) and effecting certain other amendments to the
provisions of the Existing Credit Agreement;
WHEREAS, the Arrangers, the Agents and the Lenders have agreed to amend
and restate the Existing Credit Agreement on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is agreed that the Existing Credit Agreement is
hereby amended and restated in its entirety by this Amended and Restated Credit
Agreement as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
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"ADDITIONAL PROPERTIES" is defined in SECTION 7.1.10.
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AGENTS" is defined in the PREAMBLE and includes each other Person as
shall have subsequently been appointed as a successor Agent pursuant to SECTION
9.4.
"AGREEMENT" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"APPLICABLE BASE RATE MARGIN" is the rate per annum determined by
reference to the definition of the term "Applicable Margin."
"APPLICABLE EURODOLLAR RATE MARGIN" is the rate per annum determined by
reference to the definition of the term "Applicable Margin."
"APPLICABLE MARGIN" means, in the case of any Base Rate Loan or
Eurodollar Rate Loan, a rate per annum determined by reference to the Total Debt
to EBITDA Ratio as follows:
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Total Debt Applicable Base Applicable Eurodollar Commitment
to EBITDA Ratio Rate Margin Rate Margin Fee
- --------------- --------------- --------------------- ----------
Less than 2.50 0.000% +1.000% 0.250%
Greater than or 0.000% +1.250% 0.250%
equal to 2.50, but
less than 3.0
Greater than or 0.250% +1.500% 0.300%
equal to 3.0,
but less than 3.50
Greater than or 0.375% +1.625% 0.350%
equal to 3.50,
but less than 4.00
Greater than or 0.500% +1.750% 0.375%
equal to 4.00,
but less than 4.25
4.25 or greater 0.750% +2.000% 0.500%
The "APPLICABLE BASE RATE MARGIN", the "APPLICABLE EURODOLLAR RATE MARGIN" and
the "COMMITMENT FEE" shall be adjusted on the 15th day of March and on the first
day of each June, September and December (or, if such day is not a Business Day,
on the next succeeding Business Day) based on the Total Debt to EBITDA Ratio as
of the last day of the most recently ended Fiscal Quarter. If the Borrower
should fail to deliver a certificate required under SECTION 7.1.1(d) hereof in
respect of the most recently ended Fiscal Quarter or Fiscal Year by any such
date, as the case may be, then, for purposes of this definition, until the
Borrower shall have provided such certificate, it shall be presumed that the
Total Debt to EBITDA Ratio as of the end of the preceding Fiscal Quarter was
greater than 4.25.
"ACQUISITION" means any acquisition by the Borrower or a Guarantor of
any one or more hotel properties in any transaction or series of related
transactions.
"ARRANGERS" is defined in the PREAMBLE.
"ASSIGNEE LENDER" is defined in SECTION 10.11.1.
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders in the certificate delivered pursuant to
SECTION 5.1.1 or a further certificate referred to therein.
"AVAILABLE REVOLVING LOAN COMMITMENT AMOUNT" means, on any day, the
Revolving Loan Commitment Amount on such day MINUS the
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aggregate principal amount of outstanding Swing Loans, MINUS the aggregate
undrawn face amount of outstanding Letters of Credit and unreimbursed drawings
under Letters of Credit.
"BASE RATE" means, on any date and with respect to all Base Rate Loans,
a fluctuating rate of interest per annum equal to the highest of
(a) the rate of interest most recently announced by the
Administrative Agent at its Domestic Office as its prime commercial
rate;
(b) the Federal Funds Rate determined on such day by the
Administrative Agent plus 1/2 of 1%; and
(c) the CD Published Moving Rate determined on such day by the
Administrative Agent plus 1%.
The prime commercial rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent or any other Lender in
connection with extensions of credit. Changes in the rate of interest on that
portion of any Loans maintained as Base Rate Loans will take effect
simultaneously with each change in the Base Rate. The Administrative Agent will
give notice promptly to the Borrower and the Lenders of changes in the Base
Rate.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Base Rate.
"BIG RED PROJECT" means the Borrower's plan to spend $60,000,000 to
refurbish its existing Inns, which plan is to be completed prior to the end of
the 1997 Fiscal Year.
"BORROWER" is defined in the PREAMBLE.
"BORROWING" means the Loans of the same Type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with SECTION 2.1.
"BORROWING REQUEST" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT C
hereto.
"BUSINESS DAY" means any day
(a) which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in Columbus,
Ohio or New York, New York; and
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(b) relative to the making, continuing, prepaying or repaying
of any Eurodollar Rate Loans, on which dealings in Dollars are carried
on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the aggregate amount of
all expenditures of the Borrower and its Subsidiaries for fixed or capital
assets made during such period which, in accordance with GAAP, would be
classified as capital expenditures (including, without limitation, the aggregate
amount of all Capitalized Lease Liabilities incurred during such period).
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"CAROUSEL" means Carousel Hotel Corporation, a Georgia
corporation.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any Indebtedness, maturing not more than one year after
such time, issued or guaranteed by the United States or any agency
thereof that is backed by the full faith and credit of the United
States;
(b) commercial paper, maturing not more than nine
months after such time, which is
(i) rated A-l+ by Standard & Poor's Rating
Service or P-l by Moody's Investors Service, Inc., or
(ii) issued by any Lender (or its holding
company);
(c) any time deposit with, or certificate of deposit
or bankers acceptance issued by, either
(i) any office located in the United States of any
bank or trust company which is organized under the laws of the
United States or any State thereof or the District of Columbia
and has a combined capital, surplus and undivided profits of
not less than $500,000,000, or
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(ii) any Lender,
in either case maturing not more than one year after such
time;
(d) any repurchase agreement with respect to any security
referred to in clause (a) through (c) entered into with any Lender (or
other bank or trust company referred to in CLAUSE (c)(i) or any other
financial institution whose senior unsecured debt (or whose holding
company's senior unsecured debt) is rated at least A by Standard &
Poor's Rating Service or Moody's Investors Service, Inc.); and
(e) shares of mutual funds whose investments are limited to
being at least 75% in securities of the types referred to in clauses
(a) through (d).
"CD PUBLISHED MOVING RATE" means, at any time, the latest three-week
moving average (adjusted to the nearest 1/100 of 1%) of daily secondary market
morning offering rates in the United States for 90-day certificates of deposit
of major United States money market lenders, such three-week moving average
(adjusted to the basis of a year of 365 or 366 days, as the case may be) being
determined weekly for the three-week period ending on the previous Friday by the
Administrative Agent on the basis of
(a) such rates reported by certificate of deposit dealers to
and published by the Federal Reserve Bank of New York (as adjusted for
reserves and assessments in the same manner as the CD Quoted Rate), or
(b) if such publication shall be suspended or terminated, the
CD Quoted Rate determined by the Administrative Agent.
"CD QUOTED RATE" means, relative to any determination of the CD
Published Moving Rate in circumstances when publication of the rates referred to
in CLAUSE (a) of the definition thereof has been suspended or terminated, the
rate of interest per annum determined by the Administrative Agent to be the sum
(adjusted to the nearest 1/16 of 1%, if any) of
(a) the rate obtained by dividing
(i) the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the bid rates quoted
to the Administrative Agent in New York at approximately 10:00
a.m. New York City time (or as soon thereafter as
practicable), from time to time by three certificate of
deposit dealers of recognized standing selected by the
Administrative Agent in its sole
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discretion for the purchase at face value of 90-day
certificates of deposit in an amount approximately equal or
comparable to the amount of HNB's portion of the credit
outstanding hereunder with respect to which the CD Quoted Rate
is being determined by
(ii) a percentage (expressed as a decimal
equivalent) equal to 100% MINUS the average of the daily
percentages specified during such period by the F.R.S. Board
for determining the maximum reserve requirement (including,
but not limited to, any marginal reserve requirement) for a
member bank in respect of liabilities consisting of or
including (among other liabilities) 90-day Dollar nonpersonal
time deposits in the United States,
PLUS
(b) the daily average during such period of the annual
assessment rate in effect on each day during such period which is
payable by a member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R.Section 327.4(a) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for insuring Dollar
time deposits of such institution at offices in the United States.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CHANGE OF CONTROL" means such time as (a) a "person" or "group"
(within the meaning of Section 13(d) or 14(d)(2) of the Securities and Exchange
Act of 1934, as amended (the "EXCHANGE ACT")), other than The Morgan Stanley
Real Estate Fund, L.P. (the "EXISTING STOCKHOLDER"), its partners and Affiliates
and persons whose rights to vote such voting stock are controlled by the
Existing Stockholder and its partners and Affiliates becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act) of more than 40% of the
total voting stock of the Borrower on a fully diluted basis and such ownership
is greater than the amount of voting stock, on a fully diluted basis, held by
the Existing Stockholder, its partners and Affiliates and persons whose rights
to vote such voting stock are controlled by the Existing Stockholder and its
partners and Affiliates on such date; or (b) individuals who at the beginning of
any period of two consecutive calendar years constituted the Borrower's Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Borrower's stockholders was
approved by a vote of at least two-thirds of the
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members of the Board of Directors then still in office who either were members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"CIBC WOOD GUNDY" is defined in the PREAMBLE.
"COLLATERAL" means, collectively, the Pledged Properties, the personal
property and fixtures described in the Mortgages, the personal property subject
to the Pledge Agreement, all property pledged pursuant to SECTION 7.1.10 and all
other property and interests pledged as collateral security for the Obligations.
"COLLATERAL AGENT" is defined in the PREAMBLE.
"COMMITMENT" means, as the context may require, a Lender's Revolving
Loan Commitment or the Swingline Lender's Swingline Commitment.
"COMMITMENT AMOUNT" means, as the context may require, the Revolving
Loan Commitment Amount or the Swing Loan Commitment Amount.
"COMMITMENT FEE" is defined in SECTION 3.3.1.
"COMMITMENT FEE AMOUNT" means, on any date, the Revolving Loan
Commitment Amount on such date (without giving effect to any temporary
reductions thereof under SECTION 5.1.12), MINUS the aggregate principal amount
of outstanding Revolving Loans, MINUS the aggregate undrawn face amount of
outstanding Letters of Credit.
"COMMITMENT REDUCTION DATE" means each date specified in CLAUSE (c) of
SECTION 2.2.2.
"COMMITMENT TERMINATION DATE" means the earliest of
(a) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to SECTION 2.2;
(b) the date on which any Event of Default described in clause
(d) of SECTION 8.1.9 with respect to the Borrower or any Guarantor
shall have occurred;
(c) the date on which any other Event of Default shall have
occurred and be continuing and as a result thereof, the Commitments
shall have been terminated pursuant to SECTION 8.3; and
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(d) May 30, 1997, unless the Effective Date shall have
occurred on or before such date.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount of the debt, obligation or other liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion duly executed by an Authorized Officer of the Borrower, substantially
in the form of EXHIBIT D hereto.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001(b)(1) of ERISA or, solely for purposes of Section 412 of
the Code or Section 302 of ERISA, 414(m) or 414(o) of the Code.
"DEFAULT" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agents and the Required
Lenders.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement pursuant to which such Lender became a Lender hereunder or
such other office of a Lender within the United States as may be designated from
time to time by notice from such Lender to the Borrower and the Administrative
Agent.
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"EBITDA" means, for any period, the sum of the Borrower and its
Subsidiaries' consolidated (i) net income for such period PLUS (ii) Leaseback
Rental Payments for such period PLUS (iii) interest expense for such period PLUS
(iv) income taxes for such period PLUS (v) depreciation, amortization and other
non-cash charges, extraordinary losses and non-recurring expenses during such
period MINUS (vi) non-cash gains, extraordinary gains and other non-recurring
income during such period PLUS (vii) (without duplication) for any Inn that
shall have been acquired by the Borrower or a Guarantor during such period, the
New Property EBITDA from such Inn during such period.
"EFFECTIVE DATE" means the date this Agreement becomes effective
pursuant to SECTION 10.8.
"ELIGIBLE ASSIGNEE" means (a) a financial institution organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000, PROVIDED that such bank is acting through a branch or agency
located in the United States of America; or (c) a Person that is engaged in the
business of commercial finance and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"EURODOLLAR OFFICE" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement pursuant to which Lender became a Lender hereunder or such
other office of a Lender as may be designated from time to time by notice from
such Lender to the Borrower and the Administrative Agent.
"EURODOLLAR RATE" means with respect to any Eurodollar Rate Loan and
the related Interest Period, the per annum rate that is equal to the quotient
of:
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(i) the actual or estimated arithmetic mean of the per annum rates of
interest at which deposits in U.S. dollars for the related Interest Period and
in an aggregate amount comparable to the amount of such Eurodollar Rate Loan are
being offered to U.S. banks by one or more prime banks in the London interbank
market, as determined by the Administrative Agent in its discretion based upon
reference to information appearing in Telerate, a service of Telerate Systems
Incorporated, in the section captioned "British Lenders Assoc. Interest
Settlement Rates," or any comparable index selected by the Administrative Agent,
the obtaining of rate quotations, or any other comparable reasonable procedure,
at approximately 11:00 a.m. London, England, time, on the second Business Day
prior to the first day of the related Interest Period; all as determined by the
Administrative Agent, such sum to be rounded up, if necessary, to the nearest
whole multiple of 1/16 of 1%; divided by
(ii) a percentage equal to 100% minus the rate (expressed as a
percentage), if any, at which reserve requirements are imposed on financial
institutions, on the second Business Day prior to the first day of the related
Interest Period, with respect to any "Eurocurrency liabilities" under Regulation
D of the Board of Governors of the Federal Reserve System or any other
regulations of any governmental authority having jurisdiction with respect
thereto (including, without limitation, any marginal, emergency, supplemental,
special or other reserves) for a term comparable to such Interest Period.
"EURODOLLAR RATE LOAN" means a Loan bearing interest at a fixed rate of
interest determined by reference to the Eurodollar Rate.
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"EXISTING CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"EXISTING LENDERS" is defined in the FIRST RECITAL.
"EXISTING MORTGAGE" means each mortgage (or, to the extent required
under state law, deed of trust) executed and delivered pursuant to the Existing
Credit Agreement, as amended, supplemented, restated or otherwise modified from
time to time.
"EXISTING MORTGAGED PROPERTIES" means those Properties of the Borrower
identified on SCHEDULE III hereto that have been mortgaged to secure the
obligations under the Existing Credit Agreement.
"EXPANSION CAPITAL EXPENDITURE" means any Capital Expenditure of the
Borrower or any of its Subsidiaries which does not relate to the Big Red Project
(a) made in connection with the
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acquisition or construction of any Inn that is, or after giving effect to such
expenditures will be, wholly-owned by the Borrower or a Guarantor or (b) which
substantially alters, improves or expands any existing Inn or (c) incurred in
the ordinary course of business for property used in corporate overhead
functions or (d) consisting of land to be leased to franchisees, and which in
any of the foregoing instances is not properly characterized as a Maintenance
Capital Expenditure.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of 52 or 53 weeks ending on or about
December 31 on which the Borrower's fiscal year ends; references to a Fiscal
Year with a number corresponding to any calendar year (E.G. the "1996 Fiscal
Year") refer to the Fiscal Year ending on or about December 31 of such calendar
year.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
(a)EBITDA for such period MINUS the minimum Maintenance Capital Expenditures
required to be made during such period under SECTION 7.2.7(a) to (b) the sum of
(i) the Borrower's and its Subsidiaries' consolidated cash interest expense and
cash income taxes for such period, PLUS (ii) all cash dividends paid on any
shares of capital stock of the Borrower during such period, PLUS (iii) Leaseback
Rental Payments during such period, PLUS (iv) all scheduled principal payments
required to be made by the Borrower and its Subsidiaries (whether or not such
payments are actually made) during such period (determined on a consolidated
basis and exclusive of "balloon" payments), PLUS (v) if such period ends on a
Commitment Reduction Date and to the extent positive, the average daily
utilization under this Agreement for the Fiscal Quarter ending on the last day
of such period MINUS the Revolving Loan Commitment Amount as of such Commitment
Reduction Date after giving effect to the reductions thereto pursuant to Section
2.2.2(c) on such Commitment Reduction Date.
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"FRONTING FEE" is defined in SECTION 3.3.3.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in SECTION 1.4.
"GUARANTIES" means any Guaranty executed and delivered by a Subsidiary
pursuant to SECTION 7.1.9 hereof, each of which shall be substantially in the
form of EXHIBIT E hereto, as amended, supplemented or otherwise modified from
time to time.
"GUARANTORS" means, collectively, each Subsidiary of the Borrower as of
the Effective Date (other than the Unrestricted Subsidiaries), if any, and any
other Subsidiary of the Borrower that executes a Guaranty pursuant to the
provisions of SECTION 7.1.9.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable Environmental Law, all as amended or hereafter amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
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(b) which relates to the limited scope of examination
of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrower to be in default of any of its
obligations under SECTION 7.2.4.
"HNB" is defined in the PREAMBLE.
"INCLUDING" means including without limiting the generality of any
description preceding such term.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit (other than commercial letters of
credit in an aggregate face amount of not more than $1,000,000),
whether or not drawn, and banker's acceptances issued for the account
of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) net liabilities of such Person under all Hedging
Obligations;
(e) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services (other than accounts payable and accrued
expenses in the ordinary course of business);
(f) any obligations of the sort referred to in clauses (a)
through (e) above (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of
any of the foregoing.
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For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness (other than Indebtedness recourse in respect of which is
limited to the assets of such partnership or joint venture) of any partnership
or, to the extent a Person is liable therefore, joint venture in which such
Person is a general partner or a joint venturer.
"INDEMNIFIED LIABILITIES" is defined in SECTION 10.4.
"INDEMNIFIED PARTIES" is defined in SECTION 10.4.
"INN" means (i) a Red Roof Inn hotel that is owned by the Borrower or a
Guarantor or leased and operated by the Borrower or a Guarantor, (ii) the
Trueman Club in Columbus, Ohio and (iii) a hotel other than a Red Roof Inn that
is owned by the Borrower or a Guarantor or leased and operated by the Borrower
or a Guarantor, provided that the total number of Inns described in this clause
(iii) shall not exceed (except, in the case of acquired hotels, for a
transitional period not to exceed six months) at any time more than 10% of all
Inns.
"INTEREST PERIOD" means, relative to any Eurodollar Rate Loans
comprising part of the same Borrowing, the period beginning on (and including)
the date on which such Eurodollar Rate Loan is made or continued as, or
converted into, a Eurodollar Rate Loan pursuant to SECTION 2.3 or 2.4 and ending
on (but excluding) the day which numerically corresponds to such date one, two,
three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month) or for such other
time period for which the Administrative Agent shall determine that Dollar
deposits are generally available in the interbank market, in either case as the
Borrower may select in its relevant notice pursuant to SECTION 2.3 or 2.4;
PROVIDED, HOWEVER, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than twenty different dates;
(b) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of the next calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day);
(c) no Interest Period may end later than the Stated Maturity
Date; and
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(d) the Borrower shall select Interest Periods that will
enable the Borrower to meet its payment obligations on each Commitment
Reduction Date without having to prepay any Eurodollar Rate Loans.
"INVESTMENT" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such
Person in any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"L/C FEES" is defined in SECTION 3.3.3.
"L/C ISSUER" shall mean HNB or such other Lender as may be acceptable
to the Borrower and the Agents, and their successors and assigns.
"LAWS" is defined in SECTION 6.10.
"LEASEBACK RENTAL PAYMENTS" means, for any period, the sum of the
Borrower and its Subsidiaries' annualized fixed minimum rental payments
associated with sale-leaseback transactions for such period (and to the extent
that any sale-leaseback transaction has a fixed minimum payment that is below
market standards at the time the Borrower or its Subsidiary entered into the
related sale-leaseback transaction, for purposes hereof such payment shall be
recalculated based on market standards), determined on a consolidated basis for
such period.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT L hereto.
"LENDERS" is defined in the PREAMBLE.
"LETTER OF CREDIT" means a commercial or standby letter of credit
issued at the request and for the account of the Borrower pursuant to SECTION
2.7.
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"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other preferential arrangement of any kind or
nature whatsoever that has the practical effect of creating a security interest.
"LOAN" means, as the context may require a Swing Loan or a Revolving
Loan of any Type made hereunder.
"LOAN DOCUMENT" means this Agreement, the Notes, each Letter of Credit
and application therefor, the Mortgages, the Mortgage Amendments, the Pledge
Agreement, the Guaranties, the Realignment Agreement, each document executed by
the Borrower or any Guarantor as collateral security for the Obligations and
each other document or instrument delivered in connection with this Agreement
that is designated by the parties thereto as a Loan Document.
"MAINTENANCE CAPITAL EXPENDITURES" means any Capital Expenditure of the
Borrower or any of its Subsidiaries which does not relate to the Big Red Project
and which is made to maintain or restore the condition or usefulness of property
of the Borrower or its Subsidiaries but which are not properly chargeable to
repairs and maintenance in accordance with GAAP.
"MATERIAL ADVERSE EFFECT" means a material adverse change in or effect
on (i) the business, financial condition, properties or results of operations of
the Borrower and its Subsidiaries, considered as a whole, (ii) the ability of
the Borrower to perform its obligations under the Loan Documents or (iii) the
rights and remedies of the Lenders and the Agents under the Loan Documents.
"MORTGAGE" means each mortgage (or, to the extent required under state
law, deed of trust or deed to secure debt) executed and delivered pursuant to
SECTION 5.1.5, substantially in the form of EXHIBIT I hereto and each Existing
Mortgage as amended by a Mortgage Amendment, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"MORTGAGE AMENDMENT" means those mortgage amendments (or to the extent
required by state law, deed of trust or deed to secure debt amendments) executed
and delivered pursuant to SECTION 5.1.5, substantially in the form of EXHIBIT J
hereto.
"NET CASH PROCEEDS" means, with respect to any Restricted Disposition,
the gross cash consideration received by or for the account of the Borrower
MINUS (i) transfer taxes paid or payable as a result of such Restricted
Disposition, (ii) broker's commissions and other professional fees and expenses
relating to
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such Restricted Disposition that are payable by the Borrower, and (iii) the
amount, as estimated in good faith by the Borrower, of income taxes that will be
payable by the Borrower in respect of such Restricted Disposition (taking into
account all other Restricted Dispositions in such Fiscal Year).
"NEW PROPERTY EBITDA" means, for any period, operating income (before
royalty expenses) from an Inn that was acquired by the Borrower or a Guarantor
during such period.
"NEWLY MORTGAGED PROPERTIES" means those Properties of the Borrower
identified on SCHEDULE III hereto that are not Existing Mortgaged Properties and
which will be mortgaged to secure the Obligations under this Agreement.
"NOTE" means, as the context may require, either a Revolving
Note or the Swingline Note.
"NOTES" means the Revolving Notes and the Swingline Note.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"OBLIGOR" means the Borrower or any other Person (other than the Agents
or any Lender) obligated under any Loan Document.
"ORGANIC DOCUMENT" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Obligor is a party applicable to any of its
authorized shares of capital stock.
"PARTICIPANT" is defined in SECTION 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower may have liability, including by reason of liability of any
corporation, trade or business that is, along with the Borrower, a member of a
Controlled Group, and including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
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"PERCENTAGE" means, relative to any Lender, the percentage set forth
opposite its name on SCHEDULE II or set forth in the Lender Assignment
Agreement, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to SECTION 10.11.
"PERMITTED HEDGING OBLIGATIONS" means those Hedging Obligations
described in clause (g) of SECTION 7.2.2.
"PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement executed and delivered
pursuant to SECTION 5.1.5, substantially in the form of EXHIBIT F hereto, as
amended, supplemented, restated or otherwise modified from time to time.
"PLEDGED PROPERTY" means all real property interests underlying a Newly
Mortgaged Property or an Existing Mortgaged Property, together with all
fixtures, personal property (other than leased equipment) and other improvements
located on such Newly Mortgaged Property or Existing Mortgaged Property;
provided that upon the substitution for, or sale of, a Pledged Property pursuant
to SECTION 7.1.10(a) or (b) or 7.2.10(a), such Pledged Property shall cease to
be a Pledged Property and, in the case of a substitution pursuant to SECTION
7.1.10(a) or 7.1.10(b), the Additional Property substituted therefor shall be a
Pledged Property.
"PREFERRED STOCK" means all preferred capital stock of the Borrower
issued upon terms satisfactory to the Agents.
"PROPERTY" means an Inn that is owned in fee or ground-leased by the
Borrower or a Guarantor.
"QUARTERLY PAYMENT DATE" means the last day of each Fiscal Quarter or,
if any such day is not a Business Day, the next succeeding Business Day.
"REALIGNMENT AGREEMENT" means that certain Realignment Agreement
executed and delivered by the Existing Lenders, each Lender, each Agent and the
Borrower, substantially in the form of EXHIBIT K hereto, as the same may be
amended from time to time.
"REQUIRED LENDERS" means, at any time, Lenders holding at least 51% of
the then aggregate outstanding principal amount of
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the Revolving Notes then held by the Lenders, or, if no such principal amount is
then outstanding, Lenders having at least 51% of the Revolving Loan Commitments.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as amended from
time to time.
"RESTRICTED DISPOSITION" means any sale, condemnation, loss from
casualty or other disposition of all or a substantial portion of a Pledged
Property for which the Borrower shall not have provided an Additional Property,
as contemplated by SECTION 7.1.10 or SECTION 7.2.10(b).
"REVOLVING LOAN" means each Loan made by the Lenders pursuant to the
Revolving Loan Commitment.
"REVOLVING LOAN COMMITMENT" is defined in SECTION 2.1.1.
"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $250,000,000 as
such amount may be reduced from time to time pursuant to SECTION 2.2.
"REVOLVING NOTE" means a promissory note of the Borrower payable to any
Lender in the form of EXHIBIT A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Revolving
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"SENIOR DEBT" means, as of the last day of any Fiscal Quarter, Total
Debt MINUS the sum of (i) Indebtedness (other than Hedging Obligations or the
Obligations) of the Borrower and its Subsidiaries secured by Liens on Inns, (ii)
Subordinated Debt, (iii) Capitalized Lease Liabilities of the Borrower and its
Subsidiaries and (iv) seven times the Leaseback Rental Payments during such
quarter.
"SENIOR DEBT TO SENIOR EBITDA RATIO" means the ratio of (a) Senior Debt
as at the end of any Fiscal Quarter of the Borrower to (b) Senior EBITDA for the
period of four consecutive Fiscal Quarters of the Borrower ending on the end of
such Fiscal Quarter.
"SENIOR EBITDA" means, for any period, operating income (before royalty
expenses) from those Properties that are not subject to any Liens securing
borrowed money (other than the Mortgages) or the subject of a sale-leaseback
transaction (each a "SPECIFIED PROPERTY") PLUS (without duplication) that
portion of any management fees and franchise fees attributable to royalty
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payments, marketing fees, reservation fees, technical fees and other similar
payments (other than initial franchise fees) received by the Borrower or any
Subsidiary during such period PLUS (without duplication) rent received by the
Borrower or any of its Subsidiaries pursuant to the lease of any Specified
Property or portion thereof PLUS (without duplication) for any such Inn that
shall have been acquired by the Borrower during such period, the New Property
EBITDA from such Inn during such period.
"SENIOR NOTE INDENTURE" means that certain Indenture dated as of
December 17, 1993, pursuant to which the Senior Notes were issued, as the same
may be amended from time to time in accordance with the terms hereof.
"SENIOR NOTES" means the $200,000,000 aggregate principal amount of the
Borrower's 95/8% senior notes due 2003 issued under the Senior Note Indenture.
"SPECIFIED DEFAULT" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both, would
constitute an Event of Default under any subsection of SECTION 8.1 other than
SECTION 8.1.4.
"STATED MATURITY DATE" means May 21, 2002.
"SUBORDINATED DEBT" means all unsecured Indebtedness of the Borrower
for money borrowed which is subordinated, upon terms satisfactory to the Agents,
in right of payment to the payment in full in cash of all Obligations.
"SUBSIDIARY" means, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"SWINGLINE COMMITMENT" is defined in SECTION 2.1.2.
"SWINGLINE LENDER" means HNB, and its successors and assigns.
"SWINGLINE NOTE" means a promissory note of the Borrower payable to the
Swingline Lender in the form of EXHIBIT B hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate
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Indebtedness of the Borrower to the Swingline Lender resulting from outstanding
Swing Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"SWING LOAN" means each Loan made by the Swingline Lender pursuant to
the Swingline Commitment.
"SWING LOAN COMMITMENT AMOUNT" means, on any date, $5,000,000, as such
amount may be reduced from time to time pursuant to SECTION 2.2.
"SYNDICATION AND DOCUMENTATION AGENT" is defined in the PREAMBLE.
"TANGIBLE NET WORTH" means the consolidated net worth of the Borrower
and its Subsidiaries after subtracting therefrom the aggregate amount of any
intangible assets of the Borrower and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks and trade names.
"TAXES" is defined in SECTION 4.6.
"TITLE COMPANY" means Chicago Title Insurance Company or another
national title insurance company selected by the Borrower (subject to the
reasonable approval of the Agents).
"TOTAL DEBT" means, as of the last day of any Fiscal Quarter, (i) the
consolidated Indebtedness (without duplication) of the Borrower and its
Subsidiaries of the nature referred to in clauses (a),(b) (exclusive of (I)
letters of credit issued for the account of the Borrower or any of its
Subsidiaries in the ordinary course of business to support workers compensation
and insurance obligations of the Borrower and its Subsidiaries and (II) letters
of credit (which are not Letters of Credit) issued for the account of the
Borrower or any of its Subsidiaries), (c),(e) and (f) (but only to the extent
that the underlying obligation is of the type referred to above) of the
definition of "INDEBTEDNESS" PLUS (ii) seven times the Leaseback Rental Payments
for such Fiscal Quarter MINUS (iii) cash and cash equivalents of the Borrower
and the Guarantors in excess of $5,000,000.
"TOTAL DEBT TO EBITDA RATIO" means on any day the ratio of (a) Total
Debt on the last day of the Fiscal Quarter ending on or most recently ended
prior to such day to (b) EBITDA for the period of four consecutive Fiscal
Quarters ending on the last day of such Fiscal Quarter.
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"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"UNRESTRICTED SUBSIDIARIES" means Carousel, RRI Financial, Inc. and RRI
Investment Co., Nevada corporations and wholly-owned Subsidiaries of the
Borrower so long as such entities shall have no Indebtedness to any party other
than the Borrower and no Liens on any of their respective assets other than
Liens of the type described in Section 7.2.3(d) through (j).
"UNSECURED INNS" means Inns that are not encumbered by Liens securing
Indebtedness for borrowed money (or Contingent Liabilities in respect thereof).
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under SECTION 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") as in
effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Subsidiaries delivered to the Lenders; PROVIDED that, if either the Borrower or
the Agents shall notify the other of an objection to the application of any
change in GAAP to any covenant in Section 7, any defined term used therein or
the calculation of any fee or interest rate hereunder, such parties shall
negotiate in an effort to resolve such objection; PROVIDED
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that if the parties are unable to reach resolution, such change in GAAP shall be
disregarded for purposes of any such covenant, definition, fee or interest rate.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES, NOTES,
LETTERS OF CREDIT AND RELEASE OF COLLATERAL
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this SECTION 2.1.
SECTION 2.1.1. REVOLVING LOAN COMMITMENT. On the Effective Date, each
Lender will make, or be deemed to have made, a Revolving Loan to the Borrower
equal to such Lender's Percentage of the outstanding principal amount under the
Existing Credit Agreement. Each Revolving Loan made on the Effective Date shall
be deemed to be a continuation and conversion of the Borrower's Indebtedness
outstanding under the Existing Credit Agreement. Each Lender's funding of its
initial Revolving Loan shall be made pursuant to the terms of the Realignment
Agreement. Thereafter, from time to time on any Business Day occurring before
the Commitment Termination Date, each Lender will make loans (relative to such
Lender, and of any Type, its "REVOLVING LOANS") to the Borrower equal to such
Lender's Percentage of the aggregate amount of the Borrowing requested by the
Borrower to be made on such day. The commitment of each Lender described in this
SECTION 2.1.1 is herein referred to as its "REVOLVING LOAN COMMITMENT". On the
terms and subject to the conditions hereof, the Borrower may from time to time
borrow, prepay and reborrow Revolving Loans.
SECTION 2.1.2. SWING LOAN COMMITMENT. From time to time on any Business
Day occurring before the Commitment Termination Date, the Swingline Lender will
make Swing Loans to the Borrower equal to the amount of Swing Loans requested by
the Borrower to be made on such day. The commitment of the Swingline Lender
described in this SECTION 2.1.2 is herein referred to as its "SWINGLINE
COMMITMENT". On the terms and subject to the conditions hereof, the Borrower may
from time to time borrow, repay and reborrow Swing Loans.
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SECTION 2.1.3. LENDERS NOT PERMITTED OR REQUIRED TO MAKE LOANS.
(a) No Lender shall be permitted or required to make any
Revolving Loan if, after giving effect thereto, the AGGREGATE
outstanding principal amount of all Revolving Loans
(i) of all Lenders would exceed the Available
Revolving Loan Commitment Amount, or
(ii) of such Lender would exceed such Lender's
Percentage of the Available Revolving Loan Commitment Amount.
(b) The Swingline Lender shall not be permitted or required to
make any Swing Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all
Swing Loans would exceed the Swingline Loan Commitment Amount;
or
(ii) the aggregate outstanding principal amount of
all Swing Loans would exceed the Revolving Loan Commitment
Amount MINUS the sum of (A) the aggregate principal amount of
outstanding Revolving Loans, (B) the aggregate undrawn face
amount of outstanding Letters of Credit and (C) the aggregate
amount of unreimbursed drawings under Letters of Credit.
SECTION 2.2. REDUCTION OF COMMITMENT AMOUNT. The Commitment Amounts are
subject to reduction from time to time pursuant to this SECTION 2.2.
SECTION 2.2.1. OPTIONAL. The Borrower may, from time to time on any
Business Day, voluntarily reduce the amount of any Commitment Amount; PROVIDED,
HOWEVER, that (i) all such reductions shall require at least three Business
Days' prior notice to the Administrative Agent and be permanent, (ii) any
partial reduction of the Revolving Loan Commitment Amount shall be in a minimum
amount of $5,000,000 or any integral multiple of $1,000,000 and (iii) after any
such voluntary reduction, and any simultaneous repayment or prepayment of Loans
and termination or expiration of Letters of Credit, the sum of the aggregate
principal amount of all Loans outstanding plus the aggregate undrawn face amount
of outstanding Letters of Credit will not exceed the Revolving Loan Commitment
Amount.
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SECTION 2.2.2. MANDATORY.
(a) There shall be a mandatory reduction of the Commitment
Amounts in an amount equal to all Net Cash Proceeds realized from any
Restricted Disposition, except to the extent proceeds from a
condemnation or casualty are used to repair or restore a Property as
provided in the applicable Mortgage. Unless the proceeds of a
Restricted Disposition are used or intended to be used to repair or
restore as contemplated by the Mortgages, such reduction shall be made
immediately (or, in the case of a Restricted Disposition consisting of
a material casualty or condemnation in respect of a particular Pledged
Property or Pledged Properties, if the Borrower shall have given the
Administrative Agent notice, within thirty days of the occurrence of
such casualty or condemnation, that it intends to substitute one or
more Properties for the Pledged Property or Pledged Properties subject
to such casualty or condemnation, on the 90th day following such
receipt if no such substitution shall have been effected prior to such
date) upon receipt of proceeds from such Restricted Disposition (and,
in the case of proceeds intended to be so used but not actually so
used, at such time as is contemplated in the applicable Mortgage) and
shall be credited or applied in the following manner:
first, to any unused portion of the Revolving Loan
Commitment Amount, in which event such unused portion
of the Revolving Loan Commitment Amount shall, to the
extent of such Net Cash Proceeds, be canceled and the
Borrower may retain proceeds in an amount equal to
the amount of the Revolving Loan Commitment Amount so
canceled;
second, to the prepayment of the outstanding
Revolving Loans in excess of such unused portion of
the Revolving Loan Commitment Amount and the
corresponding cancellation of the Revolving Loan
Commitment by the amount of such prepayment; and
third, to the cash collateralization of
outstanding Letters of Credit in accordance with
SECTION 2.7.
(b) All net non-cash proceeds (including any promissory notes)
realized from any Restricted Disposition shall immediately upon receipt
thereof be assigned and delivered to the Administrative Agent as and
shall be held by the Administrative Agent as additional Collateral for
the performance of the Obligations. Upon the reduction of any
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non-cash proceeds to cash, such cash shall be applied by the
Administrative Agent as provided in CLAUSE (a) above;
(c) The Revolving Loan Commitment Amount shall be reduced on
or before each date set forth below to an amount not more than the
amount set forth opposite such date:
Date Revolving Loan Commitment Amount
---- --------------------------------
March 31, 2000 $245,000,000
June 30, 2000 $240,000,000
September 30, 2000 $230,000,000
December 31, 2000 $220,000,000
March 31, 2001 $207,500,000
June 30, 2001 $195,000,000
September 30, 2001 $180,000,000
December 31, 2001 $165,000,000
March 31, 2002 $150,000,000
Stated Maturity Date -0-
The required Commitment reductions set forth above have been based on
the assumption that there will be no reduction of the Revolving Loan
Commitment Amount pursuant to SECTION 5.1.12. If the Revolving Loan
Commitment Amount shall be permanently reduced pursuant to SECTION
5.1.12 (the "REDUCED COMMITMENT"), then on the date of such reduction
the required reductions set forth above shall be recalculated. Such
recalculation shall reflect the same percentage reductions of
Commitments contemplated by the schedule set forth above, but shall be
based on the Reduced Commitment rather than $250,000,000. The Agents
shall notify the Borrower and each Lender of any such new Commitment
reduction schedule.
(d) Upon any reduction of the Revolving Loan Commitment Amount
pursuant to CLAUSE (c) above, the Borrower shall repay or prepay Loans
or, to the extent that after the repayment or prepayment of all Loans
the aggregate undrawn face amount of outstanding Letters of Credit
exceeds the Revolving Loan Commitment Amount, cash collateralize
outstanding Letters of Credit in an amount such that, after giving
effect thereto, the sum of the aggregate principal amount of all Loans
outstanding, plus the aggregate undrawn face amount of outstanding
Letters of Credit plus the aggregate amount of unreimbursed drawings
under Letters of Credit, less the aggregate amount of all cash
collateral securing such Letters of Credit shall not exceed the
Revolving Loan Commitment Amount as so reduced.
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SECTION 2.3. BORROWING PROCEDURE.
SECTION 2.3.1. REVOLVING LOANS. The Borrower may from time to time
irrevocably request that a Borrowing of Revolving Loans be made by delivering a
Borrowing Request to the Administrative Agent (i) for a Eurodollar Rate Loan, on
or before 11:00 a.m. New York time, on a Business Day, at least three Business
Days prior to the date of such proposed Borrowing, in a minimum amount of
$3,000,000 or an integral multiple of $500,000 in excess thereof, or in the
unused amount of the Available Revolving Loan Commitment Amount and (ii) for a
Base Rate Loan, on or before 11:00 a.m. New York time on the date of such
proposed Borrowing, in a minimum amount of $500,000 or an integral multiple of
$100,000 in excess thereof, or in the unused amount of the Available Revolving
Loan Commitment Amount. The Administrative Agent shall promptly (and, in the
case of Eurodollar Rate Loans, on the same Business Day such notice is received
by the Administrative Agent) notify each other Lender in writing of the terms of
such Borrowing Request. On the terms and subject to the conditions of this
Agreement, each Borrowing shall be comprised of the Type of Revolving Loans, and
shall be made on the Business Day, specified in such Borrowing Request. On or
before 2:00 p.m., New York time, on the Business Day such Revolving Loans are to
be made, each Lender shall deposit with the Administrative Agent same day funds
in an amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Administrative Agent shall specify
from time to time by notice to the Lenders. No Lender's obligation to make any
Loan shall be affected by any other Lender's failure to make any Revolving Loan.
To the extent funds are received from the Lenders, on the proposed date for such
Borrowing the Administrative Agent shall make such funds available to the
Borrower at the office of the Administrative Agent.
SECTION 2.3.2. SWING LOANS. The Borrower may from time to time
irrevocably request, by delivering a telephonic notice to the Swingline Lender
(which notice shall promptly be confirmed by telecopy to the Swingline Lender
and to the Administrative Agent) that a Borrowing of Swing Loans be made, on or
before 1:00 p.m., New York time, on the date of such proposed Borrowing, in a
minimum amount of $50,000 or an integral multiple of $10,000 in excess thereof,
or in the unused amount of the Swingline Loan Commitment Amount. On the terms
and subject to the conditions of this Agreement, each such Borrowing shall be
compromised of Base Rate Loans, and shall be made on the Business Day specified
in such Borrowing Request. The Swingline Lender shall make funds in an amount
equal to the requested Borrowing available to the Borrower to the accounts the
Borrower shall have specified in its Borrowing Request. Each request by the
Borrower for a Borrowing of Swing Loans shall be deemed to reaffirm the
representations
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set forth in subsections (a), (b) and (c) of SECTION 5.2.1. The Swingline Lender
shall not fund a Borrowing of Swing Loans if prior to the date of such Borrowing
the Swingline Lender shall have received written notice from the Administrative
Agent or any Lender of the existence and continuance of a Default or an Event of
Default.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 11:00
a.m., New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three or more than five Business Days'
notice that all, or any portion in an aggregate minimum amount of $3,000,000 and
an integral multiple of $500,000 in excess thereof, of any Loan be, in the case
of Base Rate Loans, converted into Eurodollar Rate Loans or, in the case of
Eurodollar Rate Loans, continued as a Eurodollar Rate Loan or that all, or any
portion in an aggregate minimum amount of $500,000 and an integral multiple of
$100,000 in excess thereof of any Eurodollar Rate Loan be converted into Base
Rate Loans (in the absence of delivery of a Continuation/Conversion Notice with
respect to any Eurodollar Rate Loan at least three Business Days before the last
day of the then current Interest Period with respect thereto, such Eurodollar
Rate Loan shall, on such last day, automatically convert to a Base Rate Loan);
PROVIDED, HOWEVER, that no portion of the outstanding principal amount of any
Loans may be continued after the end of the applicable Interest Period therefor
as, or be converted into, Eurodollar Rate Loans when any Specified Default has
occurred and is continuing. The Administrative Agent shall promptly notify each
other Lender in writing of the terms of such Continuation/Conversion Notice.
SECTION 2.5. FUNDING. Subject to the provisions of SECTION 4.11 hereof,
each Lender may, if it so elects, fulfill its obligation to make, continue or
convert Eurodollar Rate Loans hereunder by causing one of its foreign branches
or Affiliates (or an international banking facility created by such Lender) to
make or maintain such Eurodollar Rate Loan; PROVIDED, HOWEVER, that such
Eurodollar Rate Loan shall nonetheless be deemed to have been made and to be
held by such Lender, and the obligation of the Borrower to repay such Eurodollar
Rate Loan shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility. In addition, the Borrower
hereby consents and agrees that, for purposes of any determination to be made
for purposes of SECTIONS 4.1, 4.2, 4.3, or 4.4, it shall be conclusively assumed
that each Lender elected to fund all Eurodollar Rate Loans by purchasing Dollar
deposits in its Eurodollar Office's interbank eurodollar market.
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SECTION 2.6. NOTES. Each Lender's Revolving Loans shall be evidenced by
a Note payable to the order of such Lender in a maximum principal amount equal
to such Lender's Percentage as set forth on SCHEDULE II hereto of $250,000,000.
The Swingline Lender's Swing Loans shall be evidenced by a Swingline Note
payable to the order of the Swingline Lender in a maximum principal amount equal
to the Swing Loan Commitment Amount. The Borrower hereby irrevocably authorizes
each Lender to make (or cause to be made) appropriate notations on the grid
attached to such Lender's Note (or on any continuation of such grid), which
notations, if made, shall evidence, INTER ALIA, the date of, the outstanding
principal amount of, and the interest rate and Interest Period applicable to the
Loans evidenced thereby. Upon request by the Borrower, each Lender agrees to
confirm to the Borrower the information reflected in such notations. Such
notations shall be prima facia evidence of the information thereby indicated;
PROVIDED, HOWEVER, that the failure of any Lender to make any such notations
shall not limit or otherwise affect any Obligations of the Borrower.
SECTION 2.7. LETTER OF CREDIT PROCEDURE. The Borrower may from time to
time request that a Letter of Credit be issued by delivering to the L/C Issuer
(with a telecopy to the Administrative Agent) on a Business Day, at least three
Business Days prior to the date of such proposed issuance, a Letter of Credit
application in the L/C Issuer's then standard form, completed to the
satisfaction of the L/C Issuer, and such other certificates as the L/C Issuer
may reasonably request; PROVIDED, HOWEVER, that no Letter of Credit shall be
issued if after giving effect to the issuance thereof, the aggregate undrawn
face amount of outstanding Letters of Credit would exceed the lesser of (a)
$25,000,000 or (b) the Revolving Loan Commitment Amount MINUS the aggregate
unpaid principal amount of Revolving Loans and Swing Loans then outstanding and
MINUS the aggregate amount of unreimbursed drawings under Letters of Credit. On
the terms and subject to the conditions of this Agreement, each Letter of Credit
shall be issued by the L/C Issuer on the Business Day specified in the Borrower'
application therefor. The Administrative Agent shall promptly notify each Lender
in writing of the material terms of each Letter of Credit issued by the L/C
Issuer. Each request for a Letter of Credit and each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication Number 500. No Letter
of Credit shall have an expiration date later than the Stated Maturity Date.
Upon any termination of the Revolving Loan Commitment prior to the
Stated Maturity Date, or upon being required to post cash collateral in respect
of outstanding Letters of Credit pursuant to SECTION 2.2.2(a) or (d), the
Borrower shall deposit with the Administrative Agent an amount equal to 105% (or
in the case of a
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posting of cash collateral required pursuant to SECTION 2.2.2(a) or (d), 100%)
of the aggregate amount available to be drawn under outstanding Letters of
Credit, or the aggregate amount of cash collateral required to be so posted,
such amount to be placed in a segregated, interest-bearing cash collateral
account pledged to the Lenders as Collateral hereunder over which the Borrower
shall have no control but which shall be applied solely to repay the Borrower's
obligations in connection with such Letters of Credit unless an Event of Default
has occurred and is continuing. In the event the expiry date (or earlier
termination) of any Letter of Credit should occur with no draw having been made
thereunder for which the Borrower has not made reimbursement and so long as no
Event of Default has occurred and is continuing, the amount of the cash
collateral account shall be reduced by 105% or 100%, as the case may be, of the
undrawn amount of such expired Letter of Credit and the amount of such reduction
shall be paid to the Borrower (and, in the case of the final Letter of Credit to
expire or otherwise be terminated, the remaining balance of the cash collateral
account shall be paid to the Borrower).
SECTION 2.8. RELEASE OF COLLATERAL.
(a) The Guaranties and all Collateral held as security for the
Obligations shall be released upon the occurrence of any of the
following: (i) the Senior Notes shall be rated BBB- or better by
Standard & Poor's Ratings Group ("S&P") or shall be rated Baa3 or
better by Moody's Investor Services, Inc. ("MOODY'S"); (ii) after
giving effect to such release of the Collateral, the Obligations under
this Agreement shall receive a bank credit facility rating of BBB- or
better from S&P or Baa3 or better from Moody's; or (iii) for any period
of two consecutive Fiscal Quarters, the Borrower shall have satisfied
each of the following: (a) its Indebtedness secured by Liens on Inns
other than Liens securing the Obligations, shall be less than
$100,000,000, (b) its Fixed Charge Coverage Ratio for the period of
four consecutive Fiscal Quarters ended at the end of each such Fiscal
Quarter shall be at least 2.00 to 1.0, (c) the ratio of its (x) Total
Debt minus Subordinated Debt as at the end of each such Fiscal Quarter
to (y) EBITDA for the period of four consecutive Fiscal Quarters ended
at the end of such Fiscal Quarter shall be 2.25 to 1.0 or less, and (d)
its Total Debt to EBITDA Ratio on the last day of each such Fiscal
Quarter shall be 3.00 to 1.0 or less.
(b) The Administrative Agent shall, at the request and at the
expense of the Borrower, execute and deliver any instrument or document
reasonably requested by the Borrower to evidence (A) subject to
Paragraph 11 of the Mortgage and SECTION 2.2.2, the release of any
Collateral transferred to any governmental authority pursuant to any
condemnation or
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deed or other instrument in lieu of condemnation or any disposition of
any Collateral otherwise permitted hereunder and (B) subject to receipt
by the Administrative Agent of a certificate of the Borrower to the
effect that an easement, right of way or similar right permitted under
SECTION 7.2.3(n) does not, in the aggregate with other matters
permitted thereunder, materially detract from the value of said
Collateral or materially interfere with its use in the ordinary conduct
of the Borrower's business, the subordination of the Liens on such
Collateral created under the Loan Documents to any such easement, right
of way or similar encumbrance hereafter granted by Borrower, subject in
the case of each of clauses (A) and (B) to the receipt and reasonable
approval by the Administrative Agent of the deed, easement or other
instrument effecting the transfer or granting the easement, right of
way or similar right in question, the legal description thereof and a
survey, updated survey or other evidence of the location thereof
reasonably satisfactory to the Administrative Agent.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
SECTION 3.1.1. PAYMENT TERMS. Prior to the Stated Maturity Date of each
Loan, the Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; PROVIDED, HOWEVER, that
(i) all such voluntary prepayments of any Eurodollar
Rate Loan shall require at least three Business Days' prior
written notice to the Administrative Agent and all such
voluntary partial prepayments shall be in an aggregate minimum
amount of $3,000,000 and integral multiples of $500,000 in
excess thereof or such amount as will prepay such Loan in
full;
(ii) all such voluntary prepayments of any Base Rate
Loan outstanding under the Revolving Loan Commitment shall
require notice to the Administrative Agent by at least 11:00
a.m. New York time on the date of such prepayment, and all
such voluntary partial prepayments shall be in an aggregate
minimum amount of $500,000 and integral multiples of $100,000
in excess
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thereof or such amount as will prepay such Loan in full; and
(iii) all such voluntary prepayments of any Swing
Loan shall require notice to the Swingline Lender by at least
1:00 p.m., New York time, and all such voluntary partial
prepayments shall be in an aggregate minimum amount of $50,000
or integral multiples of $10,000 in excess thereof or such
amount as will prepay such Loan in full.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 4.4. All prepayments of
Revolving Loans shall be applied to the ratable repayment of the Loans of the
several Lenders that are Base Rate Loans or that are Eurodollar Rate Loans with
a particular Interest Period, in each case as specified by the Borrower in the
applicable notice of prepayment or, in the absence of any such specification by
the Borrower, first to the repayment of Base Rate Loans and second to the
repayment of Eurodollar Rate Loans in the direct order of the maturity of the
Interest Periods therefor. All notices of prepayment required to be delivered to
the Administrative Agent hereunder (other than notices relating to Swing Loans)
shall be in substantially the form of EXHIBIT M. The Administrative Agent shall
promptly notify each other Lender of the terms of each notice of prepayment.
SECTION 3.1.2. SPECIAL SWING LOAN PROVISIONS. The Borrower agrees to
pay each Swing Loan when due. All Swing Loans shall be payable with accrued
interest thereon solely to the Swingline Lender for its own account, and shall
otherwise be subject to all the terms and conditions applicable to the Revolving
Loans (unless otherwise specifically set forth herein). Within three Business
Days following the occurrence of an Event of Default, the Borrower shall repay
all of such Swing Loans in cash by 1:00 p.m., New York time, or make a Borrowing
of Revolving Loans in an amount at least equal to the aggregate outstanding
principal amount of all Swing Loans together with all accrued interest thereon,
and shall apply the proceeds of such Borrowing, or such portion thereof as shall
be sufficient to repay in its entirety the aggregate outstanding principal
amount of all Swing Loans together with accrued interest thereon to the date of
such repayment.
In the event that any portion of any Swing Loan is not repaid on the
first Business Day following an Event of Default, the Borrower agrees to
reimburse the Swingline Lender with the proceeds of a Revolving Loan, and the
Swingline Lender shall promptly, but in no event later than 1:00 p.m., New York
time on the second Business Day following such Event of Default, notify
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the Administrative Agent and the Administrative Agent shall promptly, and in no
event later than 5:00 p.m., New York time, on the Business Day it shall have
received such notice, notify each Lender in writing of the unreimbursed amount
of such Swing Loan and of such Lender's Percentage of such unreimbursed amount.
Each of the Lenders shall make a Revolving Loan in an amount equal to such
Lender's Percentage of the unreimbursed amount of such Swing Loan, together with
accrued unpaid interest thereon (to the extent that there is availability under
the Revolving Loan Commitment), and pay the proceeds thereof, in immediately
available funds, directly to the Administrative Agent for the account of the
Swingline Lender, not later than 1:00 p.m., New York time, on the next Business
Day after the date such Lender is notified by the Administrative Agent.
Revolving Loans made by the Lenders to repay unreimbursed Swing Loans pursuant
to this subsection shall constitute Revolving Loans hereunder, initially shall
be Base Rate Loans and shall be subject to all of the provisions of this
Agreement concerning Revolving Loans, except that such Revolving Loans shall be
made upon demand by the Administrative Agent as set forth above rather than upon
notice by the Borrower, need not comply with the principal amount requirement of
SECTION 2.3.1 and shall be made, notwithstanding anything in this Agreement to
the contrary, without regard to satisfaction of conditions precedent to the
making of Revolving Loans set forth in Article V of this Agreement; PROVIDED,
however that no Lender shall be obligated to make such Revolving Loans if, prior
to the date of the Borrowing of the Swing Loan to be refunded, the Swingline
Lender had received written notice from the Administrative Agent or any Lender
of the existence and continuance of a Default or an Event of Default.
Each Lender's obligation to make Revolving Loans in the amount of its
Percentage of any unreimbursed Swing Loan pursuant hereto is several, and not
joint or joint and several. The failure of any Lender to perform its obligation
to make a Revolving Loan in the amount of such Lender's Percentage of any
unreimbursed Swing Loan will not relieve any other Lender of its obligation
hereunder to make a Revolving Loan in the amount of such other Lender's
Percentage of such unreimbursed Swing Loan. Any Lender may, but shall have no
obligation to any Person to, assume all or any portion of any non-performing
Lender's obligation to make a Revolving Loan in the amount of such Lender's
Percentage of such unreimbursed Swing Loan. The Borrower agrees to accept the
Revolving Loans hereinabove provided, whether or not such Loans could have been
made pursuant to the terms of SECTION 5.2 hereof or any other Section of this
Agreement.
In the event, for whatever reason, the Administrative Agent determines
that the Lenders are not able to, or that it could be disadvantageous for the
Lenders to, advance their respective
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Percentage of Revolving Loans for the purpose of refunding Swing Loans as
required hereunder, then each of the Lenders absolutely and unconditionally
agrees to purchase and take from the Swingline Lender on demand an undivided
participation interest in Swing Loans outstanding in an amount equal to their
respective Percentage of such Swing Loans.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION 3.2.
SECTION 3.2.1. RATES. All Swing Loans shall bear interest at a rate per
annum equal to the Base Rate from time to time in effect. Pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice, the
Borrower may elect that Revolving Loans comprising a Borrowing accrue interest
at a rate per annum:
(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the sum of the Base Rate from time to time in
effect PLUS the Applicable Base Rate Margin in effect from time to
time; and
(b) on that portion maintained as a Eurodollar Rate Loan,
during each Interest Period applicable thereto, equal to the sum of the
Eurodollar Rate for such Interest Period PLUS the Applicable Eurodollar
Rate Margin in effect from time to time.
SECTION 3.2.2. POST-MATURITY RATES. After the date any principal amount
of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower hereunder shall have become due and payable, the Borrower shall pay
interest (after as well as before judgment) on such amounts at a rate per annum
equal to the Base Rate plus the Applicable Base Rate Margin then in effect plus
2% until such amount is paid in full.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring on and after the Effective Date;
(c) with respect to Eurodollar Rate Loans, the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed three months, at the end of the third month thereof); and
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(d) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to SECTION 8.2 or SECTION 8.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay to the Administrative
Agent and each Lender the fees set forth in this SECTION 3.3.
SECTION 3.3.1. COMMITMENT FEE. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, for each day during the
period (including any portion thereof when any of its Commitments are suspended
by reason of the Borrower's inability to satisfy any condition of ARTICLE V or
when any portion of the Revolving Loan Commitment Amount may be temporarily
unavailable pursuant to SECTION 5.1.12) commencing on the Effective Date and
continuing through the Commitment Termination Date, a commitment fee (the
"COMMITMENT FEE") at the rate per annum set forth under the column labeled
"Commitment Fee" in the definition of "Applicable Margin" opposite the Funded
Debt to EBITDA Ratio as of the last day of the most recently ended Fiscal
Quarter, calculated on the average daily Commitment Fee Amount. The Commitment
Fee shall be payable by the Borrower quarterly in arrears on the last day of
March, June, September and December in each year (or, if such day is not a
Business Day, on the next succeeding Business Day), commencing with the first
such date to occur after the Effective Date, and on any expiration or
termination of the Revolving Loan Commitment.
SECTION 3.3.2. UPFRONT FEES. On the Effective Date, the Borrower agrees
to pay to the Administrative Agent for the account of each Lender upfront fees
in such amounts as have been agreed upon previously by the Agents and each such
Lender.
SECTION 3.3.3. LETTER OF CREDIT FEES. The Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders, for each day during the
period commencing on the Effective Date and continuing through the later of the
Commitment Termination Date and the date upon which the last Letter of Credit to
terminate or expire is so terminated or expires, a letter of credit fee (the
"L/C FEES") on the undrawn face amount of outstanding Letters of Credit on such
day at the per annum rate equal to the Applicable Eurodollar Rate Margin in
effect for such day. The Borrower further agrees to pay to the L/C Issuer, for
its own account, a fronting fee (the "FRONTING FEE") at a rate equal to 0.125%
per annum on the average daily undrawn face
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amount of outstanding Letters of Credit during each Fiscal Quarter. All such L/C
Fees and Fronting Fees shall be payable quarterly in arrears on each Quarterly
Payment Date and on the Commitment Termination Date.
SECTION 3.3.4. AGENTS' FEES. The Borrower agrees to pay to the Agents
for their own account, fees in such amounts and at such times as set forth in
that certain commitment letter and term sheet dated April 1, 1997.
SECTION 3.4. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS WITH
REVOLVING LOANS. The Borrower agrees to reimburse the L/C Issuer for each draft
that is paid under any Letter of Credit for the amount of (a) such draft and (b)
any taxes, fees, charges or other costs and expenses incurred by the L/C Issuer
in connection with such payment, whether such draft is paid before, on or after
termination of the Revolving Loan Commitment. Upon notice by the L/C Issuer to
the Borrower and the Administrative Agent (and notice by the Administrative
Agent to the Lenders pursuant to SECTION 3.5) on any day that payment has been
made under any Letter of Credit, the Borrower shall reimburse the L/C Issuer
with the proceeds of a Revolving Loan made pursuant to SECTION 3.5 not later
than the following Business Day. Interest shall be payable on any and all
unreimbursed amounts advanced by the L/C Issuer under this Section from the date
such amounts have been advanced by the L/C Issuer until reimbursed at the rate
of interest payable on Base Rate Loans.
The payment obligations of the Borrower under this Section shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including without limitation,
the following circumstances:
(a) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against any beneficiary,
or any transferee, of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the L/C Issuer
or any other Person, whether in connection with this Agreement, the
transactions contemplated herein, or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
unenforceable in any respect or any statement therein being untrue or
inaccurate in any respect; PROVIDED that any such statement or other
document appears, on examination, to be regular on its face; or
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(c) payment by the L/C Issuer under any Letter of Credit
against presentation of drafts, certificates, claims, documents or
required statements that do not strictly comply with the terms of the
Letter of Credit; PROVIDED that, upon examination, any such drafts,
certificates, claims, documents or statements appear on their face to
be in accordance with the Letter of Credit.
SECTION 3.5. LETTER OF CREDIT PARTICIPATIONS. The L/C Issuer
irrevocably agrees to grant and hereby grants to each Lender, and, to induce the
L/C Issuer to issue Letters of Credit hereunder, each Lender irrevocably agrees
to accept and purchase and hereby accepts and purchases from the L/C Issuer for
such Lender's own account and risk an undivided interest equal to such Lender's
Percentage in the L/C Issuer's obligations and rights under each Letter of
Credit issued hereunder and each draft paid by the L/C Issuer hereunder.
Upon presentation of a draft drawn under any Letter of Credit, the L/C
Issuer shall promptly notify the Administrative Agent and the Administrative
Agent shall promptly notify each Lender of the amount under such draft and of
such Percentage of such amount. Unless (i) the Borrower shall have previously
reimbursed the L/C Issuer for the amount of such draft or (ii) there is a
sufficient amount in any cash collateral account established to cover payments
to be made under such Letter of Credit, each of the Lenders shall thereafter
make a Revolving Loan in an amount equal to such Lender's Percentage of the
amount of such payment made by the L/C Issuer, together with any accrued and
unpaid interest thereon. Each Lender shall pay the proceeds of its Loan, in
immediately available funds, directly to the Administrative Agent for the
account of the L/C Issuer, (i) not later than 1:00 p.m. New York time, on the
following Business Day if the Administrative Agent shall have provided notice
prior to 10:00 a.m. New York time, and (ii) if the Administrative Agent shall
have provided notice after 10:00 a.m. New York time, not later than 1:00 p.m.
New York time, on the second following Business Day. Revolving Loans made by the
Lenders to repay amounts under Letters of Credit pursuant to this subsection
shall constitute Revolving Loans hereunder, initially shall be Base Rate Loans
and shall be subject to all of the provisions of this Agreement concerning
Revolving Loans, except that such Revolving Loans shall be made upon demand by
the Administrative Agent as set forth above rather than upon notice by the
Borrower, need not comply with the principal amount requirements of SECTION
2.3.1 and shall be made, notwithstanding anything in this Agreement to the
contrary, without regard to the satisfaction of conditions precedent to the
making of Revolving Loans set forth in ARTICLE V of this Agreement and,
notwithstanding any termination of the Revolving Loan Commitment prior to the
Stated Maturity Date, Revolving Loans shall be made to reimburse the L/C Issuer
for any
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drafts paid under any Letter of Credit outstanding on the date of such
termination.
Each Lender's obligation to make Revolving Loans in the amount of its
Percentage of any unreimbursed amounts outstanding under a Letter of Credit
pursuant hereto is several, and not joint or joint and several. The failure of
any Lender to perform its obligation to make a Revolving Loan in the amount of
such Lender's Percentage of any unreimbursed amounts outstanding under an Letter
of Credit will not relieve any other Lender of its obligation hereunder to make
a Revolving Loan in the amount of such other Lender's Percentage of such
amounts. Any Lender may, but shall have no obligation to any Person to, assume
all or any portion of any non-performing Lender's obligation to make a Revolving
Loan in the amount of such Lender's Percentage of such amount outstanding under
a Letter of Credit. The Borrower agrees to accept the Revolving Loans
hereinabove provided, whether or not such loans could have been made pursuant to
the terms of SECTION 5.2 hereof, or any other Section of this Agreement.
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1. EURODOLLAR RATE LENDING UNLAWFUL. If any Lender shall
determine that the introduction of or any change in or in the interpretation of
any law makes it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for such Lender to make, continue or maintain any
Loan as, or to convert any Loan into, a Eurodollar Rate Loan, and such Lender
shall so notify the Administrative Agent, the Administrative Agent shall so
notify the Borrower and the other Lenders, whereupon the obligation of such
Lender to make, continue, maintain or convert any such Loans shall forthwith be
suspended until such Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist, and all Eurodollar Rate
Loans of such Lender shall automatically convert into Base Rate Loans at the end
of the then current Interest Periods with respect thereto or sooner, if required
by such law or assertion. Until the circumstances causing such suspension no
longer exist, such Lender(s) shall have no obligation to make or continue any
Loans as, or to convert any Loans into Eurodollar Rate Loans.
SECTION 4.2. DEPOSITS UNAVAILABLE. If, on or before the first day of
any Interest Period for any Eurodollar Rate Loan, the Administrative Agent shall
have determined that
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(a) Dollar deposits in the relevant amount are not available
to the Administrative Agent for such Interest Period in the interbank
market; or
(b) by reason of circumstances affecting the interbank market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to such Eurodollar Rate Loans for such Interest
Period,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under SECTION 2.3 and SECTION 2.4 to make or
continue any Loans as, or to convert any Loans into, Eurodollar Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
Unless the Borrower notifies the Administrative Agent at least one Business Day
before the date of any affected Borrowing for which a notice has been previously
given pursuant to SECTION 2.3 that it elects not to borrow on such date, such
Borrowing shall instead be made as a Borrowing of Base Rate Loans.
SECTION 4.3. INCREASED COSTS, ETC. The Borrower agrees to reimburse
each Lender for any increase in the cost to such Lender of, or any reduction in
the amount of any sum receivable by such Lender in respect of, (i) making,
continuing or maintaining (or of its obligation to make, continue or maintain)
any Loans as, or of converting (or of its obligation to convert) any Loans into,
Eurodollar Rate Loans or (ii) any Letter of Credit (or any Lender's
participation therein) issued hereunder as a result of any change after the date
hereof in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in after the date hereof of, any law or regulation,
directive, guideline, decision or request (whether or not having force of law)
of any court, central bank, regulator or other governmental authority (whether
or not having the force of law and whether or not the failure to comply with
such guideline or requirement would be unlawful but excluding any such law,
regulation, directive, guideline, decision or request relating to (i) income,
excise, stamp or franchise taxes or any other taxes, fees, duties, withholdings
or other charges of any nature whatsoever imposed by any taxing authority, (ii)
the amount of capital required or expected to be maintained by any Lender or
(iii) any reserve requirement included in the calculation of the Eurodollar Rate
pursuant to CLAUSE (ii) of the definition of Eurodollar Rate). Such Lender shall
promptly notify the Administrative Agent and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the calculation of the additional amount required fully to
compensate such Lender for such increased cost or reduced amount. Such
additional amounts
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shall be payable by the Borrower directly to such Lender within fifteen (15)
days of its receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurodollar Rate Loans on a date other than the last day
of the Interest Period applicable thereto, whether pursuant to SECTION
3.1 or otherwise;
(b) any Loans not being made as Eurodollar Loans in accordance
with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurodollar Loans in accordance with the Continuation/Conversion Notice
therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five (5) Business Days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change after the date
hereof in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in after the date hereof of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other governmental authority or
the implementation after the date hereof of any risk-based capital guideline or
other requirement (whether or not having the force of law and whether or not the
failure to comply with such guideline or requirement would be unlawful)
heretofore or hereafter issued by any governmental authority, whereby such law
or regulation affects or would affect the amount of capital required or expected
to be maintained by any Lender or any Person controlling such Lender, and such
Lender reasonably determines that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments or the Loans made by such
Lender or any Letter of Credit issued by such Lender or in
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which such Lender is a risk participant is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon prompt notice
from time to time by such Lender to the Borrower, such notice to state, in
reasonable detail, the reasons therefore and the calculation of the amount
demanded, the Borrower shall within fifteen (15) Business Days after demand pay
directly to such Lender additional amounts sufficient to compensate such Lender
or such controlling Person for such reduction in rate of return. A statement of
such Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its reasonable
discretion) shall deem applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall, to the
extent permitted under applicable law, be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, other than taxes imposed on or
measured by any Lender's net income or receipts by the U.S., any state, the
jurisdiction in which such Lender is organized or its principal executive
office, Domestic Office or Eurodollar Office is located (such non-excluded items
being called "TAXES"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then, subject to the
Borrower's receipt of the documentation required by the terms of the last
paragraph of this SECTION 4.6, the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
(c) pay to the Administrative Agent for the account of the
Lenders such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will equal the
full amount such Lender would have received had no such withholding or
deduction been required.
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Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses (unless such penalties, interest or expenses are
attributable solely to the actions of such Lender)) as are necessary in order
that the net amount received by such person after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount such
person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this SECTION 4.6, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower. Without prejudice to the survival of any other
agreement of the Borrower hereunder or any other Loan Document, the agreements
of the Borrower contained in this Section shall survive the payment in full of
all its Obligations.
Each Lender that is organized under the laws of a jurisdiction other
than the United States shall, on or prior to the date it becomes a Lender
hereunder and from time to time thereafter if requested by the Borrower to do so
(but only so long as such Lender remains lawfully able to do so), execute and
deliver to the Borrower and the Administrative Agent, one or more (as the
Borrower or the Administrative Agent may reasonably request) United States
Internal Revenue Service Forms 4224 or Forms 1001 (or successor forms or
documents), appropriately completed, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
exempts such Lender from United States withholding tax or reduces the rate of
withholding tax on payments for the account of such Lender or certifying that
the income receivable by such Lender is effectively connected with the conduct
of a trade or business in the United States. For any period with respect to
which a Lender has failed to provide the Borrower or the Administration Agent
with the appropriate form referred to in this paragraph (unless such failure is
due to a change in treaty, law or regulation occurring after the date on which
such form originally was required to be provided), such Lender shall not be
entitled to indemnification under this SECTION 4.6 with respect to Taxes imposed
by the United States and if the form originally so provided by any Lender to the
Borrower or the Administrative
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Agent pursuant to this paragraph certified that the rate of withholding tax
applicable to payments to such Lender was greater than zero, such Lender shall
not be entitled to indemnification under this SECTION 4.6 with respect to Taxes
imposed by the United States at a rate up to the reduced rate so certified by
such Lender.
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Administrative
Agent for the PRO RATA account of the Lenders entitled to receive such payment.
All such payments required to be made to the Administrative Agent shall be made,
without setoff, deduction or counterclaim, not later than 11:30 a.m., New York
time (or, in the case of any payment to be funded with a Borrowing hereunder,
2:00 p.m.), on the date due, in same day or immediately available funds, to The
Huntington National Bank, Columbus, Ohio, ABA: 044000024, Commercial Loan
Servicing, Attn: Special Processing, Phone 1141, Ref. Red Roof Inns, Inc., or to
such other account as the Administrative Agent shall specify from time to time
by written notice to the Borrower. Funds received after such time shall be
deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds on
the Business Day received to each Lender its share, if any, of such payments
received by the Administrative Agent for the account of the Lenders. All
interest shall be computed on the basis of the actual number of days (including
the first day but excluding the last day) occurring during the period for which
such interest is payable over a year comprised of 360 days (or, in the case of
interest on a Base Rate Loan, 365 days or, if appropriate, 366 days). All
Commitment Fees, L/C Fees and other fees shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such fees are payable over a year
comprised of 360 days. Whenever any payment to be made shall otherwise be due on
a day which is not a Business Day, such payment shall (except as otherwise
required by CLAUSE (b) of the definition of the term "INTEREST PERIOD" with
respect to Eurodollar Rate Loans) be made on the next succeeding Business Day
and such extension of time shall be included in computing interest and fees, if
any, in connection with such payment.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms of
SECTIONS 4.3, 4.4, 4.5 and 4.6) in excess of its PRO RATA share of payments then
or therewith obtained by all Lenders holding Loans of such Type, such Lender
shall purchase from the other Lenders such
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participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; PROVIDED, HOWEVER, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender TO (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
SECTION 4.9) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation. 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 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 entitled
under this Section to share in the benefits of any recovery on such secured
claim. For the purposes of determining a Lender's applicable PRO RATA share, all
issued and outstanding Letters of Credit shall be considered Revolving Loans,
and any payments in respect thereof shall be deposited in the cash collateral
account established pursuant to SECTION 2.7 hereof. If any Letter of Credit
shall thereafter expire or terminate without being drawn, the amount previously
deposited into the cash collateral account in respect thereof shall be released
from the cash collateral account and distributed to the Lenders on a PRO RATA
basis or, if no Loans shall be outstanding, delivered to the Borrower.
SECTION 4.9. SETOFF. Each Lender, with the consent of the
Administrative Agent and the Required Lenders, may, upon the occurrence of any
Event of Default, have the right to appropriate and apply to the payment of the
Obligations owing to it that are then due any and all balances, credits,
accounts or moneys of the Borrower then or thereafter maintained with such
Lender; PROVIDED, HOWEVER, that any such appropriation and application shall be
subject to the provisions of SECTION 4.8. Each Lender agrees promptly to notify
the Borrower and the Administrative Agent after any such setoff and application
made by such Lender; PROVIDED, HOWEVER, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable
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law or otherwise) which such Lender may have; PROVIDED, HOWEVER, no Lender may
exercise any such other rights and remedies without the consent of the Agents.
SECTION 4.10. USE OF PROCEEDS. The Borrower shall apply the proceeds of
the Loans for general corporate purposes, including working capital needs,
Letter of Credit issuance, property acquisition and the development of new Inns.
Without limiting the foregoing, no proceeds of any Loan will be used to acquire
any "margin stock", as defined in F.R.S. Board Regulation U.
SECTION 4.11. DISCRETION OF LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Lender had actually funded and maintained each Eurodollar Loan during the
Interest Period for such Loan through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period. Each Lender shall
use reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to take appropriate action, including the selection of
a jurisdiction of its Domestic Office or Eurodollar Office or the changing of
the jurisdiction of its Domestic Office or Eurodollar Office, as the case may
be, so as to avoid any suspension of such Lender's obligations under SECTION 4.1
or the imposition of any increased costs or withholding taxes or to reduce the
amount of any such increased costs or withholding taxes which may thereafter
accrue; PROVIDED that no such selection or change of the jurisdiction for its
Domestic Office or Eurodollar Office shall be made if, in the reasonable
judgment of such Lender, such selection or change would be disadvantageous to
such Lender.
SECTION 4.12. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURODOLLAR RATE
LOANS. If (i) the obligation of any Lender to make, or to continue or convert
outstanding Loans as or to, Eurodollar Rate Loans has been suspended pursuant to
SECTION 4.1 or (ii) any Lender has demanded compensation under SECTION 4.3, 4.5
or 4.6 with respect to its Eurodollar Rate Loans, and in any such case the
Borrower shall, by at least three Business Days' prior notice to such Lender
through the Administrative Agent, have elected that the provisions of this
Section shall apply to such Lender, then, unless and until such Lender notifies
the Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist, all Loans which would otherwise be made by such
Lender as (or continued as or converted to) Eurodollar Rate Loans shall instead
be made as (or continued
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as or converted to) Base Rate Loans on which interest and principal shall be
payable contemporaneously with the related Eurodollar Rate Loans of the other
Lenders. If the circumstances giving rise to such suspension or demand for
compensation no longer exist, the Lender shall so notify the Borrower and if the
Borrower shall have requested pursuant to SECTION 2.4 that the related Loans of
the other Lenders be converted or continued as Eurodollar Rate Loans for an
additional Interest Period, the principal amount of each such Base Rate Loan
shall be converted into a Eurodollar Rate Loan on the first day of the next
succeeding Interest Period applicable to the related Eurodollar Rate Loans of
the other Lenders.
SECTION 4.13. SUBSTITUTION. In the event that (x) any Lender's
obligation to make, or to continue or convert outstanding Loans as or to,
Eurodollar Rate Loans has been suspended pursuant to SECTION 4.1 or (y) any
Lender has demanded compensation under SECTION 4.3 or 4.5, or becomes entitled
to receive additional amounts under SECTION 4.6 and so long as there does not
exist a Specified Default, the Borrower shall have the right, with the consent
of the Administrative Agent (which consent shall not be unreasonably withheld),
to designate another financial institution (which may be one or more of the
Lenders) as a substitute for such Lender to purchase the Notes (for a price
equal to all principal, interest, fees and costs owed to such Lender) and assume
the Commitments of such Lender.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. INITIAL BORROWING. The obligations of the Lenders to fund
the initial Borrowing or the L/C Issuer to issue the initial Letter of Credit
shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this SECTION 5.1; PROVIDED, that if the
initial Borrowing is not funded by May 30, 1997, the Commitments shall then
expire.
SECTION 5.1.1. RESOLUTIONS, ETC. The Administrative Agent shall have
received from the Borrower a certificate, dated the date of the initial
Borrowing, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
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(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document to be executed by it; and
(c) its articles of incorporation and bylaws,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate. In addition, the Administrative Agent shall
have received from the Borrower a certificate, dated not earlier than March 31,
1997 from the Secretary of State of each State in which such Person owns one or
more Pledged Properties confirming the good standing in that State of such
Person.
SECTION 5.1.2. DELIVERY OF NOTES. The Administrative Agent shall have
received, for the account of each Lender, a Revolving Note (and, in the case of
the Swingline Lender, a Swingline Note) duly executed and delivered by the
Borrower.
SECTION 5.1.3. REALIGNMENT AGREEMENT. The administrative Agent shall
have received the Realignment Agreement, duly executed by each party thereto.
SECTION 5.1.4. PLEDGE AGREEMENT. The Administrative Agent shall have
received the Pledge Agreement, duly executed by the Borrower, all promissory
notes held by the Borrower and all of the capital stock of each Guarantor, if
any, held by the Borrower, together with duly executed stock powers executed in
blank.
SECTION 5.1.5. MORTGAGES. Subject to SECTION 5.1.12, the Administrative
Agent shall have received executed counterparts of a Mortgage with respect to
each Newly Mortgaged Property and a Mortgage Amendment with respect to each
Existing Mortgaged Property, each dated as of the date hereof, duly executed by
the Borrower, together with
(a) evidence of the completion (or satisfactory arrangements
for the completion) of all recordings and filings of each of the
Mortgages for all Newly Mortgaged Properties and each of the Mortgage
Amendments for all Existing Mortgaged Properties as may be necessary
or, in the reasonable opinion of the Administrative Agent, desirable
effectively to record the Mortgages for all Newly Mortgaged Properties
and the Mortgage Amendments for all Existing Mortgaged Properties as
valid, perfected Liens against the Pledged Properties, which Liens are
subject to no outstanding Liens (other than Permitted Liens (as defined
in
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the respective Mortgages)) recorded against the Pledged Properties;
(b) title policies (collectively, the "TITLE POLICIES")
covering each Newly Mortgaged Property and endorsements to the title
policies covering each Existing Mortgaged Property, all of which shall
be issued by the Title Company in favor of the Administrative Agent on
behalf of the Lenders in amounts and in form and substance reasonably
satisfactory to the Agents and subject to no outstanding Liens other
than Permitted Liens (as defined in the respective Mortgages);
(c) Uniform Commercial Code financing statements (Form UCC-1),
dated a date prior to the date of the initial Borrowing, naming the
Borrower as the debtor, and the Administrative Agent on behalf of the
Lenders, as the secured party, in appropriate form for filing, or other
similar instruments or documents, under the Uniform Commercial Code of
all jurisdictions as may be necessary or, in the reasonable opinion of
the Administrative Agent, desirable to perfect the security interests
of the Administrative Agent granted pursuant to the Mortgages;
(d) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party reasonably acceptable to the Administrative Agent,
dated a date reasonably near to the date of the initial Borrowing,
listing all effective financing statements which name the Borrower as
the debtor and which are filed in the jurisdictions in which filings
are to be made pursuant to CLAUSE (c) above, together with copies of
such financing statements; and
(e) such other approvals, opinions (excluding, however, local
counsel opinions from jurisdictions other than Ohio, Michigan, North
Carolina, Missouri, Illinois and Tennessee), or documents in connection
with the foregoing as the Administrative Agent may reasonably request.
SECTION 5.1.6. SURVEYS. The Administrative Agent shall have received
surveys for each Pledged Property in compliance with the provisions of EXHIBIT H
hereof.
SECTION 5.1.7. APPRAISALS. The Administrative Agent shall have received
copies of MAI appraisals prepared in accordance with the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, addressed to the Administrative
Agent, with respect to each Newly Mortgaged Property, prepared by U.S. Realty
Consultants or other appraisers reasonably satisfactory to the
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Agents, which appraisals shall not have been withdrawn or modified.
SECTION 5.1.8. ENVIRONMENTAL AUDIT. The Administrative Agent shall have
received copies of a so-called "phase I" environmental audit or an update of a
pre-existing environmental audit covering each Pledged Property, in each case
prepared by TRC Environmental Corporation or other environmental consultant
reasonably satisfactory to the Agents, and in form, substance and results,
reasonably satisfactory to the Agents.
SECTION 5.1.9. CONSENTS, ETC. The Administrative Agent shall have
received certified copies of all documents evidencing any necessary corporate
action of the Borrower, material consents, shareholder, creditor, material
lessor, governmental and material regulatory approvals or exemptions in
connection with this Agreement, all in form and substance reasonably
satisfactory to the Agents and, as to legal matters, its counsel.
SECTION 5.1.10. INSURANCE COVERAGES. The Borrower shall have obtained,
and the Administrative Agent shall have reasonably approved, the insurance
coverages with respect to the Pledged Properties as required by the terms of the
Mortgages.
SECTION 5.1.11. TITLE ENDORSEMENTS. The Administrative Agent shall have
been furnished with the endorsements from the Title Company set forth in EXHIBIT
P hereof.
SECTION 5.1.12. AVAILABILITY REDUCTION. The Borrower has agreed to
deliver the documentation under SECTIONS 5.1.5, 5.1.6, 5.1.7, 5.1.8, 5.1.10 and
5.1.11 for all of the Pledged Properties. If, however, on the date of the
initial Borrowing, (i) the Borrower shall not have delivered the documentation
required under SECTIONS 5.1.5, 5.1.6, 5.1.7, 5.1.8, 5.1.10 and 5.1.11 for all of
the Pledged Properties and (ii) the appraised value of the Pledged Properties
for which such documentation shall have been delivered is less than
$357,143,000, then so long as the appraised value of the Pledged Properties for
which such documentation shall have been delivered is at least $287,143,000, the
conditions set forth in such SECTIONS 5.1.5, 5.1.6, 5.1.7, 5.1.8, 5.1.10 and
5.1.11 shall nevertheless be deemed satisfied but the availability under the
Revolving Loan Commitment shall be reduced by 70% of such shortfall, and such
reduction in availability shall remain in effect until the Borrower provides (A)
such missing documentation and/or (B) pledges Additional Properties that satisfy
the requirements in the attached EXHIBIT H that have an aggregate appraised
value in an amount equal to or greater than such shortfall. If, on the 90th day
following the Effective Date, the sum of (i) the appraised value of all Pledged
Properties for which documentation under SECTIONS 5.1.5, 5.1.6, 5.1.7, 5.1.8,
5.1.10 and 5.1.11 has been delivered and (ii)
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Additional Properties is less than $357,143,000, then on such date the Revolving
Loan Commitment Amount shall be permanently reduced by such shortfall. For
purposes of this SECTION 5.1.12, the value of the Existing Mortgaged Properties
shall be determined based upon the appraisals delivered in connection with the
Existing Mortgages, the value of the Newly Mortgaged Properties shall be
determined based upon the appraisals provided pursuant to SECTION 5.1.7 hereof,
and the value of any Additional Properties shall be determined based upon the
appraisals delivered in respect thereof in satisfaction of the requirements in
the attached EXHIBIT H.
SECTION 5.1.13. SOLVENCY. The Administrative Agent shall have received
a certificate substantially in the form of EXHIBIT N hereto from the president,
the chief executive or chief financial Authorized Officer of the Borrower as to
the solvency of the Borrower, both before and after giving effect to the
transactions contemplated by this Agreement.
SECTION 5.1.14. OPINIONS OF COUNSEL. The Agents shall have received
opinions, dated the date of the initial Borrowing and addressed to the Agents
and all Lenders, from the General Counsel or Assistant General Counsel of the
Borrower and from Davis Polk and Wardwell, special New York counsel to the
Borrower, in the forms set forth as EXHIBITS O-1 and O-2, respectively.
SECTION 5.1.15. CLOSING FEES, EXPENSES, ETC. The Administrative Agent
shall have received for its own account, or for the account of each Lender, all
fees, costs and expenses due and payable pursuant to SECTIONS 3.3 and, if then
invoiced, 10.3.
SECTION 5.1.16. LOAN DOCUMENTS. The Agents shall have received copies
of such other documents or such other evidence as the Agents may reasonably
request showing that the Loans have been fully secured on the terms described in
this Agreement.
SECTION 5.2. ALL BORROWINGS. Subject to the provisions of SECTIONS
3.1.2 and 3.5, the obligation of the L/C Issuer to issue any Letter of Credit or
of each Lender to fund any Loan on the occasion of any Borrowing (including the
initial Borrowing) that would increase the aggregate principal amount of Loans
outstanding hereunder shall be subject to the satisfaction of each of the
conditions precedent set forth in this SECTION 5.2.
SECTION 5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to the issuance of a Letter of Credit or any Borrowing,
the following statements shall be true and correct:
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(a) the representations and warranties set forth in ARTICLE VI
(excluding, however, those contained in SECTION 6.7) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Administrative
Agent and the Lenders pursuant to SECTION 6.7
(i) no labor controversy, litigation, action,
arbitration or governmental investigation or proceeding shall
be pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries in which there
is a reasonable possibility of an adverse determination that
would have a Material Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to SECTION 6.7
which may be reasonably expected to have a Material Adverse
Effect; and
(c) no Default shall have then occurred and be continuing.
SECTION 5.2.2. BORROWING REQUEST. In the case of Borrowings of
Revolving Loans, the Borrower shall have furnished the Administrative Agent with
a Borrowing Request for such Borrowing, and each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) the statements made in
SUBSECTION 5.2.1 are true and correct. In the case of issuances of Letters of
Credit, the Borrower shall have furnished a Letter of Credit application in the
L/C Issuer's then current form, and delivery of such application and the
delivery by the L/C Issuer of the Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of issuance of such
Letter of Credit (both immediately before and after giving effect thereto) the
statements made in SUBSECTION 5.2.1 are true and correct. In the case of Swing
Loans, each request by the Borrower for Swing Loans and the acceptance by the
Borrower of the proceeds of such Swing Loans shall constitute a representation
and warranty by the Borrower that on the date of such Swing Loan (both
immediately before and after giving effect to such Swing Loan in the application
of the proceeds thereof) the statements made in SUBSECTION 5.2.1 are true and
correct.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agents to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the Borrower
represents and warrants unto the Agents and each Lender as set forth in this
ARTICLE VI.
SECTION 6.1. ORGANIZATION, ETC. Each of the Borrower and each Guarantor
is a corporation validly organized and existing and in good standing under the
laws of the State of its incorporation and has full power and authority and
holds all requisite governmental licenses, permits and other approvals necessary
to enter into and perform its Obligations under this Agreement, the Notes and
each other Loan Document to which it is a party. Except to the extent that the
failure to be so qualified and in good standing or to have such power and
authority or to hold such governmental licenses, consents and approvals could
not reasonably be expected to have a Material Adverse Effect, the Borrower and
each Guarantor is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification and has full power and authority and holds all
requisite governmental licenses, permits and other approvals necessary to own
and hold its property and to conduct its business substantially as currently
conducted.
SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower of this Agreement, the Notes, each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each Guarantor of each Loan Document executed or to
be executed by it, are within each such Person's corporate powers, have been
duly authorized by all necessary corporate action, and do not
(a) contravene such Person's Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or any Guarantor, or
(c) result in, or require the creation or imposition of, any
Lien on the Borrower's or any Guarantor's properties other than
pursuant to the Loan Documents.
SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. Except for such
authorizations, approvals or notices obtained or
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delivered as of the Effective Date or subsequently required in connection with
the addition of any Guarantor pursuant to SECTION 7.1.10 or filings required to
be made in connection with the creation or perfection of Liens on the Collateral
securing the Obligations, no authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery or performance (i) by
the Borrower of this Agreement, the Notes or any other Loan Document or (ii) by
any Guarantor of any Loan Document to which it is a party. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. VALIDITY, ETC. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, valid and binding agreements (or, in the case
of the Notes, obligations) of the Borrower enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and general principles of equity; and
each Loan Document executed by any Guarantor will, on the due execution and
delivery thereof, constitute a valid and binding agreement of each such Person
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, or other similar laws affecting creditors' rights generally, and
general principles of equity.
SECTION 6.5. FINANCIAL INFORMATION. The audited consolidated balance
sheet of the Borrower and its Subsidiaries as at December 28, 1996, and the
related consolidated statements of income and cash flows of the Borrower and its
Subsidiaries, copies of which have been furnished to the Administrative Agent
and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the date thereof and the results of their
operations and cash flows for the fiscal year then ended.
SECTION 6.6. NO MATERIAL ADVERSE EFFECT. Since December 28, 1996, no
event or condition has occurred which has had a Material Adverse Effect.
SECTION 6.7. LITIGATION, ETC. As of the Effective Date, there is no
pending or, to the knowledge of the Borrower, threatened labor controversy,
litigation, action, or proceeding
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affecting the Borrower or any of its Subsidiaries, or any of their respective
properties, assets or revenues in which there is a reasonable possibility of an
adverse determination, which would have a Material Adverse Effect, except as
disclosed in ITEM 6.7 ("Litigation; Labor Matters") of the Disclosure Schedule.
SECTION 6.8. SUBSIDIARIES. The Borrower has no direct or indirect
Subsidiaries, except those Subsidiaries
(a) which are identified in ITEM 6.8 ("Existing Subsidiaries")
of the Disclosure Schedule; or
(b) which are permitted to have been formed or acquired in
accordance with SECTION 7.2.5.
SECTION 6.9. OWNERSHIP OF PROPERTIES. Except as set forth in Item 6.9
("Ownership of Properties") of the Disclosure Schedule, the Borrower and each of
its Subsidiaries have good and marketable title to, or valid leasehold interests
in, all of their respective material properties and assets, free and clear of
all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except as permitted pursuant to
SECTION 7.2.3. The provisions of the Mortgages and the Pledge Agreement are
effective to create, in favor of the Administrative Agent (for the benefit of
the Lenders), valid and perfected first priority Liens on the Pledged
Properties, and all personal property described in the Pledge Agreements and the
Mortgages, subject only to the Permitted Liens (as defined in the Mortgages).
The number of Pledged Properties consisting of Inns described in clause (iii) of
the definition thereof does not exceed 10% of the number of all Pledged
Properties.
SECTION 6.10. COMPLIANCE. The Borrower and the Guarantors are in
compliance with all presently existing applicable statutes, laws, regulations,
rules, ordinances and orders of any kind whatsoever (including, but not limited
to, any zoning and building laws or ordinances, subdivision laws or ordinances,
any Environmental Laws, or any presently existing rules, regulations or orders
of any governmental entity, authority or agency) (all of which are sometimes
hereinafter collectively referred to as "LAWS"), and with all presently existing
covenants and applicable restrictions of record relating to the use and
occupancy of any of their respective properties, in any case except to the
extent that failure to so comply may not reasonably be expected to have a
Material Adverse Effect.
SECTION 6.11. PENSION PLANS. Except as disclosed on ITEM 6.11
("Employee Benefit Plans") of the Disclosure Schedule, during the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement by the Borrower and
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prior to the date of any Borrowing hereunder, no steps have been taken to
terminate any Pension Plan with respect to which the Borrower could reasonably
be expected to have any material liability, and no contribution failure has
occurred with respect to any such Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which is reasonably likely to result
in the incurrence by the Borrower of any material liability, fine or penalty.
SECTION 6.12. ENVIRONMENTAL PROTECTION. Except as set forth in ITEM
6.12 ("Environmental Matters") of the Disclosure Schedule or to the extent that
they would not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect, the Borrower (a) has no actual knowledge of the permanent
placement, burial or disposal of any Hazardous Materials on any real property
owned by the Borrower (the "PREMISES"), of any spills, releases, discharges,
leaks or disposal of Hazardous Materials that have occurred or are presently
occurring on, under or onto the Premises, or of any spills, releases,
discharges, leaks or disposal of Hazardous Materials that have occurred or are
occurring off the Premises as a result of the Borrower's improvement, operation
or use of the Premises which would result in non-compliance with any
Environmental Laws; (b) is and has been in compliance with all applicable
Environmental Laws; (c) knows of no pending or threatened environmental civil,
criminal or administrative proceedings against the Borrower relating to
Hazardous Materials; (d) knows of no facts or circumstances that would give rise
to any future civil, criminal or administrative proceeding against the Borrower
relating to Hazardous Materials; and (e) will not permit any of its employees,
agents, contractors or subcontractors, and will use its best efforts not to
allow any other person occupying or present on the Premises, to generate,
manufacture, store, dispose or release on, about or under the Premises any
Hazardous Materials which would result in the Premises not complying with the
Environmental Laws.
Further, the Borrower hereby indemnifies the Lenders and holds the
Lenders harmless from and against any loss, damage, cost, expense or liability
(including strict liability) of the Lenders arising out of or attributable to
the generation, storage, release, threatened release, discharge, disposal or
presence (whether prior to or during the term of this Agreement) of Hazardous
Materials on, under or about all that portion of the Premises that, at any time
now or in the future, actually comprise part of the Pledged Properties (whether
caused by the Borrower or any employees, agents, contractor or subcontractors of
the Borrower or any predecessor in title of the Borrower or any third persons
occupying or present on the Pledged Properties), including, without limitation:
(a) those damages or expenses arising under the Environmental Laws; (b) costs of
any
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required or necessary repair, cleanup or detoxification of the Pledged
Properties, including the soil and ground water thereof, and the preparation and
implementation of any closure, remedial or other required plans; (c) damage to
any natural resources; and (d) all reasonable costs and expenses incurred by the
Lenders in connection with clauses (a), (b) and (c) including, but not limited
to reasonable attorneys' fees.
The indemnification provided for herein shall not apply to any losses,
liabilities, damages, injuries, expanses or costs which arise from the gross
negligence or willful misconduct of the Lenders.
SECTION 6.13. REGULATIONS G, U AND X. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loans will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION 6.14. TAXES. The Borrower and each of its Subsidiaries have
filed all income tax returns and all other material tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been established on its
books.
SECTION 6.15. ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
Guarantor in writing to the Agents or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby is true
and accurate in every material respect on the date as of which such information
is dated or certified and such information, taken as a whole, is not incomplete
by omitting to state any material fact necessary to make such information not
misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the Agents
and each Lender that, until all Commitments have terminated, all Letters of
Credit have expired or been cash- collateralized and all Obligations have been
paid and performed
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in full, the Borrower will perform the obligations set forth in this SECTION
7.1.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish to each Lender and the Agents copies of the following
financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of the Borrower, a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter and consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for such Fiscal Quarter and for the period commencing at
the end of the previous Fiscal Year and ending with the end of such
Fiscal Quarter, certified by the chief financial officer or chief
accounting officer of the Borrower;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrower, a copy of the annual audit
report for such Fiscal Year for the Borrower and its Subsidiaries,
including therein a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) by Deloitte & Touche LLP or other
independent public accountants of nationally recognized standing;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate in
substantially the form of EXHIBIT G hereto, executed by the chief
financial officer or chief accounting officer of the Borrower, showing
(in reasonable detail and with appropriate calculations and
computations in all respects satisfactory to the Administrative Agent)
compliance with the financial covenants set forth in SECTION 7.2;
(d) as soon as possible and in any event within 45 days after
the end of each of the Borrower's first three Fiscal Quarters of each
Fiscal Year and within 60 days after the end of each Fiscal Year of the
Borrower, a computation of the Total Debt to EBITDA Ratio as of the end
of such Fiscal Quarter or Fiscal Year, certified by the chief financial
or chief accounting officer of the Borrower;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause (b) above, a
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statement from the firm of independent public accountants reporting on
such statements whether (i) in making the examination necessary for the
signing of such annual report by such accountants, they have become
aware of any Default or Event of Default that has occurred and is
continuing, and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;
(f) as soon as possible and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
and within 90 days after the end of each Fiscal Year, a copy of the
Borrower's internally prepared "Budgetary Comparative Income
Statements" for all Inns, certified by the chief financial officer or
chief accounting officer of the Borrower and accompanied by a narrative
report describing the results of operations during such Fiscal Quarter;
(g) promptly after request by the Administrative Agent or any
Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit
committee of the board of directors) of the Borrower by independent
public accountants in connection with the accounts or books of the
Borrower or any of its Subsidiaries, or any audit of any of them;
(h) as soon as possible and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
and within 90 days after the end of each Fiscal Year, a report
describing in general terms Inns being constructed or renovated and any
planned acquisitions;
(i) as soon as possible and in any event within five days
after the Borrower obtains knowledge of the occurrence of a Default, if
such Default is then continuing, a statement of an Authorized Officer
of the Borrower setting forth details of such Default and the action
which the Borrower has taken and proposes to take with respect thereto;
(j) as soon as possible and in any event within five days
after the Borrower obtains knowledge of the (x) occurrence of any
material adverse development with respect to any labor controversy,
litigation, action or proceeding described in SECTION 6.7 (including,
without limitation, the entry against the Borrower or any of its
Subsidiaries of a judgment not covered by insurance in excess of
$5,000,000) or (y) commencement of any material labor controversy,
litigation, action or proceeding of the
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type described in SECTION 6.7, notice thereof and, as promptly as
possible, but in no event later than ten Business Days after such
event, copies of all documentation reasonably requested by the
Administrative Agent relating thereto;
(k) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to its public security holders
generally or to any regulatory commission having jurisdiction over the
Borrower (except to the extent that such reports are restricted from
disclosure by the particular regulatory agency), and all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and Form 10-K, 10-Q and 8-K
(or their equivalents) which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission;
(l) promptly upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension Plan
with respect to which the Borrower could reasonably be expected to have
any liability, or the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien on
the assets of the Borrower under section 302(f) of ERISA, or the taking
of any action with respect to a Pension Plan which is reasonably likely
to result in the requirement that the Borrower furnishes a bond or
other security to the PBGC or such Pension Plan or the occurrence of
any event with respect to any Pension Plan which is reasonably likely
to result in the incurrence by the Borrower of any material liability,
fine or penalty, notice thereof and, to the extent reasonably requested
by the Administrative Agent, copies of all documentation relating
thereto; and
(m) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender or Agent may from time to time reasonably
request.
SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. Except to the extent that
failure to so comply may not reasonably be expected to have a Material Adverse
Effect, the Borrower will, and will cause each of its Subsidiaries to, comply in
all material respects with all applicable laws, rules, regulations and orders,
such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
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(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 7.1.3. CONSTRUCTION AND MAINTENANCE OF PROPERTIES, ETC. The
Borrower shall, and shall cause its Subsidiaries to, maintain and preserve all
of their properties necessary or useful in the proper conduct of their business
(including the Pledged Properties), in good working order and condition in all
material respects, ordinary wear and tear excepted and make necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times. The Borrower shall not permit
all or any portion of any of the Pledged Properties to be removed, demolished or
materially altered, except in connection with the improvement, renovation or
expansion thereof and to the extent that the value thereof is not materially
impaired other than temporarily while such improvement, renovation or expansion
is in progress, and if any Pledged Property, or any part thereof, is now or
hereafter damaged or destroyed by any casualty (whether or not insured against
or insurable) the Borrower shall either (i) restore, replace or rebuild such
Property or (ii) provide an Additional Property, as contemplated by SECTION
7.1.10, within 90 days thereafter in substitution therefor. The Borrower shall
not permit the number of Pledged Properties consisting of Inns described in
clause (iii) of the definition thereof to be more than 10% of the number of all
Pledged Properties.
SECTION 7.1.4. INSURANCE.
(a) In addition to maintaining the insurance coverage required
as of the Effective Date under SECTION 5.1.11 hereof, the Borrower
will, and will cause each of its Subsidiaries to, maintain or cause to
be maintained with responsible insurance companies insurance with
respect to the Pledged Properties and the business of the Borrower and
its Subsidiaries conducted therein or in connection therewith
(including business interruption insurance) against such casualties and
contingencies and of such types and in such amounts as is customary in
the case of similar businesses and will furnish to the Administrative
Agent annually and prior to the expiry of any policy a certificate of
an Authorized Officer of the Borrower setting forth the nature and
extent of all insurance maintained by the Borrower and its Subsidiaries
in accordance with SECTION 5.1.11 and this Section.
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(b) All such policies of insurance shall:
(i) be written by financially responsible
companies selected by the Borrower and having an A.M. Best
rating of "A" or better and being in a financial size category
of XII or larger, or by other companies acceptable to the
Agents; and
(ii) name the Administrative Agent and the
Lenders as additional insured with respect to any liability
insurance and the Administrative Agent as loss payee with
respect to any property insurance, in each case, as its
interest may appear (except in the case of workers'
compensation insurance); and
(iii) provide that it will not be canceled
or reduced, except after not less than 30 days' written notice
to the Administrative Agent.
(c) The Borrower will advise the Administrative Agent promptly
of any policy cancellation, reduction or amendment.
(d) On or before the date of the initial Borrowing hereunder,
the Borrower will deliver to the Administrative Agent certificates of
insurance reasonably satisfactory to the Administrative Agent
evidencing the existence of all insurance required to be maintained by
the Borrower under this Agreement.
(e) Without limiting the obligations of the Borrower under the
foregoing provisions of this SECTION 7.1.4., in the event the Borrower
shall fail to maintain in full force and effect insurance as required
by the foregoing provisions of this SECTION 7.1.4., then the
Administrative Agent may, and shall if instructed so to do by the
Required Lenders, upon prior or substantially simultaneous notice to
the Borrower, procure insurance covering the interests of the Lenders
and the Administrative Agent in such amounts and against such risks as
otherwise would be required hereunder and the Borrower shall reimburse
the Administrative Agent in respect of any premiums paid by the
Administrative Agent in respect thereof.
SECTION 7.1.5. BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect all
of their business affairs and transactions and permit each Agent and each Lender
or any of their respective representatives, on reasonable notice, at reasonable
times and intervals and, so long as no Specified Default shall have occurred and
be continuing, at the expense of such Agent or Lender, to visit all of its
offices, to discuss its
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financial matters with its officers and independent public accountant (and the
Borrower hereby authorizes such independent public accountant to discuss the
Borrower's financial matters with each Lender or its representatives whether or
not any representative of the Borrower is present) and to examine (and, at the
expense of the Borrower, photocopy a reasonable number of extracts from) any of
its books or other corporate records. The Borrower shall cooperate with any
representative of any Agent or any Lender in connection with the exercise by
such Agent or such Lender of its rights under this SECTION 7.1.5.
SECTION 7.1.6. ENVIRONMENTAL COVENANT. The Borrower will, and will
cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all applicable Environmental Laws, keep all
material permits, approvals, certificates, licenses and other
authorizations required pursuant to applicable Environmental Laws in
effect and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable
Environmental Laws;
(b) promptly notify the Administrative Agent and provide
copies upon receipt of all written material claims, complaints, notices
or inquiries relating to the condition of its facilities and properties
under, or material compliance of its facilities and properties with,
applicable Environmental Laws, and shall promptly commence and
diligently proceed to cure, to the reasonable satisfaction of the
Administrative Agent any material actions and proceedings relating to
violations of compliance with applicable Environmental Laws; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this SECTION 7.1.6.
SECTION 7.1.7. MAINTENANCE OF EXISTENCE; DIVIDENDS FROM UNRESTRICTED
SUBSIDIARIES. The Borrower will take all action necessary to maintain its
corporate existence and the corporate existence of each Subsidiary; PROVIDED
that nothing in this SECTION 7.1.7 shall prohibit (i) any merger, consolidation,
dissolution, liquidation, purchase or acquisition permitted under SECTION 7.2.9
or (ii) the termination of the corporate existence of a Subsidiary if the
Borrower determines that such termination is in the best interest of the
Borrower and the Borrower and the Agents determine that such termination is not
materially disadvantageous to the Lenders. The Borrower will cause each
Unrestricted Subsidiary to declare and pay dividends and/or make advances,
directly or indirectly, to the Borrower in the amount
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of the funds available to each such Unrestricted Subsidiary which are not needed
for reasonable reserves or normal operating expenses. The Borrower will not
allow Carousel to engage in any activity other than the ownership and
development of a single hotel in Atlanta, Georgia.
SECTION 7.1.8. ACCURACY OF INFORMATION. All factual information
furnished after the date of execution and delivery of this Agreement by or on
behalf of the Borrower or any Obligor to the Administrative Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated hereby will be true and accurate in every material respect on the
date as of which such information is dated or certified, and such information,
taken as a whole, shall not be incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 7.1.9. ADDITIONAL GUARANTIES. Promptly upon the creation of any
Subsidiary, and, with respect to Carousel, if it shall then be existing, not
later than December 31, 1997, the Borrower will cause such Subsidiary to execute
and deliver a Guaranty substantially in the form of EXHIBIT E hereto.
SECTION 7.1.10. SUBSTITUTION OF COLLATERAL.
(a) Subject to subsection (d) below, the Borrower shall have
the right to substitute for any Pledged Property subject to a material
casualty or condemnation, properties of equal or greater appraisal
value ("SUBSTITUTED PROPERTIES"), as determined by appraisals in form
and substance satisfactory to the Agents, conforming to the usual
appraisal standards of the Agents and to all requirements of law
applicable to the Lenders and conducted by appraisers reasonably
satisfactory to the Agents, within 90 days following the occurrence of
such casualty or condemnation.
(b) Provided there does not then exist any Specified Default
and subject to subsection (d) below, the Borrower shall have the right
in each Fiscal Year to substitute for up to five of the Pledged
Properties, properties of equal or greater appraised value (the
"Swapped Properties" and, together with Substituted Properties, the
"ADDITIONAL PROPERTIES"), as determined by appraisals in form and
substance satisfactory to the Agents, conforming to the usual appraisal
standards of the Administrative Agent and to all requirements of law
applicable to the Lenders and conducted by appraisers satisfactory to
the Agents. Each substitution of a Swapped Property under this SECTION
7.1.10(b) shall be, for purposes of computing the number of Pledged
Properties which may be sold, treated as a
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substitution of Pledged Properties for purposes of SECTION 7.2.10(a).
(c) The Borrower shall satisfy the requirements set forth in
the attached EXHIBIT H for each such Additional Property.
(d) The Borrower's right to substitute for any Pledged
Property pursuant to this SECTION 7.1.10 or SECTION 7.2.10(a) is
subject to the condition that after giving effect to such substitution
not more than three Pledged Properties shall be ground leased
Properties.
SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Agents
and each Lender that, until all Commitments have terminated, all Letters of
Credit have expired or been cash-collateralized and all Obligations have been
paid and performed in full, the Borrower will perform the obligations set forth
in this SECTION 7.2.
SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except for
(i) the direct or indirect ownership, operation and franchising of hotels,
motels and inns and intellectual property related thereto (ii) such activities
as may be incidental or related thereto.
SECTION 7.2.2. INDEBTEDNESS; PREFERRED STOCK. The Borrower will not,
and will not permit any of its Subsidiaries to, issue, create, incur, assume or
suffer to exist or otherwise become or be liable in respect of any Indebtedness
or preferred stock, other than, without duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness existing as of the Effective Date which is
identified in ITEM 7.2.2(b) ("Ongoing Indebtedness") of the Disclosure
Schedule and any refinancing of any mortgage Indebtedness described
therein plus any fees and expenses incurred in connection with such
refinancing so long as the principal balance thereof is not increased,
such refinancing is at market terms and the average life to maturity is
not shorter than the average remaining life to maturity of the
Indebtedness being refinanced;
(c) other secured Indebtedness, inclusive of Capitalized Lease
Liabilities, in an aggregate amount not to exceed $30,000,000; PROVIDED
that any such Indebtedness in any principal amount in excess of
$10,000,000 shall be
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mortgage Indebtedness assumed or incurred in connection with
acquisitions or developments of Inns;
(d) Indebtedness of the Borrower or any of its Subsidiaries to
the Borrower or any of its Subsidiaries];
(e) Subordinated Debt and Preferred Stock in an aggregate
amount not to exceed $225,000,000 at any time;
(f) other unsecured Indebtedness of the Borrower and
its Subsidiaries in an aggregate amount not to exceed
$20,000,000 at any time;
(g) Hedging Obligations entered into by the Borrower to hedge
the Borrower's exposure with respect to interest rate or currency
fluctuations, which Hedging Obligations may, if entered into with any
Lender or any Affiliate of any Lender, at such Lender's discretion, be
ratably secured by the Collateral; PROVIDED, in no event (a) shall the
notional principal amount of such secured Hedging Obligations exceed
$100,000,000 in the aggregate or (b) shall the payment dates thereunder
extend beyond the Stated Maturity Date; and
(h) Indebtedness in respect of letters of credit issued for
the account of the Borrower or any of its Subsidiaries in the ordinary
course of business to support workers compensation and insurance
obligations of the Borrower and its Subsidiaries.
PROVIDED, HOWEVER, that no Indebtedness otherwise permitted by CLAUSES (c), (e)
or (f) shall be permitted if, after giving effect to the incurrence thereof, any
Specified Default shall have occurred and be continuing.
SECTION 7.2.3. LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
Liens securing payment of the Obligations, granted pursuant to
any Loan Document;
(b) Liens to secure payment of Indebtedness of the type
permitted and described in CLAUSE (b) of SECTION 7.2.2 and, in the case
of refinancing of such Indebtedness, covering only those assets secured
by the Indebtedness being refinanced;
(c) Liens granted to secure payment of Indebtedness of
the type permitted and described in CLAUSE (c) of SECTION
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7.2.2 and covering only those assets acquired with the proceeds of such
Indebtedness;
(d) Liens securing payment of Indebtedness of the Subsidiaries
of the Borrower that is described in clause (d) of SECTION 7.2.2;
(e) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been established on its books;
(f) Liens of carriers, warehousemen, mechanics, materialmen,
contractors, laborers, landlords and similar creditors incurred in the
ordinary course of business for sums not overdue or being diligently
contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been established
on its books;
(g) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, bids, statutory or regulatory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(h) judgment Liens in existence less than 20 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies;
(i) Liens arising from the rendering of a final judgment or
order against the Borrower that does not give rise to an Event of
Default;
(j) Liens of sellers of goods to the Borrower and its
Subsidiaries arising under Article 2 of the Uniform Commercial Code or
similar provisions of applicable law in the ordinary course of
business, covering only the goods sold and securing the unpaid purchase
price for such goods;
(k) Liens arising under commercial letters of credit issued in
the ordinary course of business for the account of the Borrower or any
of its Subsidiaries covering only the goods paid for through drawings
under such letters of credit
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and bills of lading, warehouse receipts and other documents of title in
respect thereof and securing the reimbursement obligations and related
expenses in respect of such letters of credit;
(l) Liens securing payment of Hedging Obligations to the
extent permitted by CLAUSE (g) of SECTION 7.2.2;
(m) Permitted Liens (as defined in the respective Mortgages);
(n) reservations, exceptions, encroachments, easements, rights
of way, municipal and zoning ordinances, covenants, conditions,
restrictions, leases and other similar encumbrances, charges or title
defects or irregularities affecting real property; PROVIDED they do not
in the aggregate materially detract from the value of said property or
materially interfere with its use in the ordinary conduct of the
Borrower's business.
SECTION 7.2.4. FINANCIAL CONDITION. The Borrower will not permit:
(a) Tangible Net Worth to be less than the sum of (i)
$200,000,000, PLUS (ii) 50% of the Borrower's consolidated net income
(without giving effect to any losses) for each Fiscal Quarter ending
after December 28, 1996, PLUS (iii) an amount equal to 50% of the net
proceeds from any sales and issuances of the Borrower's capital stock,
MINUS (iv) any write-offs associated with the prepayment of any first
mortgage Indebtedness or senior unsecured Indebtedness and MINUS (v) up
to $20,000,000 of non-recurring expenses associated with the Big Red
Project and the write-off of deferred loan costs associated with the
Existing Credit Agreement, in each case booked in the 1997 Fiscal Year;
(b) the Total Debt to EBITDA Ratio for any period of four
consecutive Fiscal Quarters ending during a period set forth below, to
be greater than the ratio set forth below opposite such period:
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Period Ratio
------ -----
Effective Date - Last Day of 4.75 to 1.0
Second Fiscal Quarter of 1998
First Day of Third Fiscal 4.50 to 1.0
Quarter of 1998 - Last Day of
Second Fiscal Quarter of 1999
First Day of Third Fiscal 4.25 to 1.0
Quarter of 1999 - Last Day of
Second Fiscal Quarter of 2000
First Day of Third Fiscal 4.00 to 1.0
Quarter of 2000 - Last Day of
Second Fiscal Quarter of 2001
First Day of Third Fiscal 3.75 to 1.0
Quarter of 2001 and thereafter
(c) the Fixed Charge Coverage Ratio at the end of any Fiscal
Quarter, for the period of four consecutive Fiscal Quarters ending on
such date, to be less than the ratio set forth below opposite such
period:
Period Ratio
------ -----
Effective Date - Last Day of 1.45 to 1.0
Second Fiscal Quarter of 1998
First Day of Third Fiscal 1.50 to 1.0
Quarter of 1998 - Last Day of
Second Fiscal Quarter of 2000
First Day of Third Fiscal 1.55 to 1.0
Quarter of 2000 - Last Day of
Second Fiscal Quarter of 2001
First Day of Third Fiscal 1.60 to 1.0
Quarter of 2001 and thereafter
(d) the Senior Debt to Senior EBITDA Ratio at the end of any
Fiscal Quarter, for the period of four consecutive Fiscal Quarters
ending on such date, to be greater than the ratio set forth below
opposite such period:
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Period Ratio
------ -----
Effective Date - Last Day of 4.25 to 1.0
Second Fiscal Quarter of 1998
First Day of Third Fiscal 4.00 to 1.0
Quarter of 1998 - Last Day of
Second Fiscal Quarter of 1999
First Day of Third Fiscal 3.75 to 1.0
Quarter of 1999 - Last Day of
Second Fiscal Quarter of 2000
First Day of Third Fiscal 3.50 to 1.0
Quarter of 2000 - Last Day of
Second Fiscal Quarter of 2001
First Day of Third Fiscal 3.25 to 1.0
Quarter of 2001 and thereafter
SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Effective Date and
identified in ITEM 7.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to SECTION 7.2.2;
(d) without duplication, Investments permitted as
Capital Expenditures pursuant to SECTION 7.2.7;
(e) in the ordinary course of business, Investments by the
Borrower in any Guarantor, or by any Guarantor in the Borrower or any
other Guarantor, by way of contributions to capital, loans or advances
or otherwise;
(f) Investments consisting of transfers to Unrestricted
Subsidiaries of trademarks, trade names, trade dress, service marks,
patents, copyrights, trade secrets and other intellectual property or
funds used to acquire the same, which are not pledged pursuant to the
Mortgages;
(g) Investments in franchisees of the Borrower or any of its
Subsidiaries to whom real property has been ground leased by the
Borrower or any of its Subsidiaries which Investments consist of (i)
equity interests in such
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franchisees obtained without additional cash expenditures by the
Borrower or any of its Subsidiaries upon such franchisee's failure to
pay the purchase price of the real property so leased in accordance
with the terms of such lease and (ii) promissory notes and other debt
obligations of franchisees acquired without additional cash
expenditures by the Borrower or any of its Subsidiaries in connection
with such arrangements;
(h) other Investments in an aggregate amount at any
one time not to exceed $15,000,000;
PROVIDED, HOWEVER, that
(i) any Investment which when made complies with the
requirements of the definition of the term "CASH EQUIVALENT INVESTMENT"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(j) no Investment otherwise permitted by CLAUSES (f) or (g) or
(h) shall be permitted to be made if, immediately before or after
giving effect thereto, any Specified Default shall have occurred and be
continuing.
SECTION 7.2.6. RESTRICTED PAYMENTS, ETC. On and at all times after the
Effective Date:
(a) the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower
or on any warrants, options or other rights with respect to any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower (other than dividends or distributions payable in its common
stock or warrants to purchase its common stock or splitups or
reclassifications of its stock into additional or other shares of its
common stock) or apply, or permit any of its Subsidiaries to apply, any
of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of, or agree or permit any of its Subsidiaries
to purchase or redeem, any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower, or warrants, options or other
rights with respect to any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower; PROVIDED, however, that so long
as no Specified Default has occurred and is continuing or would occur
after giving effect thereto, the Borrower may (i) pay dividends or
distributions on, or redeem, purchase or retire shares of, its capital
stock and warrants or options to purchase its capital stock so long as
the aggregate consideration paid in
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any Fiscal Year does not exceed $10,000,000 (provided, however, that up
to $2,000,000 of the unused portion of such allowance for any Fiscal
Year may be carried forward by the Borrower for one year and provided,
further that any such amount so carried forward shall be deemed
utilized after the allowance specifically designated for such Fiscal
Year has been utilized) and (ii) pay current dividends on any Preferred
Stock in an amount required to be paid under the terms of such
Preferred Stock;
(b) the Borrower will not, and will not permit any of
its Subsidiaries to
(i) make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt on
any day other than the stated, scheduled date for such payment
or prepayment set forth in the documents and instruments
memorializing such Subordinated Debt, or which would violate
the subordination provisions of such Subordinated Debt; or
(ii) redeem, purchase or defease, any Subordinated
Debt; and
(c) the Borrower will not, and will not permit any Subsidiary
to, make any deposit for any of the foregoing purposes.
SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to, make or commit to make Capital
Expenditures except as provided in CLAUSES (a), (b) and (c) below:
(a) Maintenance Capital Expenditures for the Borrower, the
Guarantors, the Unrestricted Subsidiaries (but only, in the case of an
Unrestricted Subsidiary other than Carousel, to the extent needed to
develop and improve intellectual property assets) (i) for the 1997 and
1998 Fiscal Years shall be not less than 3% nor more than 6% of the
consolidated net room revenues of the Borrower and the Guarantors in
such Fiscal Years, and (ii) for the Fiscal Years ending in 1999 and
thereafter shall not be less than 4% nor more than 6% of the
consolidated net room revenues of the Borrower and its Subsidiaries in
such Fiscal Years.
(b) Expansion Capital Expenditures for the Borrower, the
Guarantors, and, prior to becoming a Guarantor, Carousel shall not
exceed $135,000,000 in the 1997 Fiscal Year nor $120,000,000 in any
Fiscal Year thereafter, no Expansion Capital Expenditure made in
respect of any Acquisition shall exceed $50,000,000 and no Expansion
Capital Expenditure of
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the type described in clause (d) of the definition thereof shall exceed
$15,000,000 in any Fiscal Year; PROVIDED, however that up to
$25,000,000 of the unused portion of the scheduled allowance for
Expansion Capital Expenditures in any Fiscal Year may be carried
forward for one year; PROVIDED, further that any such amount so carried
forward shall be deemed to be utilized after the allowance specifically
designated for such Fiscal Year has been fully utilized; and PROVIDED,
however that any acquisitions that are funded solely with shares of the
Borrower's capital stock shall be excluded from such calculations.
(c) Capital Expenditures for the Big Red Project.
SECTION 7.2.8. RENTAL OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into, as lessee, any leases of any real
or personal property (or any interest therein) which will require the payment of
an aggregate amount of rentals by the Borrower and its Subsidiaries in excess of
$25,000,000 for any Fiscal Year, (other than (i) sale -leaseback transactions,
(ii) capital leases and (iii) leases in respect of 26 Inns in eight states which
the Borrower may acquire and which have been identified to the Agents, to the
extent the aggregate amount of fixed minimum rentals thereunder does not exceed
$13,000,000 for any Fiscal Year, and (iv) leases by the Borrower or any of its
Subsidiaries to the Borrower or any of its Subsidiaries).
SECTION 7.2.9. CONSOLIDATION, MERGER, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other corporation, or purchase or otherwise
acquire all or substantially all of the assets of any Person (or of any division
thereof) except
(a) any such Subsidiary may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower or any other
Subsidiary, and the assets or stock of any Subsidiary may be purchased
or otherwise acquired by the Borrower or any other Subsidiary; and
(b) the Borrower may merge with or into any Subsidiary of the
Borrower or any newly formed corporation organized under the laws of
the United States, any State thereof or the District of Columbia for
the purpose of "reincorporating" the Borrower in such jurisdiction, if
the Borrower is the entity surviving such merger or if such surviving
entity assumes all of the obligations of the Borrower hereunder and
under the other Loan Documents; and
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(c) so long as no Specified Default has occurred and is
continuing or would occur after giving effect thereto, the Borrower or
any of its Subsidiaries may purchase all or substantially all of the
assets of any Person, or acquire such Person by merger, if permitted
(without duplication) by SECTION 7.2.7(b) to be made as a Capital
Expenditure.
SECTION 7.2.10. ASSET DISPOSITIONS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to
(except for the ability to grant Liens as permitted by SECTION 7.2.3), all or
any of its assets (including accounts receivable and capital stock of
Subsidiaries) to any Person, except
(a) the Borrower may sell up to five Pledged Properties in any
Fiscal Year so long as the cash price for each such Pledged Property
equals or exceeds 100% of its appraised value and (i) all Net Cash
Proceeds are applied as provided in SECTION 2.2.2 of this Agreement or
(ii) subject to SECTION 7.1.10 (d), an Additional Property of equal or
greater appraised value satisfying the criteria described on EXHIBIT H
hereto is substituted for the Property to be sold. In the event the
Borrower elects to substitute an Additional Property as provided in
clause (ii) above, such substitution shall for purposes of computing
the number of Pledged Properties for which a substitution may be made
under SECTION 7.1.10(b) be treated as a substitution for purposes of
such SECTION 7.1.10(b);
(b) the Borrower and its Subsidiaries may sell Inns (other
than Pledged Properties) encumbered by Liens securing Indebtedness for
borrowed money (or Contingent Liabilities in respect thereof) so long
as the gross proceeds therefrom do not exceed $25,000,000 in any Fiscal
Year or $100,000,000 during the term of this Agreement;
(c) the Borrower and its Subsidiaries may sell Unsecured Inns
so long as the proceeds therefrom do not exceed $50,000,000 during the
term of this Agreement;
(d) the Borrower and its Subsidiaries may enter into
sale-leaseback transactions so long as the aggregate amount of
Leaseback Rental Payments required thereunder (exclusive of any
Leaseback Rental Payments up to $4,000,000 in any Fiscal Year in an
aggregate amount under the leases for the Inn in Washington, D.C. and
the Inn located at the Miami Airport in Miami, Florida) do not exceed
$7,500,000 in any Fiscal Year;
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(e) the Borrower or any Subsidiary may sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other
rights with respect to, all or any of its assets to the Borrower or any
Guarantor;
(f) the Borrower or any Subsidiary may sell, transfer, lease,
contribute or otherwise convey any asset or any interest therein to the
extent that such sale, transfer, lease or contribution is permitted as
an Investment under SECTION 7.2.5;
(g) the Borrower may lease Properties subject to a Lien
securing Indebtedness for borrowed money other than Pledged Properties;
(h) the Borrower may lease Unsecured Inns, provided that no
more than five Unsecured Inns are subject to any such leases at any
time;
(i) the Borrower may sell corporate overhead assets which do
not constitute part of an Inn and are not necessary to operate any Inn
and excluding in all cases the trademark or service mark "Red Roof
Inns" or intellectual property necessary to use such trademark or
service mark; and
(j) the Borrower or any Subsidiary may (i) lease computer,
telecommunications, administrative, accounting billing, reservations
and similar equipment and related software and intellectual property to
franchisees of the Borrower and its Subsidiaries and (ii) ground lease
or sell outparcels of real property in the ordinary course of business
(other than any Pledged Property or portion thereof, or any portion of
a property on which an Inn or its appurtenant improvements are located
or that is reasonably necessary to the use or operation of an Inn).
SECTION 7.2.11. MODIFICATION OF CERTAIN AGREEMENTS. The Borrower will
not consent to any amendment, supplement or other modification of any of the
terms or provisions contained in, or applicable to the Senior Notes or any
Subordinated Debt, other than any amendment, supplement or other modification
which the Agents and the Borrower reasonably determine are not disadvantageous
to the Lenders.
SECTION 7.2.12. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its Affiliates (other
than the Borrower and its Subsidiaries) unless such arrangement or contract is
fair and equitable to the Borrower or such Subsidiary and is an arrangement or
contract of the kind which would be entered into
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by a prudent Person in the position of the Borrower or such Subsidiary with a
Person which is not one of its Affiliates.
SECTION 7.2.13. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document and any
agreement governing any Indebtedness permitted either by CLAUSE (b) of SECTION
7.2.2 as in effect on the Effective Date (or any agreement in respect of
refinancing Indebtedness permitted under such clause (b) that is not more
restrictive than the agreement in respect of the Indebtedness being refinanced)
or by CLAUSE (c) of SECTION 7.2.2 as to the assets financed with the proceeds of
such Indebtedness) prohibiting
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower or any other Obligor to amend
or otherwise modify this Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
SECTION 7.2.14. FISCAL YEAR. The Borrower will not, and will not permit
any of its Subsidiaries to, change its Fiscal Year.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default
in the payment or prepayment when due of any principal of any Loan, or the
Borrower shall default (and such default shall continue unremedied for a period
of five days) in the payment when due of any interest on any Loan, any fees or
any other Obligation.
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SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Administrative Agent
or any Lender for the purposes of or in connection with this Agreement or any
such other Loan Document (including any certificates delivered pursuant to
ARTICLE V) is or shall be incorrect when made in any material respect.
SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS.
The Borrower shall default in the due performance and observance of any of its
obligations under SECTION 7.2.
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days (or, in the case
of any such default under any Mortgage, if such default is capable of cure in 60
days and the Borrower or applicable Obligor is diligently pursuing such cure, 60
days) after notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in SECTION 8.1.1) of the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $10,000,000, or
a default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to cause
such Indebtedness to become due and payable prior to its expressed maturity.
SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of
money in excess of $10,000,000 shall be rendered against the Borrower or any of
its Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order and shall not have been stayed; or
(b) there shall be any period of 20 consecutive days during
which a stay of enforcement of such judgment or
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order, by reason of a pending appeal or otherwise, shall not
be in effect.
SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member
of its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower could reasonably
expect to incur a liability or obligation to such Pension Plan, in
addition to such Pension Plan's assets, in excess of $10,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA
if, as a result of such failure, the Borrower could reasonably expect
to incur a liability or obligation to such Pension Plan in excess of
$10,000,000.
SECTION 8.1.8. CONTROL OF THE BORROWER. Any Change in Control shall
occur.
SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any of its Subsidiaries or any property of any thereof, or make a
general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days, provided that the Borrower,
hereby expressly authorizes the Administrative Agent and each Lender to
appear in any court conducting any relevant proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in
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respect of the Borrower or any of its Subsidiaries, and, if any such
case or proceeding is not commenced by the Borrower or such Subsidiary,
such case or proceeding shall be consented to or acquiesced in by the
Borrower or such Subsidiary or shall result in the entry of an order
for relief or shall remain for 60 days undismissed, provided that the
Borrower hereby expressly authorizes the Administrative Agent and each
Lender to appear in any court conducting any such case or proceeding
during such 60-day period to preserve, protect and defend their rights
under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan
Document, or any Lien granted thereunder, shall (except in accordance with its
terms), in whole or in part, in any material respect, terminate, cease to be
effective or cease to be a valid, binding and enforceable agreement of any
Obligor party thereto; the Borrower, any other Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any material portion of any Lien securing
any Obligation shall, in whole or in part, cease to be a perfected first
priority Lien, subject only to those exceptions expressly permitted by such Loan
Document.
SECTION 8.2. ACTION IF BANKRUPTCY. If any Event of Default described in
CLAUSE(d) of SECTION 8.1.9 with respect to the Borrower or any Guarantor shall
occur, the Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in CLAUSE (d) of SECTION 8.1.9 with
respect to the Borrower or any Guarantor) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Agents shall, only upon the
direction of the Required Lenders, by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable and/or, except as otherwise provided in the immediately
following sentence, the Commitments (including, without limitation, the
commitment of the L/C Issuer to issue any Letters of Credit) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate. During the continuance of an Event
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of Default, all or any one or more of the rights, powers, privileges and other
remedies available to the Agents or the Lenders against the Borrower under this
Agreement, the Notes or any of the other Loan Documents, or at law or in equity,
shall be exercised by the Administrative Agent at any time and from time to time
only at the written direction of Required Lenders in their sole discretion,
whether or not all or any portion of the Obligations shall be declared due and
payable, and whether or not the Administrative Agent or the Collateral Agent
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to any Property or all or any portion of the Collateral. Notwithstanding
any termination of the Revolving Loan Commitment prior to the Stated Maturity
Date, Revolving Loans may be made to reimburse (i) the L/C Issuer for any drafts
paid in respect of Letters of Credit issued as provided in this Agreement that
are outstanding or unreimbursed on the date of such termination and (ii) the
Swingline Lender for any Swing Loans outstanding on the date of such
termination.
ARTICLE IX
THE AGENTS
SECTION 9.1. ACTIONS. Each Lender hereby appoints HNB as its
Administrative Agent and Collateral Agent and CIBC Wood Gundy as its Syndication
and Documentation Agent under and for purposes of this Agreement, the Notes and
each other Loan Document. In its capacity as Administrative Agent and Collateral
Agent, HNB shall undertake those rights, powers and duties more particularly
described herein and in the other Loan Documents. Each Lender authorizes the
Agents to act on behalf of such Lender under this Agreement, the Notes and each
other Loan Document and, in the absence of other written instructions from the
Required Lenders received from time to time by the Agents (with respect to which
the Agents agree that they will comply, except as otherwise provided in this
Agreement or as otherwise advised by counsel that such action is contrary to
applicable law), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agents by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. Each
Lender hereby indemnifies (which indemnity shall survive any termination of this
Agreement) the Agents, PRO RATA according to such Lender's Percentage, from and
against any and all liabilities, obligations, losses, damages, claims, costs or
expenses of any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, the Agents in any way relating to or arising
out of this Agreement, the Notes and any other Loan Document, including
reasonable attorneys' fees, and as to which the Agents are not reimbursed by the
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Borrower; PROVIDED, HOWEVER, that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from an Agent's gross negligence or willful
misconduct. If any indemnity in favor of an Agent shall be or become, in such
Agent's reasonable determination, inadequate, such Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 9.2. FUNDING RELIANCE, ETC. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York time, on the day prior to a Borrowing of Eurodollar Rate
Loans or by 1:00 p.m., New York time, on the day of a Borrowing of Base Rate
Loans that such Lender will not make available the amount which would constitute
its Percentage of such Borrowing on the date specified therefor, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Administrative Agent,
such Lender and the Borrower severally agree to repay the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date the Administrative Agent made such amount available
to the Borrower to the date such amount is repaid to the Administrative Agent,
at the Federal Funds Rate for the first two days such funds are overdue and
thereafter at the interest rate applicable from time to time on the Loans
comprising such Borrowing. If and to the extent that the Administrative Agent
does not make payments received by it available to the Lenders on the date such
payments are due, such funds shall bear interest until paid at the Federal Funds
Rate.
SECTION 9.3. EXCULPATION. Neither the Agents nor any of their
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by them under this Agreement or any other
Loan Document, or in connection herewith or therewith, except for their own
willful misconduct or gross negligence, nor responsible for any recitals or
warranties herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan Document, nor for
the creation, perfection or priority of any Liens purported to be created by any
of the Loan Documents, or the validity, genuineness, enforceability, existence,
value or sufficiency of any collateral security, nor to make any inquiry
respecting the performance by the Borrower of its obligations
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hereunder or under any other Loan Document. Any such inquiry which may be made
by the Agents shall not obligate them to make any further inquiry or to take any
action. The Agents shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Agents believe to be genuine and to have been presented by a proper
Person.
SECTION 9.4. SUCCESSOR. Any Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all Lenders. If an Agent at
any time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become a successor Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as an Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as an Agent, the provisions of
(a) this ARTICLE IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under
this Agreement; and
(b) SECTION 10.3 and SECTION 10.4 shall continue to
inure to its benefit.
SECTION 9.5. LOANS BY HNB AND CIBC. HNB and CIBC shall each have the
same rights and powers with respect to (x) the Loans made by them or any of
their Affiliates, and (y) the Notes held by them or any of their Affiliates as
any other Lender and may exercise the same as if neither they nor their
Affiliates were an Agent. HNB and CIBC and their Affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or Affiliate of the Borrower as if HNB and CIBC Wood
Gundy were not the Agents hereunder.
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SECTION 9.6. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agents and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitment.
Each Lender also acknowledges that it will, independently of the Agents and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 9.7. COPIES, ETC. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify SECTION 2.8(a), modify this SECTION 10.1, change
the definition of "REQUIRED LENDERS", increase the Commitment Amount or
the Percentage of any Lender, reduce any fees described in ARTICLE III,
change the schedule of reductions to the Commitments provided for in
SECTION 2.2.2(c), release any material portion of the collateral
security, except as otherwise specifically provided in any
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Loan Document and except for releases of immaterial portions of a
Pledged Property that do not affect or impair the value of such
Property, or extend the Stated Maturity Date shall be made without the
consent of each Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled payment of interest on any Loan (or reduce the principal
amount of or rate of interest on any Loan) shall be made without the
consent of the holder of that Note evidencing such Loan;
(d) permit the assignment or transfer by the Borrower of any
of its rights and Obligations under this Agreement shall be made
without the consent of each Lender and each holder of a Note;
(e) affect adversely the interests, rights or
obligations of the Agents QUA the Agents shall be made
without consent of the Agents;
(f) modify SECTIONS 2.1.2, 2.3.2 or 3.1.2 shall be made
without the consent of the Swingline Lender; or
(g) modify SECTIONS 2.7, 3.4 or 3.5 shall be made without the
consent of the L/C Issuer.
No failure or delay on the part of any Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by any Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed
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and sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
SECTION 10.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay
on demand all reasonable out-of-pocket expenses of the Agents (including the
reasonable fees and out-of-pocket expenses of Mayer, Brown & Platt and Porter,
Wright, Morris & Arthur, counsel to the Agents and of local counsel, if any, who
may be retained by counsel to the Agents in connection with
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated, and
(b) the filing, recording, refiling or rerecording of the
Mortgages, the Mortgage Amendments, the Pledge Agreement and the Pledge
Agreement and/or any Uniform Commercial Code financing statements
relating thereto and all amendments, supplements and modifications to
any thereof and any and all other documents or instruments of further
assurance required to be filed or recorded or refiled or rerecorded by
the terms hereof or of the Mortgages, the Mortgage Amendments or the
Pledge Agreement, and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agents and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. The
Borrower also agrees to reimburse the Agents and each Lender upon demand for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
out-of-pocket expenses) incurred by the Agents or such Lender in connection with
(x) the negotiation of any restructuring or "work-out", whether or not
consummated, of any Obligations and (y) the enforcement of any Obligations.
SECTION 10.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agents and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless from
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and against any and all losses, claims, damages, liabilities and expenses
(including without limitation reasonable fees and disbursements of external
counsel) which may be incurred by such Indemnified Party in connection with any
litigation or any investigation, administrative or other governmental proceeding
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), (collectively, the "INDEMNIFIED
LIABILITIES"), arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan; or
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
SECTION 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 10.6. SEVERABILITY. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
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92
SECTION 10.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Agents) shall have been received by the
Agents and notice thereof shall have been given by the Agents to the Borrower
and each Lender.
SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE
PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS CREATED
PURSUANT TO THE MORTGAGES SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE
LAW OF THE STATE IN WHICH THE APPLICABLE REAL PROPERTY IS LOCATED. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agents
and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to SECTION 10.11.
SECTION 10.11. SALE AND TRANSFER OF LOANS AND NOTE; PARTICIPATIONS IN
LOANS AND NOTE. Each Lender may assign, or sell participations in, its Loans and
Commitment to one or more other Persons in accordance with this SECTION 10.11.
SECTION 10.11.1. ASSIGNMENTS. Any Lender,
(a) with the written consents of the Borrower and the Agents
(which consents shall not be unreasonably delayed or withheld) may at
any time assign and delegate to an Eligible Assignee; PROVIDED, during
the continuance of a Specified Default, no such consent from the
Borrower shall be required; and
87
93
(b) with notice to the Borrower and the Agents, but without
the consent of the Borrower or the Agents, may assign and delegate to
any of its Affiliates that is an Eligible Assignee or to any other
Lender;
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "ASSIGNEE LENDER"), all or any fraction of such Lender's total Loans and
Commitment (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitment) in a
minimum aggregate amount of $10,000,000; PROVIDED, HOWEVER, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
first sentence of the third paragraph of SECTION 4.6 and FURTHER, PROVIDED,
HOWEVER, that, the Borrower, each other Obligor and the Agents shall be entitled
to continue to deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Agents by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to
the Borrower and the Agents a Lender Assignment Agreement, accepted by
the Agents; and
(e) the processing fees described below shall have been paid.
From and after the date that the Agents accept such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agents have
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Administrative Agent (for delivery to the relevant Assignee
Lender) a new Note evidencing such Assignee Lender's assigned Loans and
Commitment and, if the assignor Lender has retained Loans and a Commitment
hereunder, a replacement Note in the
88
94
principal amount of the Loans and Commitment retained by the assignor Lender
hereunder (such Note to be in exchange for, but not in payment of, that Note
then held by such assignor Lender). Each such Note shall be dated the date of
the predecessor Note. The assignor Lender shall mark the predecessor Note
"exchanged" and deliver it to the Borrower. Accrued interest on that part of the
predecessor Note evidenced by the new Note, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on that part of
the predecessor Note evidenced by the replacement Note shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agents upon delivery of any Lender Assignment Agreement in the amount of $3,000
(except in the case of one assignment by a Lender to an Affiliate of such
Lender, in which case such processing fee shall be waived). Any attempted
assignment and delegation not made in accordance with this SECTION 10.11.1 shall
be null and void.
SECTION 10.11.2. PARTICIPATIONS. Any Lender may at any time sell to one
or more Eligible Assignees (each of such commercial banks and other Persons
being herein called a "PARTICIPANT") participating interests in any of the
Loans, its Commitment, or other interests of such Lender hereunder; PROVIDED,
HOWEVER, that
(a) no participation contemplated in this SECTION 10.11 shall
relieve such Lender from its Commitment or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Borrower and each other Obligor and the Agents shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each
of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in CLAUSE (b) or (c) of
SECTION 10.1; and
89
95
(e) the Borrower shall not be required to pay any amount under
SECTION 4.3, 4.5 or 4.6 that is greater than the amount which it would
have been required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
SECTIONS 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall, to the fullest
extent permitted under applicable law, be considered a Lender.
SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Agents or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS OR THE BORROWER SHALL, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN MANHATTAN OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT NOTWITHSTANDING THE FOREGOING, THE
AGENTS MAY, IN THE EXERCISE OF THEIR SOLE DISCRETION, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, BRING AND MAINTAIN SUIT IN THE COURTS FOR THE STATE OF
OHIO, OR IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF OHIO;
PROVIDED, FURTHER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENTS' OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK LOCATED IN MANHATTAN AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
90
96
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
SECTION 10.14. WAIVER OF JURY TRIAL. THE AGENTS, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
SECTION 10.15. AMENDMENT AND RESTATEMENT. This Agreement amends and
restates the Existing Credit Agreement, and all loans and commitments
outstanding under the Existing Credit Agreement shall be deemed Loans and
Commitments outstanding under this Agreement.
91
97
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
RED ROOF INNS, INC.
By:________________________________
Title: Vice President and
Treasurer
Address: 4355 Davidson Road
Hilliard, Ohio 43026-
2491
Facsimile No.: (614) 876-0544 or
(614) 876-3421
Attention: Mr. David L. Rea
92
98
CIBC WOOD GUNDY SECURITIES CORP.,
as Syndication and Documentation
Agent, and Arranger
By:________________________________
Title:
Address: 350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
93
99
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent,
Administrative Agent and
Arranger
By:_________________________________
Title:
Address: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
94
100
LENDERS
-------
CIBC INC.
By:________________________________
Title:
CIBC Wood Gundy Securities Corp.,
AS AGENT
Notice Address:
425 Lexington Avenue
New York, New York 10071
Facsimile No.: (212) 856-3991
Attention: Ms. Cheryl Root
with a copy to:
350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
Domestic
Office: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4817
Attention: Ms. Kelli Jones
Eurodollar
Office: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4817
Attention: Ms. Kelli Jones
95
101
THE HUNTINGTON NATIONAL BANK
By:________________________________
Title:
Domestic
Office: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
Eurodollar
Office: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
96
102
BANK ONE, NA
By:________________________________
Title:
Domestic
Office: 100 East Broad Street
7th Floor
Columbus, Ohio 43271
Facsimile No.: (614) 248-3136
Attention: Ms. Leslie Smittle
Eurodollar
Office: 100 East Broad Street
7th Floor
Columbus, Ohio 43271
Facsimile No.: (614) 248-3136
Attention: Ms. Leslie Smittle
97
103
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Title:
Domestic
Office: One PNC Plaza-P1-POPP-19-2
249 Fifth Avenue
Pittsburgh, PA 15222
Facsimile No.: (412) 768-5754
Attention: Ms. Jan Detchin
Eurodollar
Office: One PNC Plaza-P1-POPP-19-2
249 Fifth Avenue
Pittsburgh, PA 15222
Facsimile No.: (412) 768-5754
Attention: Ms. Jan Detchin
98
104
BANQUE NATIONALE DE PARIS
By:________________________________
Title:
Domestic
Office: 209 S. LaSalle Street
Chicago, Illinois 60604
Facsimile No.: (312) 977-1389
Attention: Mr. Steve Christy
Eurodollar
Office: 209 S. LaSalle Street
Chicago, Illinois 60604
Facsimile No.: (312) 977-1389
Attention: Mr. Steve Christy
99
105
NBD BANK, A MICHIGAN BANKING CORPORATION
By:________________________________
Title:
Domestic
Office: 611 Woodward Avenue
Third Floor
Detroit, Michigan 48226
Facsimile No.: (313) 226-0857
Attention: Ms. Debbie Stuart
Eurodollar
Office: 611 Woodward Avenue
Third Floor
Detroit, Michigan 48226
Facsimile No.: (313) 226-0857
Attention: Ms. Debbie Stuart
100
106
HARRIS TRUST AND SAVINGS BANK
By:________________________________
Title:
Domestic
Office: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-5225
Attention: Ms. Arlett Hall
Eurodollar
Office: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-5225
Attention: Ms. Arlett Hall
101
107
BANK OF SCOTLAND
By:________________________________
Title:
Domestic
Office: 565 Fifth Avenue
New York, New York 10017
Facsimile No.: (212) 557-9460
Attention: Ms. Janet Taffe
Eurodollar
Office: 565 Fifth Avenue
New York, New York 10017
Facsimile No.: (212) 557-9460
Attention: Ms. Janet Taffe
102
108
THE FIFTH THIRD BANK OF COLUMBUS
By:________________________________
Title:
Domestic
Office: 21 East State Street
Columbus, Ohio 43215
Facsimile No.: (614) 341-2606
Attention: Ms. Bobbie Meyers
Eurodollar
Office: 21 East State Street
Columbus, Ohio 43215
Facsimile No.: (614) 341-2606
Attention: Ms. Bobbie Meyers
103
109
MITSUI LEASING (U.S.A.) INC.
By:________________________________
Title:
Domestic
Office: 200 Park Avenue
Suite 3214
New York, New York 10166
Facsimile No.: (212) 490-1684
Attention: Ms. Takako Sumi
Eurodollar
Office: 200 Park Avenue
New York, New York 10166
Facsimile No.: (212) 490-1684
Attention: Ms. Takako Sumi
104
110
NORWEST BANK MINNESOTA, N.A.
By:________________________________
Title:
Domestic
Office: Sixth and Marquette Ave.
Minneapolis, MN 55479
Facsimile No.: (612) 667-6932
Attention: Ms. Karen Bjorgan
Eurodollar
Office: Sixth and Marquette Ave.
Minneapolis, MN 55479
Facsimile No.: (612) 667-6932
Attention: Ms. Karen Bjorgan
105
111
STAR BANK, NA
By:________________________________
Title:
Domestic
Office: 501 West Schrock Road
Westerville, Ohio 43081
Facsimile No.: (614) 794-5348
Attention: Ms. Tina Heidenreich
Eurodollar
Office: 501 West Schrock Road
Westerville, Ohio 43081
Facsimile No.: (614) 794-5348
Attention: Ms. Tina Heidenreich
106
112
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION
By:________________________________
Title:
Domestic
Office: 200 S. Orange Avenue
Orlando, Florida 32801
Facsimile No.: (407) 237-6894
Attention: Ms. Sharon E. Kalish
Eurodollar
Office: 200 S. Orange Avenue
Orlando, Florida 32801
Facsimile No.: (407) 237-6894
Attention: Ms. Sharon E. Kalish
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113
SCHEDULE I
DISCLOSURE SCHEDULE
-------------------
ITEM 6.7 Litigation.
-----------
[NONE]
ITEM 6.8 Existing Subsidiaries.
----------------------
State of Business
Name Formation Ownership % Description
- ---- --------- ----------- -----------
RRI Investment Co. Nevada corporation 100% holds (i) 100% of RRI Financial,Inc., a Nevada
corporation, which owns and licenses trademarks
and other intellectual property, (ii) a
$123,500,000 promissory note made by RRI
Financial, Inc., and (iii) a $18,271,312
subordinated revolving loan promissory note made
by Red Roof Inns, Inc.
Carousel Hotel Corporation Georgia corporation 100% owns Red Roof Inn #241
ITEM 6.9 Ownership of Properties; Exceptions.
------------------------------------
Unrecorded Option Agreement dated as of April 15, 1997 between Red Roof Inns,
Inc., as Seller, and Financial Guidance, Inc., as Buyer, granting to Buyer the
option to purchase Inn #031 Milwaukee, Wisconsin; Inn #052 Madison, Wisconsin;
Inn #063 St. Paul-Woodbury, Minnesota; #065 Minneapolis-Burnsville, Minnesota;
and Inn #202 Minneapolis-Plymouth, Minnesota.
ITEM 6.11 Employee Benefit Plans.
-----------------------
The Borrower adopted the Red Roof Inns Retirement Plan (the "Plan") effective
January 1, 1985. The Borrower froze the Plan as of December 28, 1996 with a
projected benefit obligation of $8,313,000. The Borrower is taking certain steps
to terminate the Plan. The Borrower expects to make additional contributions to
the Plan prior to the final termination of the Plan.
ITEM 6.12 Environmental Matters.
----------------------
[NONE]
ITEM 7.2.2 (b) Ongoing Indebtedness.
---------------------
See Schedule 1A attached hereto and incorporated herein by this
reference.
114
SCHEDULE I
DISCLOSURE SCHEDULE
-------------------
ITEM 7.2.5 (a) Ongoing Investment.
-------------------
a. Each of the Existing Subsidiaries identified in Item 6.8,
above.
b. Promissory Note dated December 16, 1996 in the amount of
$36,000 made by Donald G. Burr payable to Red Roof Inns, Inc.
c. Interest as Franchisee under Franchise Agreement dated March
31, 1997 between Hard Times Cafe Franchising, Inc., as
Franchisor, and Red Roof Inns, Inc., as Franchisee for
operation of Hard Times Cafe at Red Roof Inn in
Charlottesville, Virginia.
d. State of Business Ownership Interest
Name Formation Profits & Losses Residuals Description
---- --------- ---------------- --------- -----------
Red Roof Parkersburg Co. Ohio limited 29.15 % 79.88% owns and leases
partnership Red Roof Inn #022
Red Roof Harrisburg Ohio limited 3.00% 73.00% owns and leases
North Co. partnership Red Roof Inn #037
2
115
SCHEDULE 1A - ONGOING INDEBTEDNESS
BALANCE
DESCRIPTION LENDER MATURITY 05-15-97
- ----------- ------ -------- --------
RED ROOF INNS, INC.
MORTGAGE INDEBTEDNESS
CORP HQ WOODMEN LIFE 1/09 5,194,875
06 IDS LIFE INSURANCE 2/03 736,824
08 NEW ENGLAND MUTUAL 8/98 277,492
09 PHOENIX MUTUAL 9/97 924,776
11 WOODMEN LIFE 4/08 1,150,395
12 WOODMEN LIFE 4/08 1,193,002
13 CONNECTICUT GENERAL 1/05 1,643,154
14 PHOENIX MUTUAL 9/97 1,993,570
16 PHOENIX MUTUAL 9/97 2,451,667
17 PHOENIX MUTUAL 9/97 798,774
18 PHOENIX MUTUAL 9/97 1,408,224
20 CONNECTICUT GENERAL 1/05 1,241,990
26 PHOENIX MUTUAL 9/97 1,662,691
29 PHOENIX MUTUAL 9/97 1,310,667
30 PHOENIX MUTUAL 9/97 2,460,152
32 AETNA LIFE 6/03 535,520
33 PHOENIX MUTUAL 9/97 1,747,556
34 PNC BANK 4/98 576,952
35 AETNA LIFE 6/03 547,355
36 PHOENIX MUTUAL 9/97 1,645,757
38 CONNECTICUT GENERAL 1/05 2,144,371
39 NEW ENGLAND MUTUAL 8/98 903,479
40 PHOENIX MUTUAL 6/04 1,581,817
44 IDS LIFE INSURANCE 1/03 2,819,615
45 NEW ENGLAND MUTUAL 12/03 1,973,806
50 CONNECTICUT GENERAL 2/01 794,303
52 IDS LIFE INSURANCE 1/02 2,816,497
60 CONNECTICUT GENERAL 2/01 2,599,097
61 IDS LIFE INSURANCE 1/02 2,819,077
62 IDS LIFE INSURANCE 1/03 2,264,236
71 BANK ONE 2/99 1,251,833
75 IDS LIFE INSURANCE 1/03 1,841,769
76 AETNA LIFE INS 3/00 1,310,873
77 SOCIETY BANK 1/00 429,008
81 IDS LIFE INSURANCE 1/03 1,082,276
82 AETNA LIFE 6/03 1,963,053
84 BANK ONE 1/99 2,000,000
89 SOUTHTRUST BANK 9/99 283,889
92 NEW ENGLAND MUTUAL 12/03 727,442
94 PNC BANK 2/99 655,000
95 PHOENIX MUTUAL 9/97 1,429,487
97 WOODMEN LIFE 4/08 2,130,362
98 PHOENIX MUTUAL 9/97 2,052,954
99 AETNA LIFE INS 3/00 1,528,295
100 PHOENIX MUTUAL 9/97 3,028,531
101 BANK ONE 2/99 1,629,380
102 CONNECTICUT GENERAL 2/01 2,107,689
103 BANK ONE 2/99 1,725,500
104 PHOENIX MUTUAL 6/04 1,988,442
105 BANK ONE 2/99 957,500
106 BANK ONE 2/99 502,548
107 BANK ONE 2/99 1,258,125
110 BANK ONE 2/99 1,395,132
111 BANK ONE 2/99 1,610,956
114 CONNECTICUT GENERAL 2/01 1,310,937
116 PHOENIX MUTUAL 6/04 1,854,390
1 OF 3
116
SCHEDULE 1A - ONGOING INDEBTEDNESS
BALANCE
DESCRIPTION LENDER MATURITY 05-15-97
- ----------- ------ -------- --------
RED ROOF INNS, INC.
MORTGAGE INDEBTEDNESS
119 AETNA LIFE INS 3/00 3,045,407
120 AETNA LIFE INS 3/00 1,797,995
121 CONNECTICUT GENERAL 2/01 1,582,397
123 CONNECTICUT GENERAL 2/01 1,077,966
125 AETNA LIFE INS 3/00 1,578,455
127 CONNECTICUT GENERAL 2/01 1,792,076
128 CONNECTICUT GENERAL 2/01 1,804,599
129 CONNECTICUT GENERAL 1/05 2,098,193
130 AETNA LIFE INS 3/00 2,172,577
131 AETNA LIFE INS 3/00 1,947,828
132 CONNECTICUT GENERAL 2/01 2,373,604
133 CONNECTICUT GENERAL 1/05 2,375,922
136 CONNECTICUT GENERAL 2/01 1,859,313
137 NEW ENGLAND MUTUAL 12/03 1,806,788
138 AETNA LIFE INS 3/00 1,400,874
139 CONNECTICUT GENERAL 2/01 2,003,175
140 CONNECTICUT GENERAL 2/01 1,437,170
141 CONNECTICUT GENERAL 2/01 1,733,292
142 CONNECTICUT GENERAL 2/01 1,828,985
144 PNC BANK-LOUISVILLE 8/98 1,934,412
145 CONNECTICUT GENERAL 2/01 1,933,498
147 CONNECTICUT GENERAL 2/01 2,577,999
150 AETNA LIFE 6/03 5,630,007
151 CONNECTICUT GENERAL 2/01 2,106,056
154 AETNA LIFE 6/03 2,390,562
156 IDS LIFE INSURANCE 1/02 2,563,013
158 CONNECTICUT GENERAL 1/05 1,627,717
159 CONNECTICUT GENERAL 1/05 2,229,368
160 CONNECTICUT GENERAL 1/05 2,784,709
162 CONNECTICUT GENERAL 1/05 1,851,263
163 CONNECTICUT GENERAL 1/05 1,681,650
164 CONNECTICUT GENERAL 1/05 2,406,796
165 CONNECTICUT GENERAL 1/05 1,589,030
167 CONNECTICUT GENERAL 1/05 2,067,378
168 AETNA LIFE 6/03 2,361,449
171 NEW ENGLAND MUTUAL 8/98 2,308,022
172 NEW ENGLAND MUTUAL 8/98 2,430,450
173 CONNECTICUT GENERAL 1/05 2,723,279
174 AETNA LIFE 6/03 2,528,469
175 AETNA LIFE 6/03 2,373,114
178 CONNECTICUT GENERAL 1/05 2,696,372
181 NEW ENGLAND MUTUAL 8/98 3,304,721
182 CONNECTICUT GENERAL 1/05 2,723,279
183 CONNECTICUT GENERAL 1/05 2,687,564
185 CONNECTICUT GENERAL 1/05 3,490,297
186 CONNECTICUT GENERAL 1/05 2,741,056
187 CONNECTICUT GENERAL 1/05 3,241,060
188 CONNECTICUT GENERAL 1/05 3,437,571
190 CONNECTICUT GENERAL 1/05 3,669,636
191 CONNECTICUT GENERAL 1/05 3,187,568
193 CONNECTICUT GENERAL 1/05 3,178,600
202 IDS LIFE INSURANCE 1/02 1,661,734
203 PNC BANK 2/99 2,550,954
---------
TOTAL MORTGAGE INDEBTEDNESS 212,658,323
2 OF 3
117
SCHEDULE 1A - ONGOING INDEBTEDNESS
BALANCE
DESCRIPTION LENDER MATURITY 05-15-97
- ----------- ------ -------- --------
RED ROOF INNS, INC.
CAPITAL LEASES
22 Red Roof Parkersburg LP 2001 448,184
37 Red Roof Harrisburg LP 2004 781,600
59 Purity Baking Company 2016 1,208,087
72 Galapa - L. Gage & R. LaRoy 2021 220,000
149 Edward Jr. & Dorothy Glen 2025 1,000,000
---------
TOTAL CAPITAL LEASES 3,657,871
RED ROOF INNS, INC.
LETTERS OF CREDIT
224-Site improvements Huntington National Bank 10,000
WC NY Huntington National Bank 18,000
WC Retro 94/95 Huntington National Bank 133,934
WC Deduc. 95/96 Fifth Third Bank 1,200,000
WC Deduc 91 thru 95 Huntington National Bank 775,000
223 Site improvements Huntington National Bank 93,096
WC Retro 90 thru 94 National City Bank 348,469
239 Colo Spr lease Huntington National Bank 250,000
248 Sidewalk imprvmts Huntington National Bank 3,040
WC Deduc. 96/97 Huntington National Bank 1,330,247
---------
TOTAL LETTERS OF CREDIT (not including LOCs already shown as debt above) 4,161,786
84 IRB Bank One (incl. in debt above) 2,084,384
Tax Ex. Mtg Bd Trust (PNC) Bank One (incl. in debt above) 14,600,724
3 OF 3
118
SCHEDULE II
PERCENTAGES
-----------
CIBC INC. 14%
THE HUNTINGTON NATIONAL BANK 14%
BANK ONE, NA 12%
PNC BANK, NATIONAL ASSOCIATION 12%
BANQUE NATIONALE DE PARIS 8%
NBD BANK, A MICHIGAN BANKING ASSOCIATION 8%
HARRIS TRUST AND SAVINGS BANK 8%
BANK OF SCOTLAND 4%
THE FIFTH THIRD BANK OF COLUMBUS 4%
MITSUI LEASING (U.S.A.) INC. 4%
NORWEST BANK MINNESOTA, N.A. 4%
STAR BANK, NA 4%
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION 4%
----
100%
109
119
SCHEDULE III
PLEDGED PROPERTIES
------------------
DESCRIPTION EXISTING NEW
- ----------- -------- ---
117 Mobile South AL X
047 Little Rock AR X
225 Tucson (South) AZ X
250 Phoenix AZ X
212 Hartford CT X
083 Pensacola FL X
200 Orlando FL X
204 Kissimmee FL X
096 Atlanta (Airport) GA X
166 Atlanta (Indian Trail) GA X
057 Peoria IL X
067 Chicago (South Holland) IL X
078 Chicago (Lansing) IL X
087 Chicago (Downers Grove) IL X
170 Champaign IL X
195 Naperville IL X
199 Hoffman Estates IL X
007 Michigan City IN X
015 Merrillville IN X
041 Indianapolis North IN X
074 Indianapolis (Speedway) IN X
118 Louisville (Airport) KY X
134 Louisville (Southeast) KY X
184 Lexington KY X
068 Boston (Framingham) MA X
209 Baltimore North MD X
003 Kalamazoo East MI X
004 Flint MI X
005 Saginaw MI X
021 Troy MI X
025 Kalamazoo West MI X
043 Benton Harbor MI X
070 Detroit (Warren) MI X
189 Taylor MI X
024 St. Louis (Florissant) MO X
051 Kansas City North MO X
126 St. Louis (Westport) MO X
135 St. Louis (Hampton) MO X
143 St. Louis-St. Charles MO X
230 Tupelo MS X
091 Charlotte University NC X
124 Charlotte Coliseum NC X
146 Asheville West NC X
152 Hickory NC X
155 Durham (Triangle Park) NC X
176 Raleigh NC X
201 Chapel Hill NC X
122 Nashua NH X
110
120
PLEDGED PROPERTIES
------------------
DESCRIPTION EXISTING NEW
- ----------- -------- ---
066 Mount Laurel NJ X
001 Columbus South OH X
002 Columbus North OH X
019 Canton OH X
023 Dayton North OH X
028 Cleveland (Independence) OH X
046 Toledo (Maumee) OH X
049 Akron OH X
053 Cleveland (Willoughby) OH X
058 Toledo (Holland) OH X
080 Cincinnati East (Beechmont) OH X
196 Toledo North OH X
205 Fairborn OH X
207 Akron South OH X
010 Danville PA X
027 Harrisburg South PA X
054 Erie PA X
085 Columbia West SC X
090 Columbia East SC X
148 Hilton Head SC X
242 Charleston/Mt. Pleasant SC X
056 Memphis East TN X
073 Knoxville North TN X
115 Nashville North TN X
161 Nashville South TN X
208 Johnson City TN X
153 Dallas Northwest TX X
086 Richmond VA X
093 Virginia Beach VA X
108 Hampton VA X
064 Fairmont WV X
109 Huntington WV X
111
121
EXHIBITS TO
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 1997
among
RED ROOF INNS, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
CIBC WOOD GUNDY SECURITIES CORP.
and THE HUNTINGTON NATIONAL BANK,
as Arrangers,
CIBC WOOD GUNDY SECURITIES CORP.,
as Syndication Agent and Documentation Agent,
and
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent and Administrative Agent
- --------------------------------------------------------------------------------
A Form of Revolving Note
B Form of Swingline Note
C Form of Borrowing Request
D Form of Continuation/Conversion Notice
E Form of Guaranty
F Form of Pledge Agreement
G Form of Compliance Certificate
H Requirements for Additional Properties and Surveys
I Form of Mortgage
J Form of Mortgage Amendment
K Form of Realignment Agreement
L Form of Lender Assignment Agreement
M Form of Prepayment Notice
N Form of Solvency Certificate
O Form of Opinions of Counsel
P Title Endorsements
122
EXHIBIT A
AMENDED AND RESTATED REVOLVING NOTE
New York, New York
May 21, 1997
$________________
FOR VALUE RECEIVED, the undersigned, RED ROOF INNS, INC., a Delaware
corporation (the "BORROWER"), promises to pay to the order of
________________________ (the "LENDER") the principal sum of _______ DOLLARS
($____________) or, if less, the aggregate unpaid principal amount of all
Revolving Loans (as defined in the Credit Agreement, hereinafter defined) made
by the Lender to the Borrower pursuant to that certain Amended and Restated
Credit Agreement, dated as of May 20, 1997 (together with all amendments and
other modifications, if any, from time to time thereafter made thereto, the
"CREDIT AGREEMENT"), among the Borrower, certain financial institutions
(including the Lender), CIBC Wood Gundy Securities Corp. and The Huntington
National Bank, as arrangers, CIBC Wood Gundy Securities Corp., as syndication
and documentation agent, and The Huntington National Bank, as collateral and
administrative agent. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Administrative Agent pursuant to the Credit
Agreement.
This Note is a Revolving Note referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable.
This Note evidences an amendment and restatement of certain
indebtedness of the undersigned outstanding pursuant to the terms of that
certain Loan Agreement dated November 9, 1995 among the undersigned, various
financial institutions and The Huntington National Bank, as agent, as amended
prior to the date hereof (as so amended, the "EXISTING CREDIT AGREEMENT"). The
undersigned's indebtedness under the Existing Credit Agreement has been amended
and restated pursuant to the terms of the Credit Agreement, and
123
this Note evidences a continuation of the indebtedness under the Existing Credit
Agreement and was delivered in exchange for the notes outstanding under the
Existing Credit Agreement
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
RED ROOF INNS, INC.
By________________________________
Title: Vice President and Treasurer
124
REVOLVING LOANS AND PRINCIPAL PAYMENTS
- --------------------------------------------------------------------------------
Aggregate
Amount of Unpaid
Amount of Payment Principal
Loan Made Received Balance
--------- -------- -------
Interest
Base Eurodollar Period (if Base Eurodollar Base Eurodollar Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
- ---- ---- ---- ----------- ---- ---------- ---- ---------- ----- -------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
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125
EXHIBIT B
SWINGLINE NOTE
New York, New York
$5,000,000 May 21, 1997
FOR VALUE RECEIVED, the undersigned, RED ROOF INNS, INC., a Delaware
corporation, promises to pay to the order of THE HUNTINGTON NATIONAL BANK (the
"SWINGLINE LENDER") at its principal office in Columbus, Ohio the principal sum
of FIVE MILLION DOLLARS ($5,000,000) or, if less, the aggregate unpaid principal
amount of all Swing Loans (as defined in the Credit Agreement, hereinafter
defined) made by the Swingline Lender to the undersigned pursuant to the Credit
Agreement, payable in full on or before the Stated Maturity Date. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement (defined below).
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds.
This Note is the Swingline Note described in, and is subject to the
terms and provisions of, that certain Amended and Restated Credit Agreement,
dated as of even date herewith (as the same may at any time be amended or
modified and in effect, the "CREDIT AGREEMENT"), among the undersigned, certain
financial institutions (including the Swingline Lender), CIBC Wood Gundy
Securities Corp. and The Huntington National Bank, as arrangers, CIBC Wood Gundy
Securities Corp., as syndication and documentation agent, and The Huntington
National Bank, as collateral and administrative agent, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
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126
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
RED ROOF INNS, INC.
By_____________________________
Title: Vice President and
Treasurer
-2-
127
SWING LOANS AND PRINCIPAL PAYMENTS
- --------------------------------------------------------------------------------
Aggregate
Amount of Unpaid
Amount of Payment Principal Notation
Date Loan Made Received Balance Total Made By
- ---- --------- -------- ------- ----- -------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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128
EXHIBIT C
BORROWING REQUEST
The Huntington National Bank, as Administrative Agent
41 South High Street
Columbus, Ohio 432151/
Attention: [Loan Syndications]
Re: Credit Agreement, dated as of May 21, 1997
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to SECTION 2.3 of
the Amended and Restated Credit Agreement, dated as of May 21, 1997 (together
with all amendments and other modifications, if any, from time to time made
thereto, the "CREDIT AGREEMENT"), among Red Roof Inns, Inc., a Delaware
corporation (the "BORROWER"), certain financial institutions, CIBC Wood Gundy
Securities Corp. and The Huntington National Bank, as arrangers, CIBC Wood Gundy
Securities Corp., as syndication and documentation agent, and The Huntington
National Bank, as collateral and administrative agent. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby requests that a [Revolving Loan] [Swing Loan] be
made in the aggregate principal amount of $________ on ________, 19__ as a
[Eurodollar Rate Loan having an Interest Period of _______ months]2/ [Base Rate
Loan].
The Borrower hereby certifies and warrants that on the date the
Borrowing requested hereby is made (after giving effect to the making of such
Borrowing, but without, if any Default of the type referred to in Section 8.1.5
of the Credit Agreement shall have occurred with respect to any other
Indebtedness, giving effect to the application, directly or indirectly, of the
proceeds thereof):
(a) the representations and warranties set forth in Article VI
(other than Section 6.7) of the Credit Agreement are true and correct
as if then made, except to the extent any representation or warranty
relates solely to an earlier date (in which case such representation or
warranty shall have been true and correct on and as of such earlier
date);
- --------
1/ Borrowing Requests for Swing Loans should also be sent to the
Swingline Lender.
2/ Only Revolving Loans can be Eurodollar Rate Loans.
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129
(b) no Default will then have occurred and be continuing; and
(c) no labor controversy, litigation, action, arbitration, or
governmental investigation or proceeding is pending or, to the
knowledge of the Borrower, threatened against the Borrower or any
Subsidiary of the Borrower in which there is a reasonable possibility
of an adverse determination that would have a Material Adverse Effect
which was not disclosed by the Borrower pursuant to SECTION 6.7 of the
Credit Agreement, and no development shall have occurred in any labor
controversy, litigation, arbitration, or governmental investigation or
proceeding so disclosed, which may be reasonably expected to have a
Material Adverse Effect.
The Borrower agrees that if prior to the time of the Borrowing
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Administrative Agent. Except to the extent, if any, that prior to the time of
the Borrowing requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed once again to be certified as true and correct at the date of such
Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of
the following persons at the financial institutions indicated respectively:
Person to be Paid
Amount to be -------------------------- Name, Address, etc.
Transferred Name Account No. of Transferee
- ----------- -------------------------- --------------------
$_________ ______ ________ _____________________
_____________________
Attention:___________
$_________ ______ ________ _____________________
_____________________
Attention:___________
Balance of The Borrower ________ _____________________
such proceeds _____________________
Attention:___________
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130
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this day of ________, 19__.
RED ROOF INNS, INC.
By_____________________________
Title:
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131
Exhibit D
CONTINUATION/CONVERSION NOTICE
The Huntington National Bank, as Administrative Agent
41 South High Street
Columbus, Ohio 43215
Attention: [Loan Syndications]
Re: Credit Agreement dated as of May 21, 1997
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
SECTION 2.4 of the Amended and Restated Credit Agreement, dated as of May 21,
1997 (together with all amendments and other modifications, if any, from time to
time made thereto, the "CREDIT AGREEMENT"), among Red Roof Inns, Inc., a
Delaware corporation (the "BORROWER"), certain financial institutions, CIBC Wood
Gundy Securities Corp. and The Huntington National Bank, as arrangers, CIBC Wood
Gundy Securities Corp., as syndication and documentation agent, and The
Huntington National Bank, as collateral and administrative agent. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, 19___,
(1) $_______ of the currently outstanding principal amount of
the Revolving Loans that are being maintained as [Base Rate Loans]
[Eurodollar Rate Loans having an Interest Period ending on ________,
19__],
(2) be [converted into] [continued as],
(3) [Eurodollar Rate Loans having an Interest Period of
_______ months] [Base Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Specified Default has
occurred and is continuing; and
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132
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify
the Administrative Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.
The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered, and the certification and warranties contained herein to
be made, by its Authorized Officer this day of , 19 .
RED ROOF INNS, INC.
By___________________________
Title:
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133
EXHIBIT E
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of _____ __, 19__, made by
_____________, a __________ (the "GUARANTOR"), in favor of each of the Lender
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to an Amended and Restated Credit Agreement, dated as
of May 21, 1997 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among Red
Roof Inns, Inc., a Delaware corporation (the "BORROWER"), the various commercial
banking institutions (individually a "LENDER" and collectively the "LENDERS") as
are, or may from time to time become, parties thereto, CIBC Wood Gundy
Securities Corp. and The Huntington National Bank, as arrangers, CIBC Wood Gundy
Securities Corp., as syndication agent and documentation agent, and The
Huntington National Bank, as collateral agent and administrative agent (the
"AGENT") for the Lenders, the Lenders have extended Commitments to make Loans to
the Borrower; and
WHEREAS, pursuant to SECTION 7.1.9 of the Credit Agreement, the
Guarantor has been created as a Subsidiary of the Borrower and is required
pursuant to such section to execute and deliver this Guaranty; and
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower by the Lenders
pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans to the
Borrower pursuant to the Credit Agreement, the Guarantor agrees, for the benefit
of each Lender Party, as follows:
134
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" is defined in the FIRST RECITAL.
"BORROWER" is defined in the FIRST RECITAL.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"GUARANTOR" is defined in the PREAMBLE.
"GUARANTY" is defined in the PREAMBLE.
"LENDER" is defined in the FIRST RECITAL.
"LENDER PARTY" means, as the context may require, any Lender or the
Agent and each of its respective successors, transferees and assigns.
"LENDERS" is defined in the FIRST RECITAL.
"U.C.C." means the Uniform Commercial Code as in effect in the State
of New York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Guaranty, including its preamble and recitals, with such
meanings.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. GUARANTY. The Guarantor hereby absolutely,
unconditionally and irrevocably
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135
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower and each other
Obligor, whether for principal, interest, fees, expenses or otherwise
(including all such amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. Section 502(b) and Section 506(b)), and
(b) indemnifies and holds harmless each Lender Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Lender Party
or such holder, as the case may be, in enforcing any rights under this
Guaranty.
PROVIDED, HOWEVER, that the Guarantor shall be liable under this Guaranty for
the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to the Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Guaranty constitutes a guaranty of payment when due
and not of collection, and the Guarantor specifically agrees that it shall not
be necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of the Guarantor hereunder.
SECTION 2.2. ACCELERATION OF GUARANTY. The Guarantor agrees that upon
the occurrence of an Event of Default specified in clause (d) of SECTION 8.1.9
of the Credit Agreement in respect of the Guarantor, the Obligations of the
Guarantor hereunder shall be considered due and payable in the full amount which
would be payable hereunder by the Guarantor if all Obligations were then due and
payable. In addition, if acceleration of the time for payment of any amount
payable by the Borrower or any other Obligor under the Credit Agreement or any
other Loan Document is stayed upon the insolvency, bankruptcy or reorganization
of the Borrower or such other Obligor, all such amounts otherwise subject to
acceleration under the terms of the Loan Documents shall nonetheless be payable
by the Guarantor hereunder forthwith on demand by the Administrative Agent made
pursuant to Article VIII of the Credit Agreement.
SECTION 2.3. GUARANTY ABSOLUTE, ETC. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower and each other Obligor have been paid in full, all obligations of the
Guarantor hereunder shall have been paid in full and all Commitments shall have
terminated. The Guarantor guarantees that the Obligations of the Borrower and
each other Obligor and their respective Subsidiaries will be paid strictly in
accordance with the terms of the Credit Agreement and each other Loan Document
under which they arise, regardless, to the extent permitted under applicable
law, of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Lender Party or
any
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136
holder of any Note with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability as to the
Borrower or any other Obligor of the Credit Agreement, any Note or any
other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Obligations of
the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower or
any other Obligor, or any other extension, compromise or renewal of any
Obligation of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of
the Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and the Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, the Obligations of the
Borrower, any other Obligor or otherwise; PROVIDED, that nothing herein
shall prevent the assertion of any such claim by separate suit;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Lender Party or any holder of any Note securing
any of the Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
-4-
137
SECTION 2.4. REINSTATEMENT, ETC. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. WAIVER, ETC. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Agent, any other Lender Party or any holder of any Note
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrower, any other Obligor or any other Person (including any other guarantor)
or entity or any collateral securing the Obligations of the Borrower or any
other Obligor, as the case may be.
SECTION 2.6. SUBROGATION. Upon making any payment with respect to the
Borrower or any other Obligor hereunder, the Guarantor shall be subrogated to
the rights of the payee against the Borrower or such Obligor with respect to
such payment; PROVIDED that the Guarantor shall not enforce any payment by way
of subrogation or contribution until all amounts of principal of and interest on
the Notes and all other amounts payable by the Obligors under the Loan Documents
have been paid in full. If any amount shall be paid to the Guarantor in
violation of the preceding sentence and the Obligations shall not have been paid
in cash in full and the Commitments have not been terminated, such amount shall
be deemed to have been paid to the Guarantor for the benefit of, and held in
trust for, the Lender Parties, and shall forthwith be paid to the Lender Parties
to be credited and applied upon the Obligations, whether matured or unmatured.
The Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that
the waiver set forth in this Section is knowingly made in contemplation of such
benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS OF NOTES,
ETC. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Agent
and each other Lender Party;
PROVIDED that the obligations of the Guarantor hereunder shall be released in
accordance with Section 2.8 of the Credit Agreement.
Without limiting the generality of CLAUSE (B), any Lender may assign or
otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all rights and benefits in respect thereof granted to
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such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to the provisions of SECTION 10.11 of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AND COVENANTS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
Guarantor hereby represents and warrants and covenants unto each Lender Party as
set forth in this ARTICLE III.
SECTION 3.1.1. GUARANTEED OBLIGATIONS. On and as of the date of this
Guaranty, (i) neither this Guaranty nor any collateral security therefor has
been given with an intent to hinder, delay or defraud any creditor of the
Guarantor, (ii) the Guarantor is not engaged, or about to engage, in any
business or transaction for which its assets (other than those necessary to
satisfy its obligations under this Guaranty or those given as collateral
security for such obligations) are unreasonably small in relation to the
business or transaction, nor does Guarantor intend to incur, or believe or
reasonably should believe that it will incur, debts beyond its ability to pay as
they become due and (iii) the Guarantor is not insolvent at the time it gives
this Guaranty, and the giving of this Guaranty and any collateral security
provided in connection herewith will not result in Guarantor's becoming
insolvent.
SECTION 3.1.2. FINANCIAL CONDITION OF THE BORROWER. Guarantor is
currently informed of the financial condition of Borrower and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Obligations. Guarantor has read and understands the terms
and conditions of the Credit Agreement, the Notes, and the other Loan Documents.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.1. LOAN DOCUMENT. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including, without limitation, ARTICLE X thereof.
SECTION 4.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS;
ASSIGNMENT. In addition to, and not in limitation of, SECTION 2.7, this Guaranty
shall be binding upon the Guarantor and its successors, transferees and assigns
and shall inure to the benefit of and be enforceable by each Lender Party and
each holder of a Note and their respective successors, transferees and assigns
(to the full extent provided pursuant to SECTION 2.7); PROVIDED, HOWEVER, that
the Guarantor may not assign any of its obligations hereunder without the prior
written consent of the Required Lenders.
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SECTION 4.3. AMENDMENTS, ETC. No amendment to or waiver
of any provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent (at the direction of the Lenders as provided in SECTION
10.1 of the _____ Credit Agreement), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 4.4. NOTICES. All notices and other communications provided to
the Guarantor under this Guaranty shall be in writing or by facsimile and
addressed, delivered or transmitted to the Guarantor at its address or facsimile
number set forth below its signature hereto or at such other address or
facsimile number as may be designated by the Guarantor in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
SECTION 4.5. NO WAIVER; REMEDIES. In addition to, and not in limitation
of, SECTION 2.3 and SECTION 2.5, no failure on the part of any Lender Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 4.6. CAPTIONS. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 4.7. SETOFF. Each Lender, with the consent of the Agents and
the Required Lenders, may, upon the occurrence of any Event of Default, have the
right to appropriate and apply to the payment of the Obligations owing to it
that are then due any and all balances, credits, accounts or moneys of the
Guarantor then or thereafter maintained with such Lender; PROVIDED, HOWEVER,
that any such appropriation and application shall be subject to the provisions
of SECTION 4.8 of the Credit Agreement. Each Lender agrees promptly to notify
the Borrower and the Agent after any such setoff and application made by such
Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Lender may have;
PROVIDED, HOWEVER, no Lender may exercise any such other rights and remedies
without the consent of the Agents (as defined in the Credit Agreement).
SECTION 4.8. SEVERABILITY. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
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SECTION 4.9. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. FOR
PURPOSES OF ANY ACTION OR PROCEEDING INVOLVING THIS GUARANTY, THE GUARANTOR
HEREBY EXPRESSLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK LOCATED IN MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND CONSENTS THAT IT MAY BE SERVED WITH ANY
PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK.
SECTION 4.10. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[Name of Guarantor]
By ___________________________
Title:_____________________
Address: _____________________
________________________
Attention: ___________________
Telecopy: ___________________
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EXHIBIT F
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of May 21,
1997, made by Red Roof Inns, Inc., a Delaware corporation (the "PLEDGOR"), in
favor of The Huntington National Bank, as administrative agent (together with
any successor(s) thereto in such capacity, the "ADMINISTRATIVE AGENT") for each
of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to an Amended and Restated Credit Agreement, dated as
of May 21, 1997 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among the
Pledgor, the various commercial lending institutions (individually a "LENDER"
and collectively the "LENDERS") as are, or may from time to time become, parties
thereto, CIBC Wood Gundy Securities Corp. and The Huntington National Bank, as
Arrangers, CIBC Wood Gundy Securities Corp., as Syndication and Documentation
Agent, and The Huntington National Bank, as Collateral and Administrative Agent,
the Lenders have extended Commitments to make Loans to the Pledgor; and
WHEREAS, as a condition precedent to the making of the initial Loans
under the Credit Agreement, the Pledgor is required to execute and deliver this
Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Pledgor pursuant to the Credit Agreement,
the Pledgor agrees, for the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
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"COLLATERAL" is defined in SECTION 2.1.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"DIVIDENDS" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"LENDER" is defined in the FIRST RECITAL.
"LENDER PARTY" means, as the context may require, any Lender or the
Administrative Agent and each of its respective successors, transferees and
assigns.
"LENDERS" is defined in the FIRST RECITAL.
"PLEDGE AGREEMENT" is defined in the PREAMBLE.
"PLEDGED NOTE ISSUER" means each Person identified in ITEM A of
ATTACHMENT 1 hereto as the issuer of the Pledged Note identified opposite the
name of such Person and each issuer of a Pledged Note executed after the date
hereof.
"PLEDGED NOTES" means all promissory notes of any Pledged Note Issuer
which are delivered by the Pledgor to the Administrative Agent as Pledged
Property hereunder, as such promissory notes, in accordance with SECTION 4.5,
are amended, modified or supplemented from time to time and together with any
promissory note of any Pledged Note Issuer taken in extension or renewal thereof
or substitution therefor.
"PLEDGED PROPERTY" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by the Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.
"PLEDGED SHARE ISSUER" means each Person identified in ITEM B of
ATTACHMENT 1 hereto as the issuer of the Pledged Shares identified opposite the
name of such Person.
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"PLEDGED SHARES" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Pledgor to the Administrative Agent as Pledged
Property hereunder.
"PLEDGOR" is defined in the PREAMBLE.
"SECURED OBLIGATIONS" means the Obligations, PROVIDED that if, and for
so long as, the Senior Notes (or refinancings thereof) shall remain outstanding
and the provisions of Section 4.09 of the Senior Note Indenture (or similar
provisions of any such refinancing) shall remain binding on the Borrower,
Secured Obligations shall be limited to an amount not to exceed the largest
amount that is permitted under the Senior Note Indenture (or such refinancing)
to be secured by Liens on the Collateral without directly securing the Senior
Notes (or such refinancing) equally and ratably (or prior to) the Senior
Obligations.
"SECURITIES ACT" is defined in SECTION 6.1.1.
"U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Pledge Agreement, including its preamble and recitals,
with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. GRANT OF SECURITY INTEREST. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "COLLATERAL"):
(a) all promissory notes of each Pledged Note Issuer
identified in ITEM A of ATTACHMENT 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified in ITEM B of ATTACHMENT 1 hereto;
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(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter
delivered to the Administrative Agent in connection with this Pledge
Agreement;
(f) all Dividends, Distributions, interest, and other
payments and rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Pledge Agreement secures
the payment in full of all Secured Obligations now or hereafter existing under
the Credit Agreement, the Notes and each other Loan Document to which the
Pledgor or any other Obligor is or may become a party, whether for principal,
interest, costs, fees, expenses, or otherwise.
SECTION 2.3. DELIVERY OF PLEDGED PROPERTY. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares and all Pledged Notes, shall be delivered to and held by or on behalf of
(and, in the case of the Pledged Notes, indorsed to the order of) the
Administrative Agent pursuant hereto, shall be in suitable form for transfer by
delivery, or shall be accompanied by all necessary instruments of transfer or
assignment, duly executed in blank.
SECTION 2.4. DIVIDENDS ON PLEDGED SHARES AND PAYMENTS ON PLEDGED NOTES.
In the event that any Dividend is to be paid on any Pledged Share or any payment
of principal or interest is to be made on any Pledged Note at a time when no
Event of Default has occurred and is continuing, such Dividend or payment may be
paid directly to the Pledgor. If any such Event of Default has occurred and is
continuing, then any such Dividend or payment shall be paid directly to the
Administrative Agent.
SECTION 2.5. CONTINUING SECURITY INTEREST; TRANSFER OF NOTE. This
Pledge Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until payment in full of
all Obligations and the termination of all Commitments,
(b) be binding upon the Pledgor and its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Lender Party;
provided that the obligations of the Pledgor hereunder shall be released in
accordance with Section 2.8 of the Credit Agreement.
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Without limiting the foregoing CLAUSE (C), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity, and such other Person or entity shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Pledge Agreement) or otherwise, subject, however,
to any contrary provisions in such assignment or transfer, and to the provisions
of SECTION 10.11 and ARTICLE IX of the Credit Agreement. Upon the payment in
full of all Obligations and the termination of all Commitments, the security
interest granted herein shall terminate and all rights to the Collateral shall
revert to the Pledgor. Upon any such termination, the Administrative Agent will,
at the Pledgor's sole expense, deliver to the Pledgor, without any
representations, warranties or recourse of any kind whatsoever, all certificates
and instruments representing or evidencing all Pledged Shares and all Pledged
Notes, together with all other Collateral held by the Administrative Agent
hereunder, and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. WARRANTIES, ETC. The Pledgor represents and warrants unto
each Lender Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Shares and each pledge and
delivery of a Pledged Note) by the Pledgor to the Administrative Agent of any
Collateral, as set forth in this Article.
SECTION 3.1.1. OWNERSHIP, NO LIENS, ETC. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to the Collateral, free
and clear of all Liens, except any Lien granted pursuant hereto in favor of the
Administrative Agent. Subject only to the provisions of Section 4.09 of the
Senior Note Indenture or any successor provision of any refinancing of the
Senior Notes, the Pledgor has full right and authority to pledge and assign such
Collateral.
SECTION 3.1.2. VALID SECURITY INTEREST. The delivery of such Collateral
to the Administrative Agent is effective to create a valid, perfected, first
priority security interest in such Collateral and all proceeds thereof, securing
the Secured Obligations. No filing or other action will be necessary to perfect
or protect such security interest.
SECTION 3.1.3. AS TO PLEDGED SHARES. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of each Pledged Share Issuer held by the
Pledgor. The Pledgor has no Subsidiary other than the Pledged Share Issuers
except for the Unrestricted Subsidiaries.
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SECTION 3.1.4. AS TO PLEDGED NOTES. In the case of each Pledged Note,
all of such Pledged Notes have been duly authorized, executed, endorsed, issued
and delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.
SECTION 3.1.5. AUTHORIZATION, APPROVAL, ETC. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any
other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery, and
performance of this Pledge Agreement by the Pledgor, or
(b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement.
SECTION 3.1.6. COMPLIANCE WITH LAWS. The Pledgor is in compliance with
the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which might materially
adversely affect the Collateral or the worth of the Collateral as collateral
security.
ARTICLE IV
COVENANTS
SECTION 4.1. PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. Except to the
extent permitted under the Credit Agreement, the Pledgor will not sell, assign,
transfer, pledge, or encumber in any other manner the Collateral (except in
favor of the Administrative Agent hereunder). The Pledgor will warrant and
defend the right and title herein granted unto the Administrative Agent in and
to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. The
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further instruments,
and take all further action, that may be necessary or reasonably desirable, or
that the Administrative Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
SECTION 4.2. STOCK POWERS, ETC. The Pledgor will, from time to time
upon the request of the Administrative Agent, promptly deliver to the
Administrative Agent such stock powers,
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instruments, and similar documents, satisfactory in form and substance to the
Administrative Agent, with respect to the Collateral as the Administrative Agent
may reasonably request and will, from time to time upon the request of the
Administrative Agent after the occurrence of any Event of Default, promptly
transfer any Pledged Shares or other shares of common stock constituting
Collateral into the name of any nominee designated by the Administrative Agent.
SECTION 4.3. CONTINUOUS PLEDGE. Subject to SECTION 2.4, except to the
extent otherwise permitted under the Credit Agreement, the Pledgor will, at all
times, keep pledged to the Administrative Agent pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Collateral, all
Dividends and Distributions with respect thereto, all Pledged Notes, all
interest, principal and other proceeds received by the Administrative Agent with
respect to the Pledged Notes, and all other Collateral and other securities,
instruments, proceeds, and rights from time to time received by or distributable
to the Pledgor in respect of any Collateral.
SECTION 4.4. VOTING RIGHTS; DIVIDENDS, ETC. The Pledgor agrees:
(a) after any Event of Default shall have occurred and be
continuing, promptly upon receipt thereof by the Pledgor and without
any request therefor by the Administrative Agent, to deliver (properly
endorsed where required hereby or requested by the Administrative
Agent) to the Administrative Agent all Dividends, Distributions, all
interest, all principal, all other cash payments, and all proceeds of
the Collateral, all of which shall be held by the Administrative Agent
as additional Collateral for use in accordance with SECTION 6.3; and
(b) after any Event of Default shall have occurred and be
continuing and the Administrative Agent has notified the Pledgor of the
Administrative Agent's intention to exercise its voting power under
this SECTION 4.4(B)
(i) the Administrative Agent may exercise (to the
exclusion of the Pledgor) the voting power and all other
incidental rights of ownership with respect to any Pledged
Shares or other shares of capital stock constituting
Collateral and the Pledgor hereby grants the Administrative
Agent an irrevocable proxy, exercisable under such
circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent
such additional proxies and other documents as may be
necessary to allow the Administrative Agent to exercise such
voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Administrative Agent, shall, until
delivery to the Administrative Agent, be held by the Pledgor separate and apart
from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be
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continuing and the Administrative Agent shall have given the notice referred to
in SECTION 4.4(B), the Pledgor shall have the exclusive voting power with
respect to any shares of capital stock (including any of the Pledged Shares)
constituting Collateral and the Administrative Agent shall, upon the written
request of the Pledgor, promptly deliver such proxies and other documents, if
any, as shall be reasonably requested by the Pledgor which are necessary to
allow the Pledgor to exercise voting power with respect to any such share of
capital stock (including any of the Pledged Shares) constituting Collateral;
PROVIDED, HOWEVER, that no vote shall be cast, or consent, waiver, or
ratification given, or action taken by the Pledgor that would impair any
Collateral or be inconsistent with or violate any provision of the Credit
Agreement or any other Loan Document (including this Pledge Agreement).
SECTION 4.5. ADDITIONAL UNDERTAKINGS. The Pledgor will not, without
the prior written consent of the Administrative Agent:
(a) enter into any agreement amending, supplementing, or
waiving any provision of any Pledged Note (including any underlying
instrument pursuant to which such Pledged Note is issued) or
compromising or releasing or extending the time for payment of any
obligation of the maker thereof; or
(b) take or omit to take any action the taking or the omission
of which would result in any impairment or alteration of any obligation
of the maker of any Pledged Note or other instrument constituting
Collateral.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. The
Pledgor hereby irrevocably appoints the Administrative Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time following the
occurrence and continuation of an Event of Default in the Administrative Agent's
discretion, to take any action and to execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Pledge Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (A)
above; and
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(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. ADMINISTRATIVE AGENT MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Pledgor pursuant to SECTION 6.4.
SECTION 5.3. ADMINISTRATIVE AGENT HAS NO DUTY. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Property, whether or not the Administrative Agent has or
is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; PROVIDED, HOWEVER, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Event of Default shall have
occurred and be continuing:
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(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice except
as specified below or as may be required by mandatory provisions of
law, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten days' prior notice to the Pledgor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into
the name of the Administrative Agent or its nominee, with or
without disclosing that such Collateral is subject to the lien
and security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Administrative Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings
in the Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral,
and
(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION 6.1.1. SECURITIES LAWS. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
SECTION 6.1, the Pledgor agrees that, upon request of the Administrative Agent,
the Pledgor will, at its own expense:
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(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Administrative Agent, advisable to
register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "SECURITIES ACT"), and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Lender Parties
by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees, to the fullest extend
permitted under applicable law, that, if the Pledgor shall fail to perform any
of such covenants, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the value (as determined by the Administrative Agent) of the
Collateral on the date the Administrative Agent shall demand compliance with
this Section.
SECTION 6.2. COMPLIANCE WITH RESTRICTIONS. The Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner,
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nor shall the Administrative Agent be liable or accountable to the Pledgor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 6.3. APPLICATION OF PROCEEDS. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent following the occurrence and during the continuation of
an Event of Default, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to SECTION
10.3 of the Credit Agreement and SECTION 6.4) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations in such
order as the Administrative Agent shall elect.
Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all the Secured Obligations, and
the termination of all Commitments, shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 6.4. INDEMNITY AND EXPENSES. The Pledgor hereby indemnifies and
holds harmless the Administrative Agent from and against any and all claims,
losses, and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
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SECTION 7.1. LOAN DOCUMENT. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. AMENDMENTS, ETC. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Administrative Agent (at the direction of the Lenders as provided
in SECTION 10.1 of the Credit Agreement), and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it is given.
SECTION 7.3. PROTECTION OF COLLATERAL. The Administrative Agent may
from time to time, at its option, perform any act which the Pledgor agrees
hereunder to perform and which the Pledgor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Administrative Agent may from time to time take any other
action which the Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
SECTION 7.4. ADDRESSES FOR NOTICES. All notices and other
communications provided to any party hereto under this Pledge Agreement shall be
in writing or by facsimile and, if to the Pledgor, addressed, delivered or
transmitted to it at the address or facsimile number set forth below its
signature hereto, if to the Administrative Agent, addressed, delivered or
transmitted to it, at the address or facsimile number of the Administrative
Agent specified in the Credit Agreement or, as to either party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
SECTION 7.5. SECTION CAPTIONS. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. SEVERABILITY. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 7.7. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
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HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS
PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
Red Roof Inns, Inc.
By ___________________________
Title: Vice President and Treasurer
Address: 4355 Davidson Road
Hilliard, Ohio 43026
Facsimile: (614) 876-0544 or
(614) 876-3421
Attention: Mr. David L. Rea
The Huntington National Bank
By __________________________
Title: Vice President
Address: 41 South High Street
Columbus, Ohio 43215
Facsimile: (614) 480-5791
Attention: Mr. Robert H. Friend
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EXHIBIT G
Form of Certificate of the
Borrowers of Compliance with the
Provisions of SECTION 7.2
Schedule of Compliance with the
Credit Agreement
dated as of May 21, 1997
as of ___________, 19__
The undersigned, _______________ of Red Roof Inns, Inc. (the
"BORROWER"), pursuant to SECTION 7.1.1(c) of the Amended and Restated Credit
Agreement, dated as of May 21, 1997 (the "CREDIT AGREEMENT"), among the
Borrower, certain financial institutions, CIBC Wood Gundy Securities Corp. and
The Huntington National Bank, as arrangers, CIBC Wood Gundy Securities Corp., as
syndication and documentation agent, and The Huntington National Bank, as
collateral and administrative agent, hereby certifies that as of the date hereof
(defined terms in the Credit Agreement being used herein with the same meanings
as in the Credit Agreement), the following computations were true and correct:
I. Calculation of EBITDA for the four consecutive Fiscal Quarters ending
on the date set forth above:
a. Consolidated net income of the Borrower
and its Subsidiaries $_______
plus: Leaseback Rental
Payments $_______
interest expense $_______
income taxes $_______
depreciation, $_______
amortization, $_______
non-cash charges, $_______
extraordinary
losses and
non-recurring
expenses $_______ $_______
minus: non-cash gains, extraordinary gains and other
non-recurring income $_______
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plus: if applicable (without duplication)
b. For any Inn that was acquired by the Borrower or a
Guarantor during such period, the New Property EBITDA
from such Inn during such period $_______
EBITDA $_______
II. Tangible Net Worth Test(SECTION 7.2.4(a))
a. Actual Tangible Net Worth as of the
date set forth above
(i) consolidated net worth of the
Borrower and its Subsidiaries $_______
less (ii) intangible assets of the
Borrower and its Subsidiaries $_______
TOTAL $_______
b. Required Tangible Net Worth
(i) $200,000,000 $200,000,000
------------
plus (ii) 50% of consolidated net income
(without giving effect to any
losses) for each Fiscal Quarter
ending after December 28, 1996 $_______
plus (iii) Amount equal to 50% of the net
proceeds from any sales and
issuances of the Borrower's
capital stock $_______
minus (iv) any write-offs associated with
the prepayment of any first
mortgage Indebtedness or senior
unsecured Indebtedness $_______
minus (v) up to $20,000,000 of non-recurring
expenses associated with the
Big Red Project and the write-off
of deferred loan costs associated
with the Existing Credit
Agreement in each case booked in
the 1997 Fiscal Year $_______
TOTAL $_______
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c. Actual Tangible Net Worth shown
in (a) above must exceed (b)
III. Total Debt to EBITDA Ratio, SECTION 7.2.4(b)
a. Total Debt of Red Roof Inns, Inc. and its
Subsidiaries as of the date set
forth above (consolidated):
(i) obligations for borrowed money $_______
plus (ii) letter of credit and bankers
acceptances (exclusive of (I)
letters of credit issued for the
account of the Borrower or any of
its Subsidiaries in the ordinary
course of business to support
workers compensation and insurance
obligations of the Borrower and its
Subsidiaries, (II) letters of
credit (which are not Letters of
Credit) issued for the account of
the Borrower or any of its
Subsidiaries and (III) commercial
letters of credit in an aggregate
face amount of not more than
$1,000,000) $_______
plus (iii) Capitalized Lease Liabilities $_______
plus (iv) deferred purchase price of
property or services (other
than accounts payable and
accrued expenses in the ordinary
course of business) $_______
plus (v) Obligations of the types referred
to in (i) through (iv) above
secured by a lien on property of
the Borrower or any of its
Subsidiaries $_______
plus (vi) seven times the Leaseback
Rental Payments for the
Fiscal Quarter ending on such date $_______
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minus(vii) cash and cash equivalents
of the Borrower and the
Guarantors in excess of
$5,000,000 $_______
TOTAL $_______
b. EBITDA for the four consecutive Fiscal
Quarters ending on such date
(from Section I above) $_______
c. Ratio of line (a) to line (b) ____ to ____
d. The ratio on line (c) must not exceed ____ to ____
IV. Fixed Charge Coverage Ratio, SECTION 7.2.4(c)
a. EBITDA for the four consecutive Fiscal
Quarters ending on such date(from
Section I above) $____________
minus the minimum Maintenance
Capital Expenditures required to be
made during such period under
SECTION 7.2.7(a) ($___________)
b. Fixed charges
(i) consolidated cash interest expense
and cash income taxes for such
period $_______
plus (ii) cash dividends paid on any shares
of capital stock of the Borrower
during such period $_______
plus (iii) Leaseback Rental Payments during
such period $_______
plus (iv) all consolidated scheduled principal payments
required to be made by the Borrower and its
Subsidiaries (whether or not such payments were
actually made) during such period (exclusive of
"balloon
payments") $_______
plus (v) if such period ends on a
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Commitment Reduction Date and to
the extent positive, the average
daily utilization under the Credit
Agreement for the Fiscal Quarter
ending on the last day of such
period minus the Revolving Loan
Commitment Amount as of such
Commitment Reduction Date after
giving effect to the reductions
thereto pursuant to Section
2.2.2(c) $_______
c. Ratio of line (a) to line (b) ____ to ____
d. The ratio on line (c) at the end of any
Fiscal Quarter must exceed ____ to ____
V. Senior Debt to Senior EBITDA Ratio, SECTION 7.2.4(d)
a. Senior Debt of Red Roof Inns, Inc. and its Subsidiaries as of the
date set forth above
(i) Total Debt (from Section III above) $_______
minus(ii) Indebtedness (other than Hedging
Obligations and the
Obligations) secured by Liens
on Inns $_______
minus(iii) Subordinated Debt $_______
minus(iv) Capitalized Lease Liabilities $_______
minus(v) seven times the Leaseback
Rental Payments during the Fiscal
Quarter ending on such date
TOTAL $_______
b. Senior EBITDA for the period of four
consecutive Fiscal Quarters ending on
such date:
(i) operating income (before royalty
expenses) from those Properties
that are not subject to any Liens
securing borrowed money (other than
the Mortgages) or the subject of a
sale-leaseback transaction (a
"Specified Property") $_______
(ii) plus (without duplication) that
portion of any management and
franchise fees attributable to
royalty payments, marketing fees,
reservation fees, technical fees
and other similar payments
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(other than initial franchise fees) received by
the Borrower or any Subsidiary during such
period $____________
(iii) plus (without duplication) rent received by the
Borrower or any of its Subsidiaries pursuant to
the lease of any Specified Property or portion
thereof $____________
plus (iv) (without duplication) for any such Inn that
shall have been acquired by the Borrower
during such period, the New Property
EBITDA from such Inn during such period. $____________
TOTAL $____________
c. Ratio of line (a) to line (b) ____ to ____
d. The ratio on line (c) must not exceed ____ to ____
VI. Maintenance Capital Expenditures, SECTION 7.2.7(a)
a. Aggregate Maintenance Capital
Expenditures for Fiscal Year
including the date set forth
above $____________
b. Consolidated net room revenues for
such Fiscal Year $____________
c. Line (a) must not be less than __% of
line (b) or exceed __% of line (b).
VII. Expansion Capital Expenditures, SECTION 7.2.7 (b)
a. Expansion Capital Expenditures
for Fiscal Year including the date
set forth above $____________
b. Line (a) shall not exceed $135,000,000
in the 1997 Fiscal Year nor $120,000,000
in any Fiscal Year thereafter, and no
Expansion Capital Expenditure made in
respect of any single Acquisition shall
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exceed $50,000,000 PLUS, in the case of any
Fiscal Year after the 1997 Fiscal Year, up to
$25,000,000 of the unused portion of the
scheduled allowance for Expansion Capital
Expenditures for the prior Fiscal Year;
PROVIDED, however, that any such amount so
carried forward shall be deemed to be utilized
after the allowance specifically designated for
such Fiscal Year has been fully utilized;
PROVIDED, further, however that any
acquisitions by the Borrower that are funded
solely with shares of the Borrower's capital
stock shall be excluded from such calculations.
VIII. Miscellaneous Baskets
a. Other Secured Indebtedness (7.2.2(c))
Total
-----
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit $30,000,000
Exclusive of Mortgage Indebtedness Assumed or Incurred IN CONNECTION WITH
ACQUISITIONS OR DEVELOPMENTS OF INNS
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit $10,000,000
b. Subordinated Debt and Preferred Stock (7.2.2(e))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
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3. Limit $ 225,000,000
c. Other Unsecured Indebtedness (7.2.2(f))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit $ 20,000,000
d. Hedging Obligations (7.2.2(g))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit (notional amount) $ 100,000,000
e. Other Investments (7.2.5(h))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit $ 15,000,000
f. Restricted Payments (7.2.6(a))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit (per Fiscal Year
subject to certain carryovers) $ 10,000,000
g. Rental Obligations-Operating Leases (7.2.8(i))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit (per Fiscal Year) $ 25,000,000
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163
h. Rental Obligations-26 Inns (7.2.8(iii))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit (per Fiscal Year) $ 13,000,000
i. Asset Dispositions-Encumbered Inns (7.2.10(b))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage (Fiscal Year) $____________
3. Limit (per Fiscal Year) $ 25,000,000
4. Aggregate Usage (term of Agreement) $____________
5. Limit (term of Agreement) $ 100,000,000
j. Asset Dispositions-Unsecured Inns (7.2.10(c))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage $____________
3. Limit (term of Agreement) $50,000,000
k. Asset Dispositions - Sale Leasebacks Rental Payments (7.2.10(d))
1. Usage during Fiscal Quarter $____________
2. Aggregate Usage (Fiscal Year) $____________
3. Less Washington D.C. Inn and
Miami Inn (Fiscal Year) $___________(3/)
4. Limit (per Fiscal Year) $ 7,500,000
<FN>
- --------
(3/) Not to exceed $4,000,000 of Sale Leaseback Rental Payments
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164
I hereby further certify that no event has occurred and is continuing on the
date hereof which constitutes an Event of Default or a Default except [describe
any Default or Event of Default and the action which the Borrower has taken or
proposed to take with respect thereto].
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first
above written.
RED ROOF INNS, INC.
By_______________________________
Its:
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EXHIBIT H
PROPERTY REQUIREMENTS
---------------------
1. A first-lien Mortgage encumbering the Property, UCC-1 Financing
Statements evidencing a first-lien security interest in personal
property owned by the Borrower used in connection with the Property and
a Borrower's affidavit containing property representations consistent
with those made in Borrower's affidavits provided for Properties
mortgaged upon execution of the Credit Agreement.
2. Title insurance commitment for ALTA loan form (if available) title
insurance policy from Title Company in an amount not less than 70% of
appraised value, such commitment and policy to comply with the title
insurance standards of The Huntington National Bank ("HNB") and to
contain endorsements and coverages (if available) consistent with those
provided for the Properties mortgaged upon execution of the Credit
Agreement.
3. UCC-11 searches dated or brought down to a current date in each
relevant office, evidencing no other security interests affecting the
Property except for equipment lease notice filings and Permitted Liens,
if any.
4. As-built survey sufficient to cause removal of all survey exceptions
from the title insurance policy and issuance of a "comprehensive"
endorsement (if available).
5. Certificate of good standing of the Borrower in the state in which the
Property is located, if no Properties in that state previously have
been mortgaged under the Credit Agreement.
6. Copies of all leases and material agreements affecting the Property.
7. The Borrower's payment of all costs and expenses incurred in connection
with the substitution, including without limitation appraisal charges,
survey and title insurance charges, recording fees and taxes, and the
reasonable out-of-pocket fees and expenses of HNB's counsel.
8. Evidence of material compliance with applicable zoning, building and
other governmental laws, regulations and requirements, such evidence to
consist of copies of (if applicable) certificates of occupancy and
motel operating licenses and the Borrower's warranty as to the absence
of uncomplied-with code violation orders and such other evidence as HNB
may reasonably request, but to be consistent with such evidence
provided for Properties mortgaged upon execution of the Credit
Agreement.
9. Phase I environmental study complying with HNB's standards consistent
with studies provided for Properties mortgaged upon execution of the
Credit Agreement dated or brought down to a current date.
166
10. Certificates of fire and extended coverage insurance with business
interruption loss coverage and liability insurance, together with
certified copies of policies, in compliance with the Credit Agreement.
11. Evidence that no material portion of any building is located within a
flood hazard area designated by HUD or evidence that it is covered by
flood insurance.
167
EXHIBIT 1
*[FL - Florida requires a blank square on the first page of the document and a
blank rectangle on each succeeding page.]*
*[SC - NOTE: THIS IS A VARIABLE RATE MORTGAGE]*
*[WV - A CREDIT LINE DEED OF TRUST]*
---------------------------
Inn No. ___
- -------------, ----
*[GA - This Instrument Prepared By and After Recorded Should Be Returned To:
Mark A. Mears, Esq.
Mayer, Brown & Platt
350 South Grand Avenue
Suite 2500
Los Angeles, California 90071]*
*[GA - DEED TO SECURE DEBT]* *[WV, NC, TN, MO - DEED OF TRUST]* *[KY, CT,
OH - OPEN-END]* *[IN, FL, SC, IL, KY, CT, IL, MI - MORTGAGE]*,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
*[MO - THIS DEED OF TRUST COVERS FUTURE ADVANCES IN AN
AMOUNT NOT TO EXCEED $250,000,000,
AS GOVERNED BY SECTION 443.055 RSMO]*
THIS *[GA - DEED TO SECURE DEBT]* *[KY, CT, OH - OPEN-END]* *[IN, SC,
IL, KY, CT, OH, FL, MI - MORTGAGE]* *[WV, NC, TN, MO - DEED OF TRUST]*,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (herein "Instrument") is made this
day of May, 1997, between RED ROOF INNS, INC., a Delaware corporation
(successor by merger to Red Roof Inns, Inc., an Ohio corporation), whose address
is 4355 Davidson Road, Hilliard, Ohio 43026 (herein "Mortgagor" or *[GA, WV, NC,
TN - "Grantor" or]* *[NC "Trustor" or]* "Borrower"), *[MO - the Trustee,
___________________, whose address is ____________________, (herein "Trustee"),
in trust with power of sale]* *[NC - _______________, whose residence address is
____________________, ___________________, North Carolina (herein "Trustee")]*
*[GA, IN, MI FL OH, SC, KY, CT, IL, TN, IN - and]* *[IN, FL, OH, SC, IL WV, KY,
CT, TN, MI, MO - the Mortgagee,]* THE HUNTINGTON NATIONAL BANK, a national
banking association, whose address is 41 South High Street, Columbus, Ohio
43215, as agent for itself and for all other financial institutions which now
are or hereafter become Lenders (as defined in the Loan Agreement described
below, each a "Lender" and collectively the "Lenders") (herein *[GA, WV, NC, TN,
MO - "Beneficiary" or]* "Mortgagee") *[WV, TN - , and
______________________________________, whose address is
_______________________, _______________, West Virginia/Tennessee ____________
(herein "Trustee")]*.
*[NC - COLLATERAL INCLUDES FIXTURES Drawn by _____________________.
(preparer's name)]*
*[GA - THIS DEED IS ALSO TO INDEXED IN THE INDEX OF FINANCING
STATEMENTS. THIS DEED COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE
REAL PROPERTY DESCRIBED HEREIN. THIS DEED IS TO BE FILED IN THE REAL PROPERTY
RECORDS AS A DEED AND AS A FINANCING STATEMENT. GRANTOR IS THE RECORD OWNER OF
THE REAL PROPERTY CONVEYED HEREBY. THE NAMES OF THE DEBTOR ("BORROWER") AND THE
SECURED PARTY ("MORTGAGEE"), THE MAILING ADDRESS OF THE SECURED PARTY FROM WHICH
INFORMATION CONCERNING THE SECURITY INTEREST MAY BE OBTAINED, THE MAILING
ADDRESS OF THE DEBTOR, AND A STATEMENT INDICATING THE TYPES, OR
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DESCRIBING THE ITEMS OF COLLATERAL, ARE CONTAINED HEREIN IN COMPLIANCE WITH THE
REQUIREMENTS OF ARTICLE 9, SECTION 992, OF THE UNIFORM COMMERCIAL CODE AS
ENACTED IN THE STATE OF GEORGIA (O.C.G.A. ss. 11-9-402).]*
*[FL - ______________________________________________________________
Florida documentary stamp taxes in the amount of $_________ due upon recordation
of this Mortgage were computed on a documentary stamp tax base of $_________
which is _____7% of the total amount of the Indebtedness secured hereby. This
percentage represents that ratio of the current value of the Florida real
property which secures the Indebtedness secured hereby to the total current
value of all real property securing such Indebtedness, pursuant to Rule
12B-4.53(32), Florida Administrative Code.
Florida intangible taxes in the amount of $_________ due upon the recordation of
this Mortgage were computed on an intangible tax base of $__________ which is
______% of the total amount of the Indebtedness secured hereby. This percentage
represents the ratio of the current value of the Florida real property which
secures the Indebtedness secured hereby to the total current value of all real
property securing such indebtedness, pursuant to ss.199.133(2), Florida
Statutes.]*
WHEREAS, Borrower, Mortgagee, CIBC Wood Gundy Securities Corp. and
Lenders have entered into a certain Amended and Restated Credit Agreement, of
even date herewith (herein "Loan Agreement"), the provisions of which are made a
part hereof, wherein Lenders have agreed to loan to Borrower on a revolving
credit basis, up to a maximum principal indebtedness of Two Hundred Fifty
Million Dollars ($250,000,000.00), which indebtedness will be advanced, repaid
and readvanced from time to time after the date hereof in partial amounts prior
to the maturity date, and which advances shall have the same lien priority
regardless of the dates of the advances *[IN pursuant to IC 32-8-11-9]*, all as
more particularly set forth in, and subject to the terms and conditions of, the
Loan Agreement; and
WHEREAS, the indebtedness is presently evidenced by Borrower's
Revolving Notes (as defined in the Loan Agreement) and the Swingline Note (as
defined in the Loan Agreement) to the order of Lenders and the Swingline Lender
(as defined in the Loan Agreement), in the aggregate principal amount of Two
Hundred Fifty Million Dollars ($250,000,000.00), the terms and conditions of
which are made a part hereof as if fully restated herein, and which provide for
installments of interest at one or more variable rates elected by Borrower from
time to time as provided in the Loan Agreement, with the balance of the
indebtedness, if not sooner paid, due and payable on May 19, 2002, subject to
required reductions from time to time in said balance prior to May 19, 2002 in
accordance with the Loan Agreement; and
WHEREAS, the real and personal property described below (herein
"Property") encumbered by this Instrument constitutes one of several motel
properties mortgaged by Borrower to Mortgagee as security for such indebtedness
pursuant to security instruments dated as of November 9, 1995, as modified, and
dated of even date herewith;
*[GA - MORTGAGE TAX IN THE AMOUNT OF $______.00 HAS BEEN DETERMINED BASED UPON
THE RATIO (____%) OF THE COLLATERAL VALUE OF THIS INSTRUMENT TO THE COLLATERAL
VALUE OF THE ___ MORTGAGES OF EVEN DATE ENCUMBERING PROPERTIES IN ___ STATES.]*
*[TN - PROPERTY ADDRESS: _________________________, Tennessee
MAIL TAX BILLS TO: Red Roof Inns, Inc. 4355 Davidson Road, Hilliard,
Ohio 43026
MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING
PURPOSES IS $________________.
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THIS DEED OF TRUST SECURES OBLIGATORY ADVANCES AS DEFINED BY
TENNESSEE LAW AND THE ADVANCES MADE HEREUNDER ARE SOLELY FOR
COMMERCIAL PURPOSES.]*
NOW, THEREFORE *[MO - Delete NOW, THEREFORE,]* , *[NC - Borrower, in
consideration of the indebtedness herein recited and the trust herein created,
irrevocably grants, conveys and assigns to Trustee and Trustee's successors and
assigns, in trust, with power of sale, the real estate described in]* *[WV -
BORROWER, in consideration of the indebtedness herein recited and the trust
herein created, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, all of Borrower's fee simple estate in]* *[IN, IL - in
consideration of the indebtedness evidenced by the Revolving Notes and the
Swingline Note and in order to secure]* *[GA, FL, KY, CT, SC, OH, TN, MI - IN
ORDER TO SECURE]* *[MO - IN CONSIDERATION OF SUCH INDEBTEDNESS AND THE TRUST
HEREIN CREATED AND TO SECURE,]* *[IN, FL, SC, IL GA, KY, CT, OH, TN, MI, MO - ,
(a) the repayment of the principal indebtedness evidenced by the Revolving Notes
(as defined in the Loan Agreement) now or hereafter executed and delivered by
Borrower and all renewals, extensions and modifications thereof, together with
interest thereon (hereinafter the "Revolving Notes"); (b) the repayment of the
principal indebtedness evidenced by the Swingline Note (as defined in the Loan
Agreement) now or hereafter executed and delivered by Borrower and all renewals,
extensions and modifications thereof, together with interest thereon
(hereinafter, the "Swingline Note"); (c) the reimbursement of amounts drawn
under Letters of Credit (as defined in the Loan Agreement) delivered by L/C
Issuer (as defined in the Loan Agreement) for the benefit of Borrower, as
account party, and all renewals, extensions and modifications thereof, together
with interest thereon; hereinafter the Revolving Notes, the Swingline Note and
the reimbursement obligations for Letters of Credit described in the foregoing
clauses (a), (b) and (c) are collectively referred to as the "Note"; (d) the
repayment of all amounts owed under certain Hedging Obligations (as defined in
the Loan Agreement) entered into by Borrower and Lenders or affiliates of
Lenders contemporaneously herewith and hereafter; (e) the payment of all fees,
late charges, prepayment premiums or charges and other amounts owed under the
Loan Agreement or under the Note; (f) the performance of all other obligations
of Borrower under the Loan Agreement or under other security instruments
securing repayment of indebtedness and performance of obligations incurred by
Borrower pursuant to the Loan Agreement, and all amendments thereof; (g) the
repayment of all other sums advanced in accordance with the Instrument to
protect the security of the Instrument, with interest thereon; and (h) the
performance of all other covenants, agreements and obligations of Borrower in
the Instrument, Borrower *[MO - Delete everything to "forever" and insert - has
granted, bargained and sold, conveyed and confirmed and does by these presents
grant, bargain and sell, convey and confirm to Trustee, in trust, with power of
sale,]* does hereby mortgage, *[IN, SC, IL, GA, KY, OH, FL, TN - warrant,]*
grant, *[IN, OH, SC, GA, KY, IL, FL, TN - bargain, sell,]* convey and assign to
Mortgagee *[TN - Delete Mortgagee, insert Trustee]* *[IN, OH, SC, IL, GA, KY,
FL, TN - , its successors and assigns forever,]*]* *[GA, TN, MI - with power of
sale,]* the following described real property:
See legal description attached hereto as Exhibit "A" *[NC -
attached hereto]* and made a part hereof;
*[IN, SC, KY, IL, OH, FL, TN, MI, MO - TOGETHER]* *[WV, NC - TO
HAVE AND TO HOLD unto Trustee and Trustee's successors and assigns forever,]*
*[NC - together]* *[GA TO HAVE AND TO HOLD unto Mortgagee and its successors and
assigns, forever, together]* with all buildings, other improvements, structures
and tenements now situated or hereafter erected thereon, and all heretofore or
hereafter vacated alleys and streets abutting said premises, and all easements,
rights, appurtenances, rents *[MI - (including without limitation, all rights
conferred by Act. No. 210 of the Public Acts of Michigan of 1953, as and if
amended, MCL Sections 554.231, et seq. and by Act No. 228 of the Michigan Public
Acts of 1925, as and if amended, MCL Sections 554.211, et seq.)]* , royalties,
mineral, oil and gas rights and profits, water, water rights, and water stock
appurtenant to said premises, and all fixtures, machinery, equipment, engines,
boilers, incinerators, building materials, appliances and goods of every nature
whatsoever, now owned or hereafter acquired by Borrower, now existing or
hereafter arising and now or hereafter located in, on, or about said premises,
or used or intended to be used in connection with said premises, or intended and
designated
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170
(wherever located) to be incorporated into the structure(s) situated on said
premises, including without limitation fixtures and equipment for supplying or
distributing heating, cooling, electricity, gas, water, sewage, air and light,
and all elevators and related machinery and equipment, fire prevention and
extinguishing apparatus, security and access control apparatus, plumbing, bath
tubs, water heaters, water closets, sinks, ranges, stoves, refrigerators,
dishwashers, disposals, washers, dryers, awnings, storm windows, storm doors,
screens, blinds, shades, curtains and curtain rods, mirrors, cabinets, paneling,
unattached rugs, carpet and other attached floor coverings, furniture,
furnishings, computer equipment, office equipment, pictures, antennas, satellite
dishes, trees and plants (excluding, however, leased or separately financed
televisions, telephones, copiers, fax machines, data processing equipment and
satellite and data dishes and other equipment, together with associated
electronic equipment, hardware, cables and fittings); and Borrower's rights as
lessee under equipment leases (but only to the extent a Lien may be granted on
the same without consent and without giving rise to a default under or right to
terminate the same); and (subject to the limitation in paragraph 15 below) all
trademarks, tradenames and business systems used in the operation of Borrower's
business on the premises, including without limitation the nonexclusive right to
use the federally-registered tradename "Red Roof Inn" and satellite systems,
reservation systems and telephone systems; and all accounts arising from all
rents (including but not limited to room rents) and revenues, whether now due,
past due, or to become due by virtue of any lease, license or other agreement
for the occupancy or use of all or any part of the premises and improvements
(but only to the extent a Lien may be granted on the same without consent and
without giving rise to a default under or right to terminate the same); and all
permits, licenses and approvals necessary to construct and operate the
improvements (but only to the extent a Lien may be granted on the same without
consent and without giving rise to a default under or right to terminate the
same); and Borrower's contract rights in all contracts and agreements affecting
the improvements; and Borrower's rights in the plans and specifications for the
improvements; and all other property now owned or hereafter acquired and used in
or about the above-described premises; all of which, including replacements,
additions, accessions and substitutions thereto and all proceeds thereof, being
hereby deemed a part of the premises encumbered by this Instrument and being
hereinafter referred to, collectively and with the real property, as the
"Property".
*[IN, SC, CT, IL - TO HAVE AND TO HOLD the same, with all the
rights, privileges and appurtenances *[IN, SC, IL - thereunto]* *[CT -
thereunder]* belonging *[IN, SC, IL - ,]* to Mortgagee, *[IN, SC, IL - its
successors]* *[CT - as successor]* and assigns, forever.]* *[CT - ; provided
that this Instrument is made upon the STATUTORY CONDITION]* *[WV, NC - TO
SECURE, (a) the repayment of the principal indebtedness evidenced by Revolving
Notes (as defined in the Loan Agreement) now or hereafter executed and delivered
by Borrower and all renewals, extensions and modifications thereof, together
with interest thereon (hereinafter "Revolving Notes"); (b) the repayment of the
principal indebtedness evidenced by Swingline Note (as defined in the Loan
Agreement) now or hereafter executed and delivered by Borrower and all renewals,
extensions and modifications thereof, together with interest thereon
(hereinafter, the "Swingline Note"); (c) the reimbursement of amounts drawn
under Letters of Credit (as defined in the Loan Agreement) delivered by L/C
Issuer (as defined in the Loan Agreement) for the benefit of Borrower, as
account party, and all renewals, extensions and modifications thereof, together
with interest thereon; hereinafter the Revolving Notes, the Swingline Note and
the reimbursement obligations for Letters of Credit described in the foregoing
clauses (a), (b) and (c) are collectively referred to as the "Note"; (d) the
repayment of all amounts owed under certain Hedging Obligations (as defined in
the Loan Agreement) entered into by Borrower and Lenders or affiliates of
Lenders contemporaneously herewith and hereafter; (e) the payment of all fees,
late charges, prepayment premiums or charges and other amounts owed under the
Loan Agreement or under the Note; (f) the performance of all other obligations
of Borrower under the Loan Agreement or under other security instruments
securing repayment of indebtedness and performance of obligations incurred by
Borrower pursuant to the Loan Agreement, and all amendments thereof; (g) the
repayment of all other sums advanced in accordance with the Instrument to
protect the security of the Instrument, with interest thereon; and (h) the
performance of all other covenants, agreements and obligations of Borrower in
the Instrument]* *[WV - ; and (e) the repayment of future advances with interest
thereon, made to Borrower by Lenders.]*
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171
*[TN - TO HAVE AND TO HOLD to Trustee, its successors and assigns,
in fee simple forever; provided that this is a deed of trust, and if Grantor
shall pay the Note in accordance with its terms and shall perform the other
obligations secured hereby and contained herein, this conveyance shall be null
and void and may be canceled of record at the request and at the cost of
Grantor.]*
*[MO - TO HAVE AND TO HOLD the same, IN TRUST, for the benefit of
Beneficiary, its successors and assigns forever, for the purposes and uses
herein set forth.]*
Borrower covenants that Borrower is lawfully seized of the estate
hereby conveyed and has the right to mortgage, grant, convey and assign the
Property; that the Property is unencumbered except for (w) the lien of this
Instrument, (x) Liens permitted under Sections 7.2.3(e), (f), (j), (k) and (n)
of the Loan Agreement and (y) Permitted Liens (defined below); and that Borrower
will warrant and defend generally the title to the Property against all claims
and demands, whatsoever, except for (W) the Lien of this Instrument, (X) Liens
permitted under Sections 7.2.3(e), (f), (j), (k) and (n) of the Loan Agreement,
(Y) to the extent subordinate to the Lien of this Instrument, Liens permitted
under Sections 7.2.3(h) and (i) of the Loan Agreement and (Z) easements,
covenants, conditions and restrictions of record and any other encumbrances
approved by Mortgagee for inclusion in the title insurance policy to be issued
to insure the lien of this Instrument (collectively "Permitted Liens").
Borrower and Mortgagee covenant and agree as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay
when due the principal of and interest on the indebtedness evidenced by the
Note, any prepayment and late charges provided in the Note, and all other sums
secured by this Instrument. Borrower shall timely perform its other obligations
under the Loan Agreement and under other instruments given to secure the
indebtedness secured by this Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. If an Event of
Default (as defined in the Loan Agreement, an "Event of Default") shall have
occurred and be continuing, Mortgagee shall have the right, at its option, and
if Lender does not elect to accelerate the indebtedness secured hereby and to
pursue its other remedies, to require Borrower to pay to Mortgagee on the first
day of each month (or on another day designated in writing by Mortgagee), until
the Note is paid in full, a sum (herein "Funds") equal to one-twelfth of (a) the
yearly water and sewer rates and taxes and assessments which may be levied on
the Property; (b) the yearly premium installments for fire and other hazard
insurance, rent loss insurance and such other insurance covering the Property as
Mortgagee may require pursuant to paragraph 5 hereof; and (c) such other Funds
for other taxes, charges, premiums, assessments and impositions in connection
with Borrower or the Property which Mortgagee shall reasonably deem necessary to
protect Mortgagee's interests (herein "Other Impositions"); all as reasonably
estimated initially and from time to time by Mortgagee.
The Funds shall be held and applied by Mortgagee to pay said
rates, taxes, assessments, insurance premiums and Other Impositions so long as
an Event of Default shall have occurred and be continuing. Mortgagee shall make
no charge for so holding and applying the Funds, analyzing said account or for
verifying and compiling said assessments and bills, unless Mortgagee is required
under applicable law to pay Borrower interest, earnings or profits on the Funds
and applicable law permits Mortgagee to make such a charge. Unless applicable
law requires interest, earnings or profits to be paid, Mortgagee shall not be
required to pay Borrower any interest, earnings or profits on the Funds.
Mortgagee shall give to Borrower, without charge, an annual accounting of the
Funds in Mortgagee's normal format showing credits and debits to the Funds and
the purpose for which each debit to the Funds was made. The Funds are pledged as
additional security for the sums secured by this Instrument and shall be subject
to the right of set off.
If the amount of the Funds held by Mortgagee at the time of the
annual accounting thereof shall exceed the amount deemed necessary by Mortgagee
to provide for the payment of water and sewer rates, taxes, assessments,
insurance premiums, and Other Impositions, as they fall due, such excess shall
be credited to Borrower on the next monthly installment or installments of Funds
due. If at any time the amount of the Funds held by Mortgagee shall be less than
the amount deemed necessary by Mortgagee to pay water and sewer rates, taxes,
assessments, insurance premiums, and
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Other Impositions, as they fall due, Borrower shall pay to Mortgagee any amount
necessary to make up the deficiency immediately after notice from Mortgagee to
Borrower requesting payment thereof.
If an Event of Default shall have occurred and be continuing,
Mortgagee may apply, in any amount and in any order as Mortgagee shall determine
in Mortgagee's sole discretion, any Funds held by Mortgagee at the time of
application (a) to pay rates, taxes, assessments, insurance premiums and Other
Impositions which are now or will hereafter become due, or (b) as a credit
against sums secured by this Instrument that are then due (whether at maturity,
upon acceleration or otherwise). Upon payment in full of all sums secured by
this Instrument. Mortgagee shall promptly refund to Borrower any Funds held by
Mortgagee.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
otherwise, all payments received from Borrower under the Note or this Instrument
shall be applied in accordance with the terms and provisions of the Loan
Agreement.
4. CHARGES; LIENS. Borrower shall pay all water and sewer rates,
rents, taxes, assessments, premiums, and Other Impositions attributable to the
Property on or before the date the same became delinquent (subject to Borrower's
right to contest any such amounts as provided in Section 7.2.3(e) of the Loan
Agreement) and, upon Mortgagee's written request, shall promptly furnish to
Mortgagee receipts evidencing such payments *[MI - , provided, however,
Borrower's failure to pay, when due, any taxes and/or assessments attributable
to the Property, or any installment thereof, shall constitute waste as provided
by Act No. 236, Public Acts of 1961 (Revised Judicature Act), Section 600.2927,
as and if amended; and, if an Event of Default shall have occurred and be
continuing Borrower agrees to and hereby consents to the appointment of a
receiver under said statute, should Mortgagee elect to invoke Mortgagee's
remedies provided therein]* .
Borrower shall promptly discharge any lien which has, or may
have, priority over or equality with, the lien of this Instrument (other than
Liens permitted under Sections 7.2.3(e), (j), (k) and (n) of the Loan Agreement
which shall be paid in accordance with the preceding paragraph) and Permitted
Liens, and Borrower shall pay, when due, the claims of all persons supplying
labor or materials to or in connection with the Property (subject to Borrower's
right to contest the same as provided in Section 7.2.3(f) of the Loan
Agreement). Without Mortgagee's prior written permission, Borrower shall not
allow any lien, encumbrance, or other interest in the Property inferior to the
lien of this Instrument to be perfected against the Property, except for Liens
permitted under Sections 7.2.3(e), (f), (h), (i), (j) (k) and (n) of the Loan
Agreement and Permitted Liens, provided that Borrower may contest any mechanic's
or materialman's lien in good faith and by appropriate proceedings as provided
in Section 7.2.3; further provided that Borrower shall cause such mechanic's or
materialman's lien to be promptly discharged of record upon commencement of any
judicial proceeding to enforce such lien out of the Property and shall pay all
reasonable expenses incurred by Mortgagee in order to protect the lien of this
Instrument.
5. HAZARD INSURANCE. Borrower shall keep the improvements now
existing or hereafter erected on the Property insured as provided in Section
7.1.4 of the Loan Agreement. *[MI-, provided, however, Borrower's failure to
pay, when due, all premiums on such insurance policies shall constitute waste as
provided by Act No. 236, Public Acts of 1961 (Revised Judicature Act), Section
600.2927, as and if amended; and Borrower agrees to and hereby consents to the
appointment of a receiver under said statute, should Mortgagee elect to invoke
Mortgagee's remedies provided therein]* .
In the event of loss, Borrower shall promptly give written notice
to the insurance carrier and to Mortgagee. If Borrower fails to timely make
proof of loss or diligently prosecute its insurance claim to completion and such
failure continues for 20 days after notice from Mortgagee or if an Event of
Default shall have occurred and be continuing, Borrower hereby authorizes and
empowers Mortgagee, as attorney-in-fact for Borrower, to make proof of loss, to
adjust and compromise any claim under insurance policies, to appear in and
prosecute any action arising from such insurance policies, to collect and
receive insurance proceeds (but otherwise Borrower shall have the sole right to
do all of the foregoing without Mortgagee's consent), and to deduct therefrom
Mortgagee's expenses incurred in the collection of such proceeds; provided,
however, that nothing
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173
contained in this paragraph shall require Mortgagee to incur any expense or take
any action hereunder. If no Event of Default is continuing and (after a material
casualty) Borrower substitutes Substitute Property/ies (as defined in the Loan
Agreement) for the Property pursuant to Section 7.1.10 of the Loan Agreement,
the insurance proceeds with respect to the Property shall be released, paid and
belong to Borrower. If the insurance proceeds with respect to any casualty do
not exceed $500,000 and no Event of Default is continuing, such proceeds shall
be paid to Borrower to be used by Borrower to restore the Property, with any
excess proceeds remaining after completion of such restoration and payment of
the cost thereof to be applied if and to the extent required under Section 2.2.2
of the Loan Agreement or retained by Borrower. If the insurance proceeds with
respect to any casualty exceed $500,000, such proceeds shall be deposited with
Mortgagee and, if no Event of Default is continuing, shall be held by Mortgagee
in trust, and invested by Mortgagee for the account of Borrower in investments
reasonably selected by Borrower and reasonably approved by Mortgagee, and
disbursed by Mortgagee to Borrower as and when necessary (but not more
frequently than monthly) as the restoration of the Property progresses to pay
for bills due for the cost of such restoration, subject to reasonable conditions
as set forth in the following paragraph, with any excess proceeds (and any
income thereon) remaining after completion of such restoration and payment of
the costs thereof to be applied if and to the extent required under Section
2.2.2 of the Loan Agreement or released to Borrower. If Borrower does not within
90 days following the occurrence of the casualty in question use or commit to
use any insurance proceeds held by Mortgagee pursuant to the preceding sentence
or to substitute Substitute Property/ies for the Property pursuant to Section
7.1.10 of the Loan Agreement, such proceeds shall be applied as provided in
Section 2.2.2 of the Loan Agreement to the extent required therein and any
excess released to Borrower if no Event of Default is continuing. If an Event of
Default shall have occurred and be continuing, Borrower authorizes Mortgagee, at
Mortgagee's option, to apply any insurance proceeds (and any income thereon)
collected or held by Mortgagee as set forth in paragraph 3 hereof, with any
remaining balance to be paid to the person or persons legally entitled thereto.
If the insurance proceeds are held by Mortgagee to reimburse
Borrower for the cost of restoration of the Property, the Property shall be
restored to the equivalent of its original condition or such other condition as
Mortgagee may reasonably approve in writing. Mortgagee may, at Mortgagee's
option, condition disbursement of said proceeds on Mortgagee's approval of such
plans and specifications of an architect reasonably satisfactory to Mortgagee,
contractor's cost estimates, architect's certificates, waivers of liens, sworn
statements of mechanics and materialmen and such other evidence of costs,
percentage completion of construction, application of payments, and satisfaction
of liens as Mortgagee may reasonably require.
If the Property is sold pursuant to paragraph 25 *[WV, NC -
26]* hereof or if Mortgagee acquires title to the Property, Mortgagee shall have
all of the right, title and interest of Borrower in and to any insurance
policies and unearned premiums thereon and in and to the proceeds resulting from
any damage to the Property prior to such sale or acquisition.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Except to the extent
permitted under Section 7.1.3 of the Loan Agreement, Borrower (a) shall not
commit waste or permit impairment or deterioration of the Property, (b) shall
not abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition, or such other condition as Mortgagee may approve in writing,
in the event of any damage, injury or loss thereto, whether or not insurance
proceeds are sufficient to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including improvements,
fixtures, equipment, machinery and appliances thereon in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) materially shall comply with
all laws, ordinances, regulations and requirements of any governmental body
applicable to the Property, (f) if Borrower does not directly manage the
Property, shall maintain professional management of the Property by a management
company approved by Mortgagee, (g) shall operate the Property as a Red Roof Inn,
and (h) shall give notice in writing to Mortgagee of and, unless otherwise
directed in writing by Mortgagee, appear in and defend any action or proceeding
purporting to affect the Property, the security of this Instrument or the rights
or powers of Mortgagee. Except to the extent permitted under Section 7.1.3 of
the Loan Agreement, neither Borrower nor any tenant or other person shall
remove, demolish or alter any improvement now
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174
existing or hereafter erected on the Property or any fixture, equipment,
machinery or appliance in or on the Property except when incident to the
replacement of fixtures, equipment, machinery and appliances with items of like
kind.
7. USE OF PROPERTY. Except to the extent permitted under the Loan
Agreement, unless required by applicable law or unless Mortgagee has otherwise
agreed in writing, Borrower shall not allow changes in the use for which all or
any part of the Property was intended at the time this Instrument was executed.
Borrower shall not initiate or acquiesce in a change in the zoning
classification of the Property without Mortgagee's prior written consent.
8. PROTECTION OF MORTGAGEE'S SECURITY. If Borrower fails to
perform the covenants and agreements contained in this Instrument, or if any
action or proceeding is commenced which affects the Property or title thereto or
the interest of Mortgagee therein, including, but not limited to, eminent
domain, insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Mortgagee at Mortgagee's option may make such
appearances, disburse such sums and take such action as Mortgagee deems
necessary, in its sole discretion, to protect Mortgagee's interest, including,
but not limited to, (a) disbursement of attorney's fees and (b) entry upon the
Property to make repairs.
Any amounts disbursed by Mortgagee pursuant to this paragraph,
with interest thereon, shall become additional indebtedness of Borrower secured
by this Instrument. Unless Borrower and Mortgagee agree to other terms of
payment, such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement at the Base Rate (as defined in the Loan
Agreement) unless collection from Borrower of interest at such rate would be
contrary to applicable law, in which event such amounts shall bear interest at
the highest rate which may be collected from Borrower under applicable law.
Borrower hereby covenants and agrees that Mortgagee shall be subrogated to the
lien of any mortgage or other lien discharged, in whole or in part, by the
indebtedness secured hereby. Nothing contained in this paragraph shall require
Mortgagee to incur any expense or take any action hereunder.
9. INSPECTION. Mortgagee may make or cause to be made reasonable
entries upon and inspections of the Property as provided in Section 7.1.5 of the
Loan Agreement.
10. BOOKS AND RECORDS. Borrower shall keep and maintain at all
times the books of accounts and records required to be maintained pursuant to
Section 7.1.5 of the Loan Agreement. Such books and records shall be subject to
examination as set forth in Section 7.1.5. Borrower shall furnish to Lenders the
financial statements and other financial information required by the terms of
the Loan Agreement.
11. CONDEMNATION. Borrower shall promptly notify Mortgagee of any
action or proceeding relating to any condemnation or other taking, whether
direct or indirect, of the Property, or part thereof, and Borrower shall appear
in and prosecute any such action or proceeding unless otherwise directed by
Mortgagee in writing. If Borrower fails to appear or diligently prosecute its
claim for 20 days after written notice from Mortgagee to do so, or if an Event
of Default shall have occurred and be continuing, Borrower authorizes Mortgagee,
at Mortgagee's option, as attorney-in-fact for Borrower, to commence, appear in
and prosecute, in Mortgagee's or Borrower's name any action or proceeding
relating to any condemnation or other taking of the Property, whether direct or
indirect, and to settle or compromise any claim in connection with such
condemnation or other taking (but otherwise, Borrower shall have the sole right
to do all of the foregoing without Mortgagee's consent). The proceeds of any
award, payment or claim for damages, direct or consequential, in connection with
any condemnation or other taking, whether direct or indirect, of the Property,
or part thereof, or for conveyances in lieu of condemnation, are hereinafter
referred to as "condemnation proceeds". If no Event of Default is continuing and
(after a material condemnation) Borrower substitutes Substitute Property/ies (as
defined in the Loan Agreement) for the Property pursuant to Section 7.1.10 of
the Loan Agreement, the condemnation proceeds with respect to the Property shall
be released, paid and belong to Borrower. If the condemnation proceeds with
respect to any condemnation do not exceed $500,000 and no Event of Default is
continuing, and if restoration is possible such condemnation proceeds shall be
paid to Borrower to be used by Borrower to restore the
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Property, with any excess proceeds remaining after completion of such
restoration and payment of the cost thereof to be applied if and to the extent
required under Section 2.2.2 of the Loan Agreement or retained by Borrower. If
the condemnation proceeds with respect to any condemnation or takes any
conveyance in lieu thereof exceed $500,000, such proceeds shall be deposited
with Mortgagee and, if no Event of Default is continuing, and if restoration is
possible shall be held by Mortgagee in trust, and invested by Mortgagee for the
account of Borrower in investments reasonably selected by Borrower and
reasonably approved by Mortgagee, and disbursed by Mortgagee to Borrower as and
when necessary (but not more frequently than monthly) as the restoration of the
Property progresses to pay for bills due for the cost of such restoration,
subject to reasonable conditions as set forth in the following paragraph, with
any excess proceeds (and any income thereon) remaining after completion of such
restoration and payment of the costs thereof to be applied if and to the extent
required under Section 2.2.2 of the Loan Agreement or released to Borrower. If
Borrower does not within 90 days following the occurrence of the condemnation in
question use or commit to use any condemnation proceeds held by Mortgagee
pursuant to the preceding sentence or to substitute Substitute Property/ies for
the Property pursuant to Section 7.1.10 of the Loan Agreement, such proceeds
shall be applied as provided in Section 2.2.2 of the Loan Agreement to the
extent required therein and any excess released to Borrower if no Event of
Default is continuing. If an Event of Default shall have occurred and be
continuing, Borrower authorizes Mortgagee, at Mortgagee's option, to apply any
condemnation proceeds (and any income thereon) collected or held by Mortgagee as
set forth in paragraph 3 hereof, with the balance, if any, to the person or
persons legally entitled thereto.
If the condemnation proceeds are held by Mortgagee to
reimburse Borrower for the cost of restoration of the Property, the Property
shall be restored to the equivalent of its original condition or such other
condition as Mortgagee may reasonably approve in writing. Mortgagee may, at
Mortgagee's option, condition disbursement of said proceeds on Mortgagee's
approval of such plans and specifications of an architect reasonably
satisfactory to Mortgagee, contractor's cost estimates, architect's
certificates, waivers of liens, sworn statements of mechanics and materialmen
and such other evidence of costs, percentage completion of construction,
application of payments, and satisfaction of liens as Mortgagee may reasonably
require.
12. BORROWER AND LIEN NOT RELEASED. From time to time, Mortgagee
may, at Mortgagee's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on Mortgagee's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of said indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of said indebtedness, accept a renewal
note or Note therefor, *[GA, WV, NC, TN, MO - direct Trustee to]* release from
the lien of this Instrument any part of the Property, take or release other or
additional security, reconvey any part of the Property, consent to any map or
plan of the Property, consent to the granting of any easement, join in any
extension or subordination agreement, or agree in writing with Borrower to
modify the rate of interest or period of amortization of the Note or to change
the amount of the monthly installments payable thereunder. Any actions taken by
Mortgagee *[GA, WV, NC, TN - or Trustee]* pursuant to the terms of this
paragraph shall not affect the obligation of Borrower or Borrower's successors
or assigns to pay the sums secured by this Instrument and to observe the
covenants of Borrower contained herein, shall not affect the guaranty of any
person, corporation, partnership or other entity for payment of the indebtedness
secured hereby, and shall not affect the lien or priority of lien hereof on the
Property. Borrower shall pay Mortgagee a reasonable service charge, together
with such title insurance premiums and attorney's fees as may be incurred at
Mortgagee's option for any such action if taken at Borrower's request.
13. FORBEARANCE BY MORTGAGEE NOT A WAIVER. Any forbearance by
Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any right
or remedy. The acceptance by Lenders of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver of Lenders'
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Mortgagee shall
not be a waiver of Lenders' right to accelerate the maturity of the indebtedness
secured by this Instrument. Lenders' receipt of any
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awards, proceeds or damages under paragraphs 5 and 11 hereof shall not operate
to cure or waive Borrower's default in payment of sums secured by this
Instrument.
14. ESTOPPEL CERTIFICATE. Borrower shall, within 10 days of a
written request from Mortgagee, furnish Mortgagee with a written statement, duly
acknowledged, setting forth the sums secured by this Instrument and any right of
set-off, counterclaim or other defense which exists against such sums and the
obligations of this Instrument.
15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. In addition to
being *[a/an]* *[KY, CT, OH - Open-End]* *[IN, FL, SC, KY, CT, IL, OH, MI -
Mortgage]* *[GA - Deed to Secure Debt]* *[WV, NC, TN, MO - Deed of Trust]* and
Assignment of Rents, this Instrument is intended to be a security agreement
pursuant to the Uniform Commercial Code for any of the items specified above as
part of the Property which under applicable law, may be subject to a security
interest pursuant to the Uniform Commercial Code, and Borrower hereby grants
Mortgagee a security interest in said items. To the extent permitted under
applicable law, Borrower agrees that Mortgagee may file this Instrument, or a
reproduction thereof, in the real estate records or other appropriate index, as
a financing statement for any of the items specified above as part of the
Property. Any reproduction of this Instrument or of any other security agreement
or financing statement shall be sufficient as a financing statement. In
addition, Borrower agrees to execute and deliver to Mortgagee, upon Mortgagee's
request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Instrument in such form as
Mortgagee may require to perfect a security interest with respect to said items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Mortgagee may reasonably require. Without the prior written consent of
Mortgagee, Borrower shall not create or suffer to be created pursuant to the
Uniform Commercial Code any security interest in said items, including
replacements and additions thereto other than (w) the Lien of this Instrument,
(x) Liens permitted under Sections 7.2.3(e), (f), (j) and (k) of the Loan
Agreement, (y) to the extent subordinate to the Lien of this Instrument, Liens
permitted under Sections 7.2.3(h) and (i) of the Loan Agreement and (z)
Permitted Liens. *[IL - except in connection with this mortgage]* If an Event of
Default shall have occurred and be continuing, Mortgagee shall have the remedies
of a secured party under the Uniform Commercial Code and, at Mortgagee's option,
may also invoke the remedies provided in paragraph 25 *[WV, NC - 26]* of this
Instrument as to such items. In exercising any of said remedies, Mortgagee may
proceed against the items of real property and any items of personal property
specified above as part of the Property separately or together and in any order
whatsoever, without in any way affecting the availability of Mortgagee's
remedies under the Uniform Commercial Code or of the remedies provided in
paragraph 25 *[WV, NC - 26]* of this Instrument.
Subject to the terms and conditions contained in this paragraph
15, the Borrower hereby grants to the Mortgagee: (i) a non-exclusive,
irrevocable sublicense right (the "Sublicense") to permit the entities defined
in the subparagraph (c) below to use the federally-registered tradename "Red
Roof Inn" and all other service marks and trademarks used by Borrower in the
operation of its Red Roof Inn motels (the "Trademarks") in the manner described,
and subject to the conditions set forth, in this Paragraph 15; and (ii) a
security interest in the Borrower's license (the "License") under the license
agreement, dated April 2, 1996 entered into between the Borrower and the owner
of the Trademarks (the "License Agreement"). The grant of the Sublicense shall
be subject to the following terms and conditions:
(a) The Sublicense shall be irrevocable but shall automatically
expire upon the payment by Borrower to Mortgagee of all
indebtedness owing under the Loan Agreement.
(b) The scope and permitted use of the Trademarks under the
Sublicense, and the scope of the Mortgagee's security interest in
the License, shall be limited to the use of the Trademarks in the
operation of the Pledged Properties (as defined in the Loan
Agreement) as Red Roof Inn motels.
(c) The Sublicense shall not be assignable by the Mortgagee (other
than to a successor Administrative Agent (as defined in the Cover
Agreement or to the Lenders) or any
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successor agent to the Mortgagee. The rights under the Sublicense
shall be exercisable only by the Lenders, Mortgagee, any
successor Administrative Agent, any court-appointed or authorized
receiver any of the Pledged Properties, any manager or operator
retained or appointed by any of the foregoing, and all their
respective officers, employees and agents (in such capacity), all
of which shall be subject at all times to the terms and
conditions of the License Agreement (except as provided in
subparagraph (d.) below,
(d) The duration of the Sublicense shall be (i) for a period not
to exceed ten (10) years after the first date that the Mortgagee
or a successor Administrative Agent or receiver takes possession
of any of the Pledged Properties, with such use to be without
charge, and (ii) for an indefinite period after such ten-year
period, upon payment to the Borrower by the Lenders of an annual
fee in an amount then customary for such rights within the budget
motel industry; provided, however, that the Sublicense shall
expire at such time as the Lenders have disposed of all interest
of the Lenders in the Pledged Properties, and, as the Sublicense
applies to any one or more of the Pledged Properties, upon the
Mortgagee's voluntary release of its lien (i.e., other than as a
result of a foreclosure of such lien or a deed in lieu of
foreclosure) against any such Pledged Property.
(e) The Borrower covenants that it will take all action required
to preserve for the Mortgagee and the Lenders the right to use
the Trademarks under the terms and conditions contained in this
Paragraph 15 and agrees that the loss of such right by the
Lenders, whether as a result of the Borrower's loss of its
License, or otherwise, shall constitute an additional Event of
Default under the Loan Agreement. Notwithstanding anything to the
contrary contained herein, this covenant shall survive a
foreclose of the lien of this Instrument or a deed in lieu of
foreclosure.
Use of such trademarks, tradenames and business systems, as permitted above, is
not subject to any other limitation, condition or obligation, including without
limitation any inspection procedure or any regulation or standard of operation.
Borrower represents and warrants to Mortgagee that Borrower has taken and will
hereafter take all actions necessary in order to maintain and preserve
Borrower's rights in the trademarks, tradenames and business systems, including
without limitation the filing of all necessary documents with the United States
Patent and Trademark Office.
16. LEASES OF THE PROPERTY. Borrower shall comply with and observe
Borrower's obligations as landlord under all leases of the Property or any part
thereof. Borrower shall furnish Mortgagee with executed copies of all leases now
existing or hereafter made of all or any part of the Property, and all leases
now or hereafter entered into will be in form and substance subject to the
approval of Mortgagee.
Borrower does hereby assign to Mortgagee, as additional
security, all leases now existing or hereafter made of all or any part of the
Property and, to the extent permitted by applicable law, all security deposits
made by tenants in connection with such leases of the Property. If an Event of
Default shall have occurred and be continuing, Mortgagee, at Mortgagee's option,
shall have all of the rights and powers possessed by Borrower prior to such
assignment.
17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument
is distinct and cumulative to all other rights or remedies under this Instrument
or afforded by law or equity, and may be exercised concurrently, independently,
or successively, in any order whatsoever.
18. [INTENTIONALLY OMITTED]
19. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER.
On sale, encumbrance, or transfer of (a) all or any part of the Property, or any
interest therein, or (b) except as *[IN, SC, FL, IL, GA, WV, CT, NC, OH, MI, MO
- - expressly]* permitted in the Loan Agreement, beneficial interests in Borrower,
Mortgagee may, at Mortgagee's option, declare all of the sums secured by this
Instrument to be immediately due and payable, and Mortgagee may invoke any
remedies permitted by paragraph 25 *[WV, NC - 26]* of this Instrument. This
option shall not apply to (i) sales or transfers of fixtures or any personal
property pursuant to paragraph 6
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hereof, (ii) temporary encumbrances paid or contested in good faith pursuant to
paragraph 4 hereof and (iii) sales, encumbrances or transfers permitted under
the Loan Agreement.
20. NOTICE. Except for any notice required under applicable law to
be given in another manner, (a) any notice to Borrower or Mortgagee shall be
given and have effect as provided in Section 10.2 of the Loan Agreement.
21. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and
the rights hereunder shall inure to, the respective successors and assigns of
Mortgagee and Borrower. In exercising any rights hereunder or taking any actions
provided for herein, Mortgagee may act through its employees, agents or
independent contractors as authorized by Mortgagee. The captions and headings of
the paragraphs of this Instrument are for convenience only and are not to be
used to interpret or define the provisions hereof.
22. GOVERNING LAW; SEVERABILITY. *[IN, TN, FL, OH, SC, IL, WV, GA
, KY, NC, MI, MO - The Note and the Loan Agreement are governed by New York law.
This Instrument shall be governed by the law of the jurisdiction in which the
Property is located.]* *[CT This Instrument is governed by Connecticut law.]* In
the event that any provision of this Instrument or the Note conflicts with
applicable law, such conflict shall not affect other provisions of this
Instrument or the Note which can be given effect without the conflicting
provisions, and to this end the provisions of this Instrument and the Note are
declared to be severable. In the event that any applicable law limiting the
amount of interest or other charge permitted to be collected from Borrower is
interpreted so that any charge provided for in this Instrument or in the Note,
whether considered separately or together with other charges levied in
connection with this Instrument and the Note, violates such law, and Borrower is
entitled to the benefit of such law, such charge is hereby reduced to the extent
necessary to eliminate such violation. The amounts, if any, previously paid to
Mortgagee in excess of the amounts payable to Mortgagee pursuant to such charges
as reduced shall be applied by Mortgagee to reduce the principal of the
indebtedness evidenced by the Note. For the purpose of determining whether any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower has been violated, all indebtedness which is secured by
this Instrument or evidenced by the Note and which constitutes interest, as well
as all other charges levied in connection with such indebtedness which
constitute interest, shall be deemed to be uniformly allocated and spread over
the stated term of the Note.
23. WAIVER OF STATUTE OF LIMITATIONS *[IN, MI, FL, OH SC, IL GA,
KY, CT, MO - ; WAIVER OF APPRAISAL. To the extent permitted by applicable law,
Borrower hereby waives the right to assert any statute of limitations as a bar
to the enforcement of the lien of this Instrument or to any action brought to
enforce the Note or any other obligation secured by this Instrument.]* *[WV, NC
- - . (intentionally omitted).]*
*[TN - WAIVER OF STATUTE OF LIMITATIONS; WAIVER OF REDEMPTION AND
WAIVER OF APPRAISAL. To the extent permitted by applicable law, Borrower hereby
waives: (a) the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce
the Note or any other obligation secured by this Instrument; and (b) all rights
of equitable and statutory redemption of the Property.]*
*[WV, NC - 24. WAIVER OF APPRAISAL.]* *[IN, MI, FL, OH, SC, GA,
KY, CT, WV, TN, NC, MO - To the extent permitted by applicable law, Borrower
hereby waives any right of appraisal of the Property. In the event of
foreclosure pursuant to paragraph 25 *[WV - 26]* hereof, Mortgagee may, at
Mortgagee's option, obtain an appraisal of the Property, and any funds expended
by Mortgagee for such purpose shall become indebtedness of Borrower to Mortgagee
secured by this Instrument.]* *[IL - To the extent permitted by applicable law,
Borrower hereby waives any right of appraisement, valuation, redemption
(pursuant to Subsection (b) of Section 15-1601 of The Illinois Mortgage
Foreclosure Law), stay of execution and notice of election to mature or declare
due the whole of the secured indebtedness. In the event of foreclosure pursuant
to paragraph 25 hereof, Mortgagee may, at Mortgagee's option, obtain an
appraisal of the Property, and any funds expended
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by Mortgagee for such purpose shall become indebtedness of Borrower to Mortgagee
secured by this Instrument.]*
24. WAIVER OF MARSHALING. Notwithstanding the existence of any
other security interests in the Property held by Mortgagee or by any other
party, Mortgagee shall have the right to determine the order in which any or all
of the Property shall be subjected to the remedies provided herein. Except to
the extent expressly provided herein, Mortgagee shall have the right to
determine the order in which any or all portions of the indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Borrower, any party who consents to this Instrument,
and any party who now or hereafter acquires a security interest in the Property
and who has actual or constructive notice hereof hereby waives any and all right
to require the marshaling of assets in connection with the exercise of any of
the remedies permitted by applicable law or provided herein, to the extent
permitted by applicable law.
25. ACCELERATION; REMEDIES. If an Event of Default shall have
occurred and be continuing and the sums secured by this Instrument have become
or been declared due and payable pursuant to Section 8.2 or 8.3 of the Loan
Agreement, Mortgagee, at Mortgagee's option, may *[IN, SC, KY, CT, IL, OH, FL -
foreclose this Instrument by judicial proceeding and may invoke]* *[GA invoke
the power of sale herein granted (and Borrower appoints Mortgagee the agent and
attorney in fact for Borrower to exercise said power of sale) and]* *[WV, NC,
TN, MI - invoke the power of sale and]* *[MO - invoke the power of sale and may
invoke]* any other remedies permitted by applicable law *[IL - (the Illinois
Mortgage Foreclosure Law, Ill. Rev. Stats. Ch. 110, Article XV, ss. 15-1101 et
seq., as amended from time to time)]* or *[IN, SC, IL, WV, KY, CT, OH, FL, MO -
as]* provided herein. *[GA - Borrower acknowledges that the power of sale herein
granted may be exercised by Mortgagee without prior judicial hearing. Borrower
has the right to bring an action to assert the non-existence of a breach or any
other defense of Borrower to acceleration and sale.]* *[TN - Borrower
acknowledges that the power of sale herein granted may be exercised by Mortgagee
without prior judicial hearing. Said sale shall be made in accordance with
Tennessee law for cash free of the right and equity of redemption and all other
exemptions which are expressly waived. Borrower has the right to bring an action
to assert the non-existence of a breach or any other defense of Borrower to
acceleration and sale.]* Mortgagee shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including, but not limited to
attorneys' fees and costs of documentary evidence, abstracts and title reports
*[WV, NC - ,all of which shall be additional sums secured by this Instrument]* .
*[MI - MORTGAGOR ACKNOWLEDGES THAT THIS INSTRUMENT CONTAINS A POWER OF SALE AND
THAT IN THE EVENT MORTGAGEE ELECTS TO FORECLOSE BY ADVERTISEMENT PURSUANT TO THE
POWER OF SALE, IN ACCORDANCE WITH MCLA 600.3201 ET SEQ., MORTGAGOR EXPRESSLY
WAIVES NOTICE THEREOF (EXCEPT ANY NOTICE REQUIRED UNDER THE AFORESAID STATUTE),
A HEARING PRIOR TO SALE AND ANY RIGHT, CONSTITUTIONAL OR OTHERWISE, THAT
MORTGAGOR MIGHT OTHERWISE HAVE TO REQUIRE A JUDICIAL FORECLOSURE.]*
*[WV, NC - If Mortgagee invokes the power of sale and if it is
determined in a hearing held in accordance with applicable law that Trustee can
proceed to sale, Trustee shall take such action regarding notice of sale and
shall give such additional notices to Borrower and to other persons as West
Virginia law may require. After the lapse of such time as may be required by
applicable law and after the publication of the notice of sale, Trustee shall
sell the Property according to the laws of West Virginia. Trustee may sell the
Property at the time and place and under the terms designated in the notice of
sale in one or more parcels and in such order as Trustee may determine, at
public auction to the highest bidder for cash. Trustee may postpone sale of all
or any parcel of the Property by public announcement at the time and place of
any previously scheduled sale. Mortgagee or Mortgagee's designee may purchase
the Property at any sale.
Trustee shall deliver to the purchaser Trustee's deed conveying
the Property so sold without any covenant or warranty, expressed or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth of the
statements made therein. Trustee shall apply the proceeds of the sale in the
following order: (a) to all costs and expenses of the sale, including, but not
limited to, Trustee's and attorney's fees and costs of title evidence; (b) to
all sums secured by this Instrument in
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such order as Mortgagee, in Mortgagee's sole discretion, directs; and (c) the
excess, if any, to the person or persons legally entitled thereto, including
holders of inferior liens of which trustee has actual notice. Trustee shall not
be required to take possession of the Property prior to the sale or to deliver
possession of the Property to the purchaser at such sale.]*
*[GA - If Mortgagee invokes the power of sale, Mortgagee shall
mail a copy of a notice of sale to Borrower in the manner provided in paragraph
20 hereof and shall give notice of sale and shall sell the Property according to
the laws of Georgia. Mortgagee may sell the Property at the time and place and
under the terms designated in the notice of sale in one or more parcels and in
such order as Mortgagee may determine. Mortgagee or Mortgagee's designee may
purchase the Property at any sale.
Mortgagee shall deliver to the purchaser Mortgagee's deed to the
Property in fee simple and Borrower hereby appoints Mortgagee Borrower's agent
and attorney-in-fact to make such conveyance. The recitals in Mortgagee's deed
shall be prima facie evidence of the truth of the statements made therein.
Borrower covenants and agrees that Mortgagee shall apply the proceeds of the
sale in the following order: (a) to all reasonable costs and expenses of the
sale, including, but not limited to, reasonable attorney's fees and costs of
title evidence; (b) to all sums secured by this Instrument in such order as
Mortgagee, in Mortgagee's sole discretion, directs; and (c) the excess, if any,
to the person or persons legally entitled thereto. The power and agency hereby
granted are coupled with an interest, are irrevocable by death or otherwise and
are cumulative to the remedies for collection of said indebtedness as provided
by law.
If the Property is sold pursuant to this paragraph 25, Borrower,
or any person holding possession of the Property through Borrower, shall
surrender possession of the Property to the purchaser at such sale on demand. If
possession is not surrendered on demand, Borrower or such person shall be a
tenant holding over and may be dispossessed in accordance with applicable law.]*
*[TN - If Mortgagee invokes the power of sale, Trustee shall give
notice of sale by public advertisement for the time and in the manner provided
by the laws of Tennessee, and Mortgagee or Trustee shall mail a copy of the
notice of sale to Borrower in the manner provided in paragraph 20 hereof.
Trustee, without demand on Borrower, shall sell the Property at the time and
under the terms designated in the notice of sale at public auction to the
highest bidder, in one or more parcels and in such order as Trustee may
determine. Trustee may postpone sale of all or any parcel of the Property by
public announcement at the time and place of any previously scheduled sale.
Mortgagee or Mortgagee's designee may purchase the Property at any sale.
Trustee shall deliver to the purchaser Trustee's deed conveying
the Property so sold without any covenant or warranty, expressed or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth of the
statements made therein. Trustee shall apply the proceeds of the sale in the
following order: (a) to all costs and expenses of the sale, including, but not
limited to, Trustee's and attorney's fees and costs of title evidence; (b) to
all sums secured by this Instrument in such order as Mortgagee, in Mortgagee's
sole discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled thereto.]*
*[MI - Mortgagee may, at Mortgagee's option, sell the Property in
one or more parcels and in such order as Mortgagee may determine, Mortgagee or
Mortgagee's designee may purchase the Property at any sale. The proceeds of the
sale shall be applied in the following order: (a) to all costs and expenses of
the sale, including, but not limited to, attorney's fees and costs of title
evidence; (b) to all sums secured by this instrument in such order as Mortgagee
in Mortgagee's sole discretion, directs; and (c) the excess, if any, to the
person or persons legally untitled thereto.]*
*[MO - If Mortgagee invokes the power of sale, Mortgagee or
Trustee shall mail copies of the notice of sale in the manner prescribed by
applicable law to Borrower and to the other persons prescribed by applicable
law. Trustee shall give notice of sale by public advertisement for the time and
in the manner prescribed by applicable law. Trustee, without demand on Borrower,
shall sell the Property at public auction to the highest bidder for cash at the
time and place and under the terms designated in the notice of sale in one or
more parcels and in such order as Trustee may determine.
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Trustee may postpone sale of all or any parcel of the Property to any later time
on the same date by public announcement at the time and place of any previously
schedule sale Mortgagee or Mortgagee's designee may purchase the property at any
sale.
Trustee shall deliver to the purchaser Trustee's deed conveying
the Property so sold without any covenant or warranty, expressed or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth of the
statements made therein. Trustee shall apply the proceeds of the sale in the
following order: (a) to all reasonable costs and expenses or the sale, including
but not limited to, reasonable Trustee's fees, attorney's fees, costs of suit;
and costs of title evidence; (b) to all sums secured by this Deed of Trust; and
(c) the excess, if any, to the person or persons legally entitled thereto.]*
26. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; MORTGAGEE IN
POSSESSION. As part of the consideration for the indebtedness evidenced by the
Note, Borrower hereby absolutely and unconditionally assigns and transfers to
Mortgagee all the rents and revenues of the Property, including those now due,
past due, or to become due by virtue of any lease, license or other agreement
for the occupancy or use of all or any part of the Property, regardless of to
whom the rents and revenues of the Property are payable. Borrower hereby
authorizes Mortgagee or Mortgagee's agents to collect the aforesaid rents and
revenues and hereby directs each tenant of the Property to pay such rents to
Mortgagee or Mortgagee's agents; provided, however, that unless an Event of
Default shall have occurred and be continuing, Borrower shall collect and retain
all rents and revenues of the Property. If an Event of Default shall have
occurred and be continuing, and without the necessity of Mortgagee entering upon
and taking and maintaining full control of the Property in person, by agent or
by a court-appointed receiver, Mortgagee shall immediately be entitled to
possession of all rents and revenues of the Property as specified in this
paragraph as the same become due and payable, including but not limited to rents
then due and unpaid, and all such rents shall immediately upon delivery of such
notice be held by Borrower as trustee for the benefit of Mortgagee only;
provided, however, that the written notice by Mortgagee to Borrower of such
Event of Default shall contain a statement that Mortgagee exercises its rights
to such rents. Borrower agrees that commencing upon delivery of such written
notice by Mortgagee to Borrower, each tenant of the Property shall make such
rents payable to and pay such rents to Mortgagee or Mortgagee's agents on
Mortgagee's written demand to each tenant therefor, delivered to each tenant
personally, by mail or delivering such demand to each rental unit, without any
liability on the part of said tenant to inquire further as to the existence of a
default by Borrower.
Borrower hereby covenants that Borrower has not executed
any prior assignment of said rents, that Borrower has not performed, and will
not perform, any acts and has not executed, and will not execute, any instrument
which would prevent Mortgagee from exercising its rights under this paragraph,
and that at the time of execution of this Instrument there has been no
anticipation or prepayment of any of the rents of the Property for more than 2
months prior to the due dates of such rents, except security deposits and rents
collected in advance as security. Borrower covenants that Borrower will not
hereafter collect or accept payment of any rents of the Property more than 2
months prior to the due dates of such rents, except security deposits and rents
collected in advance as security. Borrower further covenants that Borrower will
execute and deliver to Mortgagee such further assignments of rents and revenues
of the Property as Mortgagee may from time to time request.
*[MI - Subject to applicable law,]* If an Event of Default
shall have occurred and be continuing, Mortgagee may in person, by agent or by a
court-appointed receiver, regardless of the adequacy of Mortgagee's security,
enter upon and take and maintain full control of the Property in order to
perform all acts necessary and appropriate for the operation and maintenance
thereof including, but not limited to, the execution, cancellation or
modification of leases, the collection of all rents and revenues of the
Property, the making of repairs to the Property and the execution or termination
of contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Instrument. In the
event Mortgagee elects to seek the appointment of a receiver for the Property if
an Event of Default shall have occurred and be continuing, Borrower hereby
expressly consents to, the appointment of such receiver. Mortgagee or the
receiver shall be entitled to receive a reasonable fee for so managing the
Property.
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All rents and revenues collected, if an Event of Default
shall have occurred and be continuing, shall be applied first to the costs, if
any, of taking control of and managing the Property and collecting the rents,
including, but not limited to, attorney's fees, receiver's fees, premiums on
receiver's bonds, costs of repairs to the Property, premiums on insurance
policies, taxes, assessments and other charges on the Property, and the costs of
discharging any obligation or liability of Borrower as lessor or landlord of the
Property and then to the sums then due that are secured by this Instrument.
Mortgagee or the receiver shall have access to the books and records used in the
operation and maintenance of the Property and shall be liable to account only
for those rents actually received. Mortgagee shall not be liable to Borrower,
anyone claiming under or through Borrower or anyone having an interest in the
Property by reason of anything done or left undone by Mortgagee under this
paragraph.
If the rents of the Property are not sufficient to meet the
costs, if any, of taking control of and managing the Property and collecting the
rents, any funds expended by Mortgagee for such purposes shall become
indebtedness of Borrower to Lenders secured by this Instrument pursuant to
paragraph 8 hereof. Unless Mortgagee and Borrower agree in writing to other
terms of payment, such amounts shall be payable upon notice from Mortgagee to
Borrower requesting payment thereof and shall bear interest from the date of
disbursement Base Rate (as defined in the Loan Agreement).
Any entering upon and taking and maintaining of control of
the Property by Mortgagee or the receiver and any application of rents as
provided herein shall not cure or waive any default hereunder or invalidate any
other right or remedy of Mortgagee under applicable law or as provided herein.
This assignment of rents shall terminate at such time as this Instrument ceases
to secure indebtedness held by Lenders.
*[MI - NOTICE OF ABSOLUTE ASSIGNMENT OF RENTS. Mortgagor
acknowledges and agrees that: (a) the assignment of rents hereunder to Mortgagee
is and is intended to be an absolute present assignment of rents pursuant to
MCLA 554.231 et. seq., if an Event of Default shall have occurred and be
continuing without any action by Mortgagee, while an Event of Default is
continuing, Mortgagor shall have no further right to collect or otherwise
receive such rents and that such rents will be the absolute and sole property of
Mortgagee pursuant to such statute; (b) any rents collected or received by
Mortgagor while an Event of Default shall be continuing, shall be held in trust
by Mortgagor for the benefit of Mortgagee, and Mortgagor shall have no right
thereto or interest therein; and (c) while an Event of Default shall be
continuing, such rents, as the sole and absolute property of Mortgagee, will not
under any circumstances be available to Mortgagor or any trustee of Mortgagor in
any bankruptcy proceeding. This assignment shall continue and remain in full
force and effect during any foreclosure proceedings relating to this Instrument
and the period of redemption, if any, and until all sums secured by this
Instrument, together with interest thereon, shall have been paid in full. If the
entire balance secured hereunder shall be bid by Mortgagee at the foreclosure
sale (by cash or otherwise) or by a third party at such sale, said assignment
shall nonetheless continue for the benefit of the successful bidder, with any
rent collected by Mortgagee, the purchaser at the foreclosure sale or their
successors (net of operating expenses actually paid) to be applied in reduction
of the redemption price. If an Event of Default shall have occurred and be
continuing, Mortgagee shall have the full right and power to collect the
assigned rents, security deposits, issues, profits, income and proceeds by
demand, suit or otherwise. All monies received by Mortgagee pursuant to said
assignment shall be applicable at the option of Mortgagee in the manner
hereinafter provided for the use of such funds if paid to a receiver appointed
to manage the Property or in the manner provided for the application of proceeds
from sale of the Property in the event of a foreclosure.]*
27. HAZARDOUS SUBSTANCES. (A) Borrower hereby covenants and
agrees with Mortgagee that the following terms shall have the following
meanings:
(i) "Environmental Laws" means all federal, state and local laws,
statutes, ordinances, and codes relating to the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous Substance and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives with respect thereto.
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(ii) "Hazardous Substance" means, without limitation, any
flammable explosives, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum based products,
methane, hazardous materials, hazardous wastes, hazardous or toxic Substances or
related materials, as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. Sections 2601, et seq.), or any other applicable Environmental Law.
(iii) "Indemnitee" means Mortgagee, Lenders, their participants in
the loan, and all subsequent holders of this Instrument, their respective
successors and assigns, their respective officers, directors, employees, agents,
representatives, contractors and subcontractors.
(iv) "Release" has the same meaning as given to that term in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, et seq.), and the regulations promulgated
thereunder.
(B) Borrower represents and warrants to Mortgagee that, to its
knowledge after due investigation and except (i) as disclosed in the
environmental assessment and/or update report prepared by TRC Environmental in
connection with the Property or (ii) to the extent that, in the aggregate
(together with similar circumstances with respect to any other Pledged Property
(as defined in the Loan Agreement)), any of the following would not reasonably
be expected to result in a Material Adverse Effect (as defined in the Loan
Agreement): (i) the Property is not being and has not been used for the storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Substance in violation of any Environmental Laws; (ii)
the Property does not contain any Hazardous Substance in violation of any
Environmental Laws; (iii) there has been no Release of any Hazardous Substance
on, at or from the Property or any property adjacent to or within the immediate
vicinity of the Property, and Borrower has not received any form of notice or
inquiry with regard to such a Release or the threat of such a Release; (iv) no
event has occurred with respect to the Property which, with the passage of time
or the giving of notice, or both, would constitute a violation of any applicable
Environmental Law; (v) there are no agreements or orders or directives of any
federal, state or local governmental agency or authority relating to the
Property which require any work, repair, construction, containment, clean up,
investigations, studies, removal or other remedial action with respect to the
Property and (vi) there are no actions, suits, claims or proceedings, pending or
threatened, which seek any remedy that arise out of the condition, ownership,
use, operation, sale, transfer or conveyance of the Property and (a) a violation
or alleged violation of any applicable Environmental Law, (b) the presence of
any Hazardous Substance or a Release of any Hazardous Substance or the threat of
such a Release, or (c) human exposure to any Hazardous Substance.
(C) Borrower covenants and agrees with Mortgagee as follows:
(i) Borrower shall keep, and shall use reasonable efforts to cause
all operators, tenants, sub-tenants, licensees, and occupants of the Property to
keep, the Property free of all Hazardous Substances, except for (A) Hazardous
Substances stored, treated, generated, transported, processed, handled, produced
or disposed of in the normal operation of the Property as a motel in accordance
with all Environmental Laws, (B) non-friable asbestos and (C) any Hazardous
Substances that have not resulted and would not reasonably be expected to result
in a material liability to the Borrower.
(ii) Borrower shall comply with, and shall use reasonable efforts
to cause all operators, tenants, sub-tenants, licensees, and occupants of the
Property to comply with, all Environmental Laws in all material respects.
(iii) Borrower shall promptly provide Mortgagee with a copy of all
notifications which it gives or receives with respect to any past or present
material Release of any Hazardous Substance or the threat of such a Release on,
at or from the Property or any property adjacent to or within the immediate
vicinity of the Property.
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(iv) Borrower shall undertake and complete all investigations,
studies, sampling and testing for Hazardous Substances reasonably required by
Mortgagee and, in accordance with all Environmental Laws, all material removal
and other remedial actions necessary to contain, remove, and clean up all
Hazardous Substances that are determined to be present at the Property in
material violation of any Environmental Law.
(v) Mortgagee shall have the right, but not the obligation, to
cure any material violation by Borrower of the Environmental Laws and
Mortgagee's reasonable cost and expense to so cure shall be secured by this
Instrument.
(D) Borrower covenants and agrees, at its sole cost and expense,
to indemnify, defend and save harmless Indemnitee from and against any and all
damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, actions, proceedings, costs, disbursements
and/or expenses (including, without limitation, reasonable attorneys' and
experts' fees and expenses) of any kind or nature whatsoever which may at any
time be imposed upon, incurred by or asserted or awarded against Indemnitee
arising out of the condition, ownership, use or operation of the Property during
or prior to the Borrower's occupancy thereof and (i) the storage, treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous Substance, (ii) the presence of any Hazardous Substance or a Release
of any Hazardous Substance or the threat of such a Release, (iii) human exposure
to any Hazardous Substance or (iv) a violation of any Environmental Law
(collectively the "Indemnified Matters").
The liability of Borrower to Indemnitee hereunder shall in no way
be limited, abridged, impaired or otherwise affected by (a) the repayment of all
sums and the satisfaction of all obligations of Borrower under the Note, this
Instrument, or any other instrument evidencing or securing the Note (herein
collectively the "Loan Documents"), (b) the foreclosure of this Instrument or
the acceptance of a deed in lieu thereof, (c) any amendment or modification of
the Loan Documents by or for the benefit of Borrower or any subsequent owner of
the Property, (d) any extensions of time for payment or performance required by
any of the Loan Documents, (e) the release or discharge of this Instrument or of
Borrower, any guarantor of the loan, or any other person from the performance or
observance of any of the agreements, covenants, terms or conditions contained in
any of the Loan Documents whether by Mortgagee, by operation of law, or
otherwise, (f) the invalidity or unenforceability of any of the terms or
provisions of the Loan Documents, (g) any applicable statute of limitations, (h)
the sale or assignment of the Note or this Instrument, (i) the sale, transfer,
or conveyance of all or part of the Property, (j) the dissolution or liquidation
of Borrower, (k) the release or discharge, in whole or in part, of Borrower in
any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceeding, or (l) any other circumstances
which might otherwise constitute a legal or equitable release or discharge, in
whole or in part, of Borrower under the Note or this Instrument.
The foregoing indemnity shall be in addition to any and all other
obligations and liabilities Borrower may have to Mortgagee at common law.
28. RELEASE. Upon payment of all sums secured by this Instrument,
the Lien and encumbrance of this Instrument shall be null and void and shall be
released, and Mortgagee *[NC and each other case where there is a Trustee - and
Trustee] * shall execute and deliver any instrument or document reasonably
requested by Borrower to evidence and effectuate such release. Upon (x) a
substitution of a Pledged Property (as defined in the Loan Agreement) for the
Property pursuant to Section 7.1.10 of the Loan Agreement, (y) a sale of the
Property pursuant to Section 7.2.10 of the Loan Agreement or (z) satisfaction of
condition (i), (ii) or (iii) of Section 2.8 of the Loan Agreement, the Lien and
encumbrance of this Instrument shall be released, and Mortgagee *[NC and each
other case where there is a Trustee - and Trustee] * shall execute and deliver
any instrument or document reasonably requested by Borrower to evidence and
effectuate such release. Borrower shall pay Mortgagee's reasonable out-of-pocket
costs incurred in discharging this Instrument.
*[MO - 29. BUSINESS PURPOSE. Borrower covenants that the proceeds
of the loan evidenced by the Note and secured by this Instrument will be used
for business purposes as specified in Section 408.015(2) of the Revised Statutes
of Missouri as amended, and that the principal
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obligation secured hereby constitutes a business loan which comes within the
purview of said Section.]*
29. PRIORITY OF LIEN. This Instrument shall remain in full force
and effect notwithstanding any extension or extensions of the maturity date or
other reamortization of the obligations which this Instrument secures and
notwithstanding the fact that such extensions and reamortizations may be
evidenced by a note or Note signed and dated after the date of this Instrument.
*[ MO, TN - 30.
SUBSTITUTE TRUSTEE. Mortgagee, at Mortgagee's option, may from
time to time remove Trustee and appoint a successor trustee to any Trustee
appointed hereunder by an instrument recorded in the county in which this
Instrument is recorded. Without conveyance of the Property, the successor
trustee shall succeed to all the title, power and duties conferred upon the
Trustee herein and by applicable law.]*
*[GA - 30. DEED TO SECURE DEBT. This conveyance is to be construed
under the existing laws of the State of Georgia as a deed passing title, and not
as a mortgage, and is intended to secure the payment of all sums secured
hereby.]*
30. *[WV - OBLIGATORY]* *[IN, TN, OH, SC, IL, WV, CT, KY, MI -
LOAN]* *[NC, TN, IN, OH, SC, IL, WV, CT, KY, MI - ADVANCES]*. This Instrument
shall secure unpaid balances of loan advances which Lenders are obligated to
make and letters of credit that the L/C Issuer (as defined in the Loan
Agreement) is obligated to issue after this Instrument is delivered to the
Recorder for record pursuant to the provisions of the Note and the Loan
Agreement*[IN - , whether made after a reduction to a zero or other balance]*.
The maximum amount of the unpaid balance of said obligatory loan advances and
letters of credit, in the aggregate and exclusive of interest accrued thereon,
which may be outstanding at any time is Two Hundred Fifty Million Dollars
($250,000,000.00). *[WV - The future advances and letters of credit are intended
to be obligatory pursuant to West Virginia Code Section 38-1-14.]* *[NC - The
maximum amount which may be secured hereby at any one time is Two Hundred Fifty
Million Dollars ($250,000,000.00). The time period with which such future
advances and letters of credit are to be made is the period between the date
hereof and a date five (5) years from the date hereof. Advances and letters of
credit secured hereby shall not be required to be evidenced by a "written
instrument of notation" as described in Section 45-68(2) of the North Carolina
General Statutes, it being the intent of the parties that the requirements of
Section 45-68(2) for a "written instrument or notation" for each advance or
letter of credit shall not be applicable to advances made under the Loan
Agreement and the Note.]*
*[FL - LOAN ADVANCES. This Instrument shall secure unpaid balances
of loan advances to be made by Lenders and letters of credit that the L/C Issuer
(as defined in the Loan Agreement) is obligated to issue within twenty (20)
years after this Instrument is delivered to the Recorder for record pursuant to
the provisions of the Note and the Loan Agreement. Borrower and Mortgagee intend
that all future advances and letters of credit made within twenty (20) years
from the date hereof shall have the original lien priority regardless of the
dates of such advances; provided, however, that the unpaid balance secured by
this mortgage at any one time shall not exceed Two Hundred Fifty Million Dollars
($250,000,000.00) plus interest thereon; and plus any disbursements made by the
Mortgagee for the payment of taxes, levies and insurance premiums on the
mortgaged property, together with interest on such disbursements.]*
*[WV, NC - 32. SUBSTITUTE TRUSTEE. Mortgagee, at Mortgagee's
option, may from time to time remove Trustee and appoint a successor trustee to
any Trustee appointed hereunder by an instrument recorded in the city or county
in which this Instrument is recorded. Without conveyance of the Property, the
successor trustee shall succeed to all the title, power and duties conferred
upon the Trustee herein and by applicable law.]*
*[WV - 33. BENEFICIAL OWNER. The Lenders are the beneficial owners
and holders of the indebtedness secured hereby at the time of execution and
delivery hereof, and are acting through their duly authorized agent, The
Huntington National Bank, whose address is stated in the first paragraph of the
first page of this Instrument.]*
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IN WITNESS WHEREOF, Borrower, by its duly authorized officer, has
executed this Instrument.
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INDIANA, WEST VIRGINIA
RED ROOF INNS, INC.
By:____________________________________
Its:___________________________________
(Corporate Seal)
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GEORGIA
Signed, sealed and delivered RED ROOF INNS, INC.
in the presence of:
________________________________ By:__________________________________
Signature
________________________________ Its:_________________________________
Printed Name
Unofficial Witness (Corporate Seal)
________________________________
Signature
ATTEST:
________________________________ By: _________________________________
Printed Name
Notary Public Its: ________________________________
Date of Notarization: _________________________
My Commission Expires: ________________________
[Notary Seal]
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189
KENTUCKY, CONNECTICUT, NORTH CAROLINA, OHIO, FLORIDA, MICHIGAN, MISSOURI
Signed and acknowledged RED ROOF INNS, INC.
in the presence of:
________________________________ By:____________________________________
Signature
________________________________ Its:___________________________________
Printed Name
________________________________
Signature
________________________________
Printed Name
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190
NORTH CAROLINA
ATTEST: RED ROOF INNS, INC.
_________________________________ By:_________________________________
Its:_______________________________ Its:________________________________
(CORPORATE SEAL)
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191
ILLINOIS
RED ROOF INNS, INC.
By:____________________________________
Its:___________________________________
(Corporate Seal)
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192
TENNESSEE
ATTEST: RED ROOF INNS, INC.
________________________________ By:______________________________
Its:____________________________ Its:_____________________________
(Corporate Seal)
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193
MISSOURI
IN WITNESS WHEREOF, Trustee has executed this Instrument.
_________________________________ By: ____________________________________
Signature
_________________________________
Printed Name
_________________________________
Signature
_________________________________
Printed Name
STATE OF MISSOURI,
COUNTY OF JACKSON, SS:
On this__________ day of May, 1997, before me a Notary Public in and
for said County and State, personally appeared________________________________,
known to me to be the person who executed the foregoing instrument and
acknowledged to me that (s)he did so execute said instrument as his/her free act
and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________________
Notary Public
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INN NO. ______________
________________, Ohio
OPEN-END MORTGAGE
MODIFICATION AGREEMENT
THIS OPEN-END MORTGAGE MODIFICATION AGREEMENT (hereinafter the
"Modification") is made this _____ day of May, 1997, by and between RED ROOF
INNS, INC., a Delaware corporation, whose address is 4355 Davidson Road,
Hilliard, Ohio 43026 (hereinafter "Borrower") and THE HUNTINGTON NATIONAL BANK,
a national banking association, whose address is 41 South High Street, Columbus,
Ohio 43215, as Administrative Agent (as defined in the Restated Credit
Agreement, defined below) for itself and for all other financial institutions
which now are or hereafter become Lenders (as defined in the Restated Credit
Agreement, defined below) (hereinafter "Mortgagee").
RECITALS
A. Borrower, Mortgagee (as a Lender) and certain other Lenders are
parties to a Loan Agreement, dated November 9, 1995, as amended in a First
Amendment to Loan Agreement, dated November 21, 1995, in a Second Amendment to
Loan Agreement, dated December ____, 1995, in a Third Amendment to Loan
Agreement, dated April 16, 1996, and in a Fourth Amendment to Loan Agreement,
dated June 27, 1996 (hereinafter collectively the "Original Credit Agreement"),
pursuant to which those Lenders have committed to advance to Borrower, on a
revolving credit basis, up to One Hundred Fifty Million Dollars
($150,000,000.00). The principal amount outstanding as of the date of this
Modification is _________________________________________________________
Dollars ($________________).
B. Borrower has evidenced its obligation to repay indebtedness
incurred under the Original Credit Agreement by executing and delivering, from
time to time, Revolving Notes to those Lenders.
C. In order to secure repayment of up to One Hundred Million Dollars
($100,000,000.00) of the indebtedness incurred under the Original Credit
Agreement and evidenced by Revolving Notes, Borrower executed and delivered to
Mortgagee a certain Open-End Mortgage, Assignment of Rents and Security
Agreement (hereinafter the "Instrument"), dated November 9, 1995, recorded in
Mortgage Record Volume ____________, beginning at Page ____________, Recorder's
Office, ____________________ County, Ohio, which Instrument encumbers one of a
total of forty-two Red Roof Inn motels mortgaged by Borrower to or for the
benefit of Mortgagee in order to secure indebtedness incurred under the Original
Credit Agreement.
D. Borrower, Mortgagee (as a Lender), certain existing Lenders and
additional financial institutions which have become Lenders have agreed to amend
and restate in its entirety the Original Credit Agreement in an Amended and
Restated Credit Agreement (hereinafter the "Restated Credit Agreement"), dated
as of May _______, 1997, the provisions of which are made a part of the
Instrument as amended in this Modification, wherein Borrower and Lenders have
agreed to increase the credit facility from One Hundred Fifty Million Dollars
($150,000,000.00) to Two Hundred Fifty Million Dollars ($250,000,000.00), which
includes the principal amount outstanding on the date of this Modification and
the principal amount secured by the Instrument, which aggregate indebtedness, in
accordance with the terms and conditions of the Restated Credit Agreement, will
continue to be advanced from time to time, repaid and readvanced in partial
amounts prior to the maturity date, and which advances shall have the same lien
priority under the Instrument regardless of the dates of such advances. Borrower
and Lenders have also modified the terms of repayment in certain respects and
have extended the maturity date from January 15, 1999, to May 21, 2002, all as
more particularly set forth in the Restated Credit Agreement.
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E. As additional security for the indebtedness incurred under the
Restated Credit Agreement, Borrower has executed and delivered to Mortgagee
mortgages, deeds of trust and deeds to secure debt encumbering approximately
forty-one additional Red Roof Inn motels.
F. Borrower and Mortgagee have modified all or substantially all of
the previously granted mortgages, deeds of trust and deeds to secure debt and
now desire to modify the Instrument in order to give notice of the extended
maturity date and to provide that the Instrument secures such aggregate
indebtedness and all other obligations of Borrower set forth in the Restated
Credit Agreement.
AGREEMENT
1. RECITALS. The foregoing recitals are accurate and are hereby made a
part of this Modification and a part of the Instrument.
2. DEFINITIONS; INTERPRETATION. As used in the Instrument and
hereafter in this Modification: (a) references to the "Instrument" shall mean
the Instrument as modified in this Modification and all renewals, extensions
and modifications thereof, (b) references to "Lender" or to "Mortgagee" shall
mean and refer to the Administrative Agent, (b) references to "members of the
Bank Group" or to "Lenders" shall mean and refer to the Lenders under and as
defined in the Loan Agreement, (c) references to the "Loan Agreement" shall
mean and refer to the Restated Credit Agreement and all renewals, extensions
and modifications thereof, (d) references to the "Note" shall mean and refer to
the Note defined in Paragraph 3 below, and (e) capitalized terms used but not
defined in this Modification shall have the meanings assigned to them in the
Loan Agreement. In the event of a conflict between the Instrument, on the one
hand, and this Modification, on the other hand, the provisions of this
Modification shall govern. In the event of a conflict between the Loan
Agreement, on the one hand, and the Instrument and/or this Modification, on the
other hand, the provisions of the Loan Agreement shall govern.
3. SECURED OBLIGATIONS. The obligations secured by the Instrument are
amended and restated in their entireties as follows:
"NOW, THEREFORE, IN ORDER TO SECURE (a) the repayment of the principal
indebtedness evidenced by the Revolving Notes (as defined in the Loan
Agreement) now or hereafter executed and delivered by Borrower and all
renewals, extensions and modifications thereof together with interest
thereon (hereinafter collectively the "Revolving Notes"); (b) the
repayment of the principal indebtedness evidenced by the Swingline Note
(as defined in the Loan Agreement) now or hereafter executed and
delivered by Borrower and all renewals, extensions and modifications
thereof together with interest thereon (hereinafter collectively the
"Swingline Note"); (c) the reimbursement of amounts drawn under Letters
of Credit (as defined in the Loan Agreement) delivered by L/C Issuer
(as defined in the Loan Agreement) for the benefit of Borrower, as
account party, and all renewals, extensions and modifications thereof,
together with interest thereon; hereinafter the Revolving Notes, the
Swingline Note, and the reimbursement obligations for Letters of Credit
described in the foregoing clauses (a), (b) and (c) are collectively
referred to as the "Note"; (d) the repayment of all amounts owed under
certain Hedging Obligations (as defined in the Loan Agreement) entered
into by Borrower and Lenders or affiliates of Lenders contemporaneously
herewith and hereafter; (e) the payment of all fees, late charges,
prepayment premiums or charges and other amounts owed under the Loan
Agreement or under the Note; (f) the performance of all other
obligations of Borrower under the Loan Agreement or under other
security instruments securing repayment of indebtedness and performance
of obligations incurred by Borrower pursuant to the Loan Agreement, and
all amendments thereof; (g) the repayment of all other sums advanced in
accordance with the Instrument to protect the security of the
Instrument, with interest thereon; and (h) the performance of all other
covenants, agreements and obligations of Borrower in the Instrument,
Borrower does hereby
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mortgage, warrant, grant, convey, bargain, sell and assign to
Mortgagee, its successors and assigns forever, for the benefit of the
Lenders, the following described real and personal property:"
4. LEASED EQUIPMENT; LICENSES. The parenthetical exclusion for leased
or separately financed equipment and the assignment of Borrower's rights in
equipment leases appearing in the paragraph immediately following the reference
to Exhibit "A" on page 1 of the Instrument are amended as follows:
(a) The parenthetical exclusion is restated as follows:
"(excluding, however, leases or separately financed televisions,
telephones, copiers, fax machines, data processing equipment, satellite
and data dishes and other equipment, together with associated
electronic equipment, hardware, cables and fittings)"; and
(b) The reference to "Borrower's rights as lessee under
equipment leases" is amended by adding "(but only to the extent a lien
may be granted on the same without consent and without giving rise to a
default under or right to terminate the same)."
The reference to "all permits, licenses and approvals necessary to
construct and operate the improvements" is amended by adding "(but only to the
extent a Lien may be granted on the same without consent and without giving rise
to a default under or right to terminate the same)".
5. WARRANTY OF TITLE. The warranty of title paragraph in the
Instrument is amended and restated in its entirety as follows:
"Borrower covenants that Borrower is lawfully seized of the estate
hereby conveyed and has the right to mortgage, grant, convey and assign
the Property; that the Property is unencumbered except for (w) the Lien
of this Instrument, (x) Liens permitted under Sections 7.2.3(e), (f),
(j), (k) and (n) of the Loan Agreement and (y) Permitted Liens (defined
below); and that Borrower will warrant and defend generally the title
to the Property against all claims and demands, whatsoever, except (W)
the Lien of this Instrument, (X) Liens permitted under Sections
7.2.3(e), (f), (j), (k) and (n), (Y) to the extent subordinate to the
Lien of this Instrument, Liens permitted under Sections 7.2.3(h) and
(i), and (Z) easements, covenants, conditions and restrictions of
record and any other encumbrances approved by Mortgagee for inclusion
in the title insurance policy issued to insure the lien of this
Instrument (herein collectively 'Permitted Liens')."
6. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Paragraph 2 of the
Instrument is amended by clarifying that (i) Funds (as defined therein) will not
be collected unless an Event of Default (as defined in the Loan Agreement, an
"Event of Default") shall have occurred and be continuing and Lenders do not
elect to accelerate and pursue other remedies, (ii) Funds collected will be
applied to pay rates, taxes, assessments, insurance premiums and Other
Impositions (as defined therein) unless a subsequent Event of Default shall have
occurred and be continuing, and (iii) if an Event of Default shall have occurred
and be continuing and Mortgagee applies Funds against sums secured by the
Instrument, such application may be made only to sums that are then due (whether
at maturity, upon acceleration or otherwise).
7. APPLICATION OF PAYMENTS. Paragraph 3 of the Instrument is amended
and restated in its entirety as follows:
"Unless applicable law provides otherwise, all payments received from
Borrower under the Note or this Instrument shall be applied in
accordance with the provisions of the Loan Agreement."
8. CHARGES; LIENS. The first paragraph of Paragraph 4 of the
Instrument is amended to provide that Borrower shall pay all water and sewer
rates, rents, taxes, assessments, premiums and Other Impositions on or before
the date the same become delinquent, subject to Borrower's right to
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contest taxes and assessments by appropriate proceedings as provided in Section
7.2.3(e) of the Loan Agreement.
The second paragraph of Paragraph 4 of the Instrument is amended and
restated in its entirety as follows:
"Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument (other than
Liens permitted under Section 7.2.3(e), (j), (k) and (n) of the Loan
Agreement which shall be paid in accordance with the preceding
paragraph and (y) Permitted Liens), and Borrower shall pay, when due,
the claims of all persons supplying labor or materials to or in
connection with the Property (subject to Borrower's right to contest
the same as provided in Section 7.2.3(f) of the Loan Agreement).
Without Mortgagee's prior written permission, Borrower shall not allow
any lien, encumbrance, or other interest in the Property inferior to
the lien of this Instrument to be perfected against the Property,
except for Liens permitted under Section 7.2.3(e), (f), (h), (i), (j),
(k) and (n) of the Loan Agreement and Permitted Liens, provided that
Borrower may contest any mechanic's or materialman's lien in good faith
and by appropriate proceedings as provided in Section 7.2.3; further
provided that Borrower shall cause such mechanic's or materialman's
lien to be promptly discharged of record upon commencement of any
judicial proceeding to enforce such lien out of the Property and shall
pay all reasonable expenses incurred by Mortgagee in order to protect
the lien of this Instrument."
9. HAZARD INSURANCE. The first paragraph of Paragraph 5 of the
Instrument is amended and restated in its entirety as follows:
"Borrower shall keep the improvements now existing or hereafter erected
on the Property insured as provided in Section 7.1.4 of the Loan
Agreement."
The second paragraph of Paragraph 5 is deleted.
The third paragraph of Paragraph 5 is amended and restated in its
entirety as follows:
"In the event of loss, Borrower shall promptly give written notice to
the insurance carrier and to Mortgagee. If Borrower fails to timely
make proof of loss or diligently prosecute its insurance claim and such
failure continues for 20 days after written notice from Mortgagee or if
an Event of Default shall have occurred and be continuing, Borrower
hereby authorizes and empowers Mortgagee, as attorney-in-fact for
Borrower, to make proof of loss, to adjust and compromise any claim
under insurance policies, to appear in and prosecute any action arising
from such insurance policies, to collect and receive insurance proceeds
(but otherwise Borrower shall have the sole right to do all of the
foregoing without Mortgagee's consent), and to deduct therefrom
Mortgagee's expenses incurred in the collection of such proceeds;
provided, however, that nothing contained in this paragraph shall
require Mortgagee to incur any expense or take any action hereunder. If
no Event of Default is continuing and (after a material casualty)
Borrower substitutes Substitute Property/ies (as defined in the Loan
Agreement) for the Property pursuant to Section 7.1.10 of the Loan
Agreement, the insurance proceeds with respect to the Property shall be
released, paid and belong to Borrower. If the insurance proceeds with
respect to any casualty do not exceed $500,000 and no Event of Default
is continuing, such proceeds shall be paid to Borrower to be used by
Borrower to restore the Property, with any excess proceeds remaining
after completion of such restoration and payment of the cost thereof to
be applied if and to the extent required under Section 2.2.2 of the
Loan Agreement or retained by Borrower. If the insurance proceeds with
respect to any casualty exceed $500,000, such proceeds shall be
deposited with Mortgagee and, if no Event of Default is continuing,
shall be held by Mortgagee in trust, and invested by Mortgagee for the
account of Borrower in
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investments reasonably selected by Borrower and reasonably approved by
Mortgagee, and disbursed by Mortgagee to Borrower as and when necessary
(but not more frequently than monthly), as the restoration of the
Property progresses, to pay for bills due for the cost of such
restoration, subject to reasonable conditions as set forth in the
following paragraph, with any excess proceeds (and any income thereon)
remaining after completion of such restoration and payment of the costs
thereof to be applied if and to the extent required under Section 2.2.2
of the Loan Agreement or released to Borrower. If Borrower does not
within 90 days following the occurrence of the casualty in question use
or commit to use any insurance proceeds held by Mortgagee pursuant to
the preceding sentence or to substitute Substitute Property/ies for the
Property pursuant to Section 7.1.10 of the Loan Agreement, such
proceeds shall be applied as provided in Section 2.2.2 of the Loan
Agreement to the extent required therein and any excess released to
Borrower if no Event of Default is continuing. If an Event of Default
shall have occurred and be continuing, Borrower authorizes Mortgagee,
at Mortgagee's option, to apply any insurance proceeds (and any income
thereon) collected or held by Mortgagee as set forth in Paragraph 3 of
this Instrument, with any remaining balance to be paid to the person or
persons legally entitled thereto."
The fifth paragraph of Paragraph 5 is deleted.
10. PRESERVATION AND MAINTENANCE OF PROPERTY. The first sentence of
Paragraph 6 of the Instrument is amended by adding at the beginning thereof
"Except to the extent permitted under Section 7.1.3 of the Loan Agreement." The
last sentence of Paragraph 6 is likewise amended by adding at the beginning
thereof "Except to the extent permitted under Section 7.1.3 of the Loan
Agreement."
11. USE OF PROPERTY. The first sentence of Paragraph 7 of the
Instrument is amended by adding at the beginning thereof "Except to the extent
permitted under the Loan Agreement."
12. PROTECTION OF MORTGAGEE'S SECURITY. Amounts disbursed by Mortgagee
pursuant to the second paragraph of Paragraph 8 of the Instrument shall bear
interest at the Base Rate (as
defined in the Loan Agreement).
13. INSPECTION. Paragraph 9 of the Instrument is amended and restated
in its entirety as follows:
"Mortgagee may make or cause to be made reasonable entries upon and
inspections of the Property as provided in Section 7.1.5 of the Loan
Agreement."
14. BOOKS AND RECORDS. Paragraph 10 of the Instrument is amended and
restated in its entirety as follows:
"Borrower shall keep and maintain at all times the books of accounts
and records required to be maintained pursuant to Section 7.1.5 of the
Loan Agreement. Such books and records shall be subject to examination
as set forth in Section 7.1.5. Borrower shall furnish to Lenders the
financial statements and other financial information required by the
terms of the Loan Agreement."
15. CONDEMNATION. Paragraph 11 of the Instrument is amended and
restated in its entirety as follows:
"Borrower shall promptly notify Mortgagee of any action or proceeding
relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear
in and prosecute any such action or proceeding unless otherwise
directed by Mortgagee in writing. If Borrower fails to appear in such
proceeding or fails to diligently prosecute its claim within 20 days
after written notice from Mortgagee, or if an Event of Default shall
have occurred and be
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continuing, Borrower authorizes Mortgagee, at Mortgagee's option, as
attorney-in-fact for Borrower, to commence, appear in and prosecute, in
Mortgagee's or Borrower's name, any action or proceeding relating to
any condemnation or other taking of the Property, whether direct or
indirect, and to settle or compromise any claim in connection with such
condemnation or other taking (but otherwise Borrower shall have the
sole right to do all of the foregoing without Mortgagee's consent). The
proceeds of any award, payment or claim for damages, direct or
consequential, in connection with any condemnation or other taking,
whether direct or indirect, of the Property, or part thereof, or for
conveyances in lieu of condemnation, are hereinafter referred to as
"condemnation proceeds." If no Event of Default is continuing and
(after a material condemnation) Borrower substitutes Substitute
Property/ies for the Property pursuant to Section 7.1.10 of the Loan
Agreement, the condemnation proceeds with respect to the Property shall
be released, paid and belong to Borrower. If the condemnation proceeds
with respect to any condemnation do not exceed $500,000 and no Event of
Default is continuing, and, if restoration is possible, such
condemnation proceeds shall be paid to Borrower to be used by Borrower
to restore the Property, with any excess proceeds remaining after
completion of such restoration and payment of the cost thereof to be
applied if and to the extent required under Section 2.2.2 of the Loan
Agreement or retained by Borrower. If the condemnation proceeds with
respect to any condemnation or taking or conveyance in lieu thereof
exceed $500,000, such proceeds shall be deposited with Mortgagee and,
if no Event of Default is continuing and if restoration is possible,
shall be held by Mortgagee in trust, and invested by Mortgagee for the
account of Borrower in investments reasonably selected by Borrower and
reasonably approved by Mortgagee, and disbursed by Mortgagee to
Borrower as and when necessary (but not more frequently than monthly),
as the restoration of the Property progresses, to pay for bills due for
the cost of such restoration, subject to reasonable conditions as set
forth in the following paragraph, with any excess proceeds (and any
income thereon) remaining after completion of such restoration and
payment of the costs thereof to be applied if and to the extent
required under Section 2.2.2 of the Loan Agreement or released to
Borrower. If Borrower does not within 90 days following the occurrence
of the condemnation in question use or commit to use any condemnation
proceeds held by Mortgagee pursuant to the preceding sentence or to
substitute Substitute Property/ies for the Property pursuant to Section
7.1.10 of the Loan Agreement, or if restoration is not possible, such
proceeds shall be applied as provided in Section 2.2.2 of the Loan
Agreement to the extent required therein, and any excess released to
Borrower if no Event of Default is continuing. If an Event of Default
shall have occurred and be continuing, Borrower authorizes Mortgagee,
at Mortgagee's option, to apply any condemnation proceeds (and any
income thereon) collected or held by Mortgagee as set forth in
Paragraph 3 of the Instrument, with the balance, if any, to the person
or persons legally entitled thereto.
If the condemnation proceeds are held by Mortgagee to reimburse
Borrower for the cost of restoration of the Property, the Property
shall be restored to the equivalent of its original condition or such
other condition as Mortgagee may reasonably approve in writing.
Mortgagee may, at Mortgagee's option, condition disbursement of such
proceeds on Mortgagee's approval of such plans and specifications of an
architect reasonably satisfactory to Mortgagee, contractor's cost
estimates, architect's certificates, waivers of liens, sworn statements
of mechanics and materialmen and such other evidence of costs,
percentage completion of construction, application of payments, and
satisfaction of liens as Mortgagee may reasonably require."
16. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. The first paragraph of
Paragraph 15 of the Instrument is amended (i) to provide that the Instrument
may be filed as a financing statement to the extent permitted under applicable
law; (ii) to restate the sentence beginning "Without the prior written consent
of Mortgagee" as "Without the prior written consent of Mortgagee, Borrower
shall not create or suffer to be created pursuant to the Uniform Commercial
Code any security interest in said items, including replacements and additions
thereto, other than (w)
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the lien of this Instrument, (x) liens permitted under Sections 7.2.3(e), (f),
(j) and (k) of the Loan Agreement, (y) to the extent subordinate to the Lien of
this Instrument, Liens under Sections 7.2.3 (h) and (i) of the Loan Agreement
and (z) Permitted Liens"; and (iii) to condition exercise of remedies upon
occurrence and continuance of an Event of Default only.
The second paragraph of Paragraph 15 of the Instrument is amended and
restated in its entirety as follows:
"Subject to the terms and conditions contained in this paragraph 15,
the Borrower hereby grants to Mortgagee: (i) a non-exclusive,
irrevocable sublicense right (the "Sublicense") to permit the entities
defined in subparagraph (c) below to use the federally-registered
tradename "Red Roof Inn" and all other service marks and trademarks
used by Borrower in the operation of its Red Roof Inn motels (the
"Trademarks") in the manner described, and subject to the conditions
set forth, in this Paragraph 15; and (ii) a security interest in the
Borrower's license (the "License") under the license agreement, dated
April 2, 1996 entered into between the Borrower and the owner of the
Trademarks (the "License Agreement"). The grant of the Sublicense shall
be subject to the following terms and conditions:
(a) The Sublicense shall be irrevocable but shall
automatically expire upon the payment by Borrower to Lenders
of all indebtedness owing under the Restated Credit Agreement.
(b) The scope and permitted use of the Trademarks
under the Sublicense, and the scope of the Mortgagee's
security interest in the License, shall be limited to the use
of the Trademarks in the operation of the Pledged Properties
(as defined in the Loan Agreement) as Red Roof Inn motels.
(c) The Sublicense shall not be assignable by the
Mortgagee (other than to a successor Administrative Agent or
to the Lenders) or any successor to the Mortgagee. The rights
under the Sublicense shall be exercisable only by the
Mortgagee, any successor Administrative Agent, any
court-appointed or authorized receiver for any of the Pledged
Properties, any manager or operator retained or appointed by
any of the foregoing, and all their respective officers,
employees and agents (in such capacity), all of which shall be
subject at all times to the terms and conditions of the
License Agreement (except as provided in subparagraph (d)
below).
(d) The duration of the Sublicense shall be (i) for a
period not to exceed ten (10) years after the first date that
the Mortgagee or a successor Administrative Agent or receiver
takes possession of any of the Pledged Properties, with such
use to be without charge, and (ii) for an indefinite period
after such ten-year period, upon payment to the Borrower by
the Lenders of an annual fee in an amount then customary for
such rights within the budget motel industry; provided,
however, that the Sublicense shall expire at such time as the
Lenders have disposed of all interest of the Lenders in the
Pledged Properties, and, as the Sublicense applies to any one
or more of the Pledged Properties, upon the Mortgagee's
voluntary release of its lien (i.e., other than as a result of
a foreclosure of such lien or acceptance of a deed in lieu of
foreclosure) against any such Pledged Property.
(e) The Borrower covenants that it will take all
action required to preserve for the Mortgagee the right to use
the Trademarks under the terms and conditions contained in
this Paragraph 15 and agrees that the loss of such right by
the Mortgagee, whether as a result of the Borrower's loss of
its License, or otherwise, shall constitute an additional
Event of Default under the Loan Agreement. Notwithstanding
anything to the contrary contained
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herein, this covenant shall survive a foreclosure of the lien
of this Instrument or acceptance of a deed in lieu of
foreclosure."
17. LEASES OF THE PROPERTY. The second sentence of the second
paragraph of Paragraph 16 of the Instrument is amended and restated as follows:
"If an Event of Default shall have occurred and be continuing,
Mortgagee, at Mortgagee's option, shall have all of the rights and
powers possessed by Borrower prior to such assignment."
18. ACCELERATION IN CASE OF BORROWER'S INSOLVENCY. Paragraph 18 of the
Instrument is deleted.
19. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER.
Paragraph 19 of the Instrument is amended by adding to the end of the second
paragraph:
"and (iii) sales, encumbrances or transfers permitted under the Loan
Agreement."
20. NOTICE. Paragraph 20 of the Instrument is amended and restated in
its entirety as follows:
"Except for any notice required under applicable law to be given in
another manner, any notice to Borrower or Mortgagee shall be given and
have effect as provided in Section 10.2 of the Loan Agreement."
21. GOVERNING LAW; SEVERABILITY. The first and second sentences of
Paragraph 22 of the Instrument are amended and restated as follows:
"The Note and the Loan Agreement are governed by New York law. This
Instrument shall be governed by the law of the jurisdiction in which
the Property is located."
22. WAIVER OF MARSHALING. The second sentence of Paragraph 24 of the
Instrument is amended by adding at the beginning "Except to the extent
expressly provided herein."
23. ACCELERATION; REMEDIES. The first sentence of [THE FIRST PARAGRAPH
OF] Paragraph 25 of the Instrument is amended and restated as follows: "If an
Event of Default shall have occurred and be continuing and the sums secured by
this Instrument have become or been declared due and payable pursuant to
Section 8.2 or 8.3 of the Loan Agreement, Mortgagee, at Mortgagee's option, may
foreclose this Instrument by judicial proceeding and may invoke any other
remedies permitted by applicable law or provided herein." The last sentence of
[THE FIRST PARAGRAPH OF] Paragraph 25 is deleted.
24. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; MORTGAGEE IN
POSSESSION. The first paragraph of Paragraph 26 of the Instrument is amended and
restated in its entirety as follows: "As part of the consideration for the
indebtedness evidenced by the Note, Borrower hereby absolutely and
unconditionally assigns and transfers to Mortgagee all the rents and revenues of
the Property, including those now due, past due, or to become due by virtue of
any lease, license or other agreement for the occupancy or use of all or any
part of the Property, regardless of to whom the rents and revenues of the
Property are payable. Borrower hereby authorizes Mortgagee or Mortgagee's agents
to collect the aforesaid rents and revenues and hereby directs each tenant of
the Property to pay such rents to Mortgagee or Mortgagee's agents; provided,
however, that unless an Event of Default shall have occurred and be continuing,
Borrower shall collect and retain all rents and revenues of the Property. If an
Event of Default shall have occurred and be continuing, and without the
necessity of Mortgagee entering upon and taking and maintaining full control of
the Property in person, by agent or by a court-appointed receiver, Mortgagee
shall immediately be entitled to possession of all rents and revenues of the
Property as specified in this paragraph as the same become due and payable,
including but not limited to rents then due and unpaid, and all such rents shall
immediately upon delivery of such notice be held by Borrower as trustee for the
benefit of
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Mortgagee only; provided, however, that the written notice by Mortgagee to
Borrower of such Event of Default shall contain a statement that Mortgagee
exercises its rights to such rents. Borrower agrees that commencing upon
delivery of such written notice by Mortgagee to Borrower, each tenant of the
Property shall make such rents payable to and pay such rents to Mortgagee or
Mortgagee's agents on Mortgagee's written demand to each tenant therefor,
delivered to each tenant personally, by mail or delivering such demand to each
rental unit, without any liability on the part of said tenant to inquire further
as to the existence of a default by Borrower."
Borrower's covenants in the second paragraph of Paragraph 26 regarding
prepayment of rents are limited by adding "except security deposits and rents
collected in advance as security."
References in the third and fourth paragraphs of Paragraph 26 to
Borrower's breach shall mean "If an Event of Default shall have occurred and be
continuing."
The reference in the fourth paragraph of Paragraph 26 to Mortgagee's
application of rents and revenues to "sums secured by this Instrument" is
amended to read "sums then due that are secured by the Instrument."
The reference in the last sentence of the fifth paragraph of Paragraph
26 to "the rate stated in the Note" is changed to "the Base Rate."
25. HAZARDOUS SUBSTANCES. Subparagraph (A)(iii) of Paragraph 27 of the
Instrument is amended and restated in its entirety as follows:
"'Indemnitee' means Mortgagee, Lenders, their participants in the Loan,
and all subsequent holders of this Instrument, their respective
successors and assigns, their respective officers, directors,
employees, agents, representatives, contractors and subcontractors."
Subparagraph (B) of Paragraph 27 is amended by adding the following
language after the words "due investigation" in the second line:
"and except (i) as disclosed in the environmental assessment and/or
update report prepared by TRC Environmental in connection with the
Property or (ii) to the extent that, in the aggregate (together with
similar circumstances with respect to any other Pledged Property), any
of the following would not reasonably be expected to result in a
Material Adverse Effect (as defined in the Loan Agreement)".
Subparagraph (C)(i) of Paragraph 27 is amended and restated in its
entirety as follows:
"Borrower shall keep, and shall use reasonable efforts to cause all
operators, tenants, sub-tenants, licensees and occupants of the
Property to keep, the Property free of all Hazardous Substances, except
for (a) Hazardous Substances stored, treated, generated, transported,
processed, handled, produced or disposed of in the normal operation of
the Property as a motel in accordance with all Environmental Laws, (b)
non-friable asbestos and (c) any Hazardous Substances that have not
resulted and would not reasonably be expected to result in a material
liability to the Borrower."
Subparagraph (C)(ii) of Paragraph 27 is amended and restated in its
entirety as follows:
"Borrower shall comply with, and shall use reasonable efforts to cause
all operators, tenants, sub-tenants, licensees, and occupants of the
Property to comply with, all Environmental Laws in all material
respects."
Subparagraph (C)(iii) of Paragraph 27 is amended and restated in its
entirety as follows:
"Borrower shall promptly provide Mortgagee with a copy of all
notifications which Borrower gives or receives with respect to any past
or present material Release of
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any Hazardous Substance or the threat of such a Release on, at or from
the Property or any property adjacent to or within the immediate
vicinity of the Property."
Subparagraph (C)(iv) of Paragraph 27 is amended and restated in its
entirety as follows:
"Borrower shall undertake and complete all investigations, studies,
sampling and testing for Hazardous Substances reasonably required by
Mortgagee and, in accordance with all Environmental Laws, all material
removal and other remedial actions necessary to contain, remove, and
clean up all Hazardous Substances that are determined to be present at
the Property in material violation of any Environmental Law."
Subparagraph (C)(v) of Paragraph 27 is amended and restated in its
entirety as follows:
"Mortgagee shall have the right, but not the obligation, to cure any
material violation by Borrower of the Environmental Laws, and
Mortgagee's reasonable cost and expense to so cure shall be secured by
this Instrument."
Subparagraph (D) of Paragraph 27 is amended and restated in its
entirety as follows:
"Borrower covenants and agrees, at its sole cost and expense, to
indemnify, defend and save harmless Indemnitee from and against any and
all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, actions, proceedings,
costs, disbursements and/or expenses (including, without limitation,
reasonable attorneys' and experts' fees and expenses) of any kind or
nature whatsoever which may at any time be imposed upon, incurred by or
asserted or awarded against Indemnitee arising out of the condition,
ownership, use or operation of the Property during or prior to
Borrower's occupancy thereof and (i) the storage, treatment,
generation, transportation, processing, handling, production or
disposal of any Hazardous Substance, (ii) the presence of any Hazardous
Substance or a Release of any Hazardous Substance or the threat of such
a Release, (iii) human exposure to any Hazardous Substance or (iv) a
violation of any Environmental Law (herein collectively the
'Indemnified Matters')".
26. RELEASE. Paragraph 28 of the Instrument is amended and restated in
its entirety as follows:
"Upon payment of all sums secured by this Instrument, the Lien and
encumbrance of this Instrument shall be null and void and shall be
released, and Mortgagee shall execute and deliver any instrument or
document reasonably requested by Borrower to evidence and effectuate
such release. Upon (x) a substitution of a Pledged Property for the
Property pursuant to Section 7.1.10 of the Loan Agreement, (y) a sale
of the Property pursuant to Section 7.2.10 of the Loan Agreement or (z)
satisfaction of condition (i), (ii) or (iii) of Section 2.8 of the Loan
Agreement, the Lien and encumbrance of this Instrument shall be
released, and Mortgagee shall execute and deliver any instrument or
document reasonably requested by Borrower to evidence and effectuate
such release. Borrower shall pay Mortgagee's reasonable out-of-pocket
costs incurred in discharging this Instrument."
27. LOAN ADVANCES. Paragraph 30 of the Instrument is amended and
restated in its entirety as follows:
"LOAN ADVANCES. This Instrument shall secure unpaid balances of loan
advances which Lenders are obligated to make and Letters of Credit that
the L/C Issuer (as defined in the Loan Agreement) is obligated to issue
after this Instrument is delivered to the Recorder for record pursuant
to the provisions of the Loan Agreement and the Note. The maximum
amount of the unpaid balance of said obligatory loan advances and
amounts drawn on Letters of Credit, in the aggregate and exclusive of
interest
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accrued thereon, which may be outstanding at any time is Two Hundred
Fifty Million Dollars ($250,000,000.00)."
28. MATURITY DATE. The maturity date of the Restated Credit Agreement
and the Notes is hereby amended from January 15, 1999 to May 21, 2002. The
maturity date may be further extended as provided in the Loan Agreement.
29. MORTGAGEE'S APPROVAL RIGHTS. Whenever in this Instrument Mortgagee
has an approval right, Mortgagee's approval shall not be unreasonably withheld,
delayed or conditioned. Whenever in this Instrument any evidence, statement,
report, instrument or document is required to be "satisfactory" to Mortgagee,
the standard shall be "reasonably satisfactory."
30. EFFECT. The Instrument, as modified in this Modification, shall
remain a first lien on the Property in full force and effect in all respects as
security for all indebtedness and other obligations, existing and hereafter
incurred pursuant to the Loan Agreement. Nothing in this Modification shall
impair any rights and powers which Mortgagee may have thereunder. Borrower
covenants with Lenders to pay the principal indebtedness, together with
interest, and to pay all other amounts and perform all other obligations
incurred pursuant to the Loan Agreement, at the times and in the manner provided
in the Loan Agreement or in the Note. Borrower confirms to Lenders that Borrower
has no offset, claim or defense to repayment and performance.
IN WITNESS WHEREOF, Borrower and Mortgagee, each by its duly authorized
officer, have executed this Modification.
BORROWER:
Signed and acknowledged
in the presence of: RED ROOF INNS, INC.
_________________________________ By________________________________
Signature
_________________________________ Its_________________________
Printed Name
- ---------------------------------
Signature
- ---------------------------------
Printed Name
MORTGAGEE:
THE HUNTINGTON NATIONAL BANK
_________________________________ By____________________________________
Signature Robert Friend
_________________________________ Its Vice President
Printed Name
- ------------------------------------
Signature
- ------------------------------------
Printed Name
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STATE OF NEW YORK,
COUNTY OF NEW YORK, SS:
On this _____ day of May, 1997, before me, a Notary Public in and for
said County and State, personally appeared
_____________________________________, the __________________
______________________ of Red Roof Inns, Inc., a Delaware corporation,
personally known to me or identified, who, being first duly sworn, acknowledged
that he did sign the foregoing instrument on behalf of said corporation, by
authority of a resolution of its Board of Directors, and that the same is his
free act and deed as such officer and the free act and deed of said corporation.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
STATE OF NEW YORK,
COUNTY OF NEW YORK, SS:
On this _____ day of May, 1997, before me, a Notary Public in and for
said County and State, personally appeared Robert Friend, the Vice President of
The Huntington National Bank, a national banking association, personally known
to me or identified, who, being first duly sworn, acknowledged that he did sign
the foregoing instrument on behalf of said association, by authority of a
resolution of its Board of Directors, and that the same is his free act and deed
as such officer and the free act and deed of said association.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
THIS INSTRUMENT PREPARED BY:
Donald W. Jordan, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
12
206
EXHIBIT K
REALIGNMENT AGREEMENT
This REALIGNMENT AGREEMENT (as it may be amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") is entered into as of
May 21, 1997 by and among RED ROOF INNS, INC., a Delaware corporation
("BORROWER"), the financial institutions listed on the signature pages hereof
(each of which is individually referred to herein as a "LENDER" and all of
which are collectively referred to herein as "LENDERS") and THE HUNTINGTON
NATIONAL BANK ("HNB") as administrative agent for the Lenders (in such
capacity, "AGENT").
RECITALS
WHEREAS, the Borrower, various financial institutions (the "EXISTING
LENDERS") and HNB, as agent,(the "EXISTING AGENT"), entered into that certain
Loan Agreement dated as of November 9, 1995, as amended(as so amended the
"EXISTING CREDIT AGREEMENT").
WHEREAS, the Borrower has entered into that certain Amended and
Restated Credit Agreement dated as of even date herewith (such Agreement, as it
may be amended, supplemented or otherwise modified from time to time, is
referred to herein as the "NEW CREDIT AGREEMENT") with the Lenders, pursuant to
which the Lenders have agreed, subject to the terms and conditions set forth in
the New Credit Agreement, to amend and restate the Existing Credit Agreement
for the purpose of, among other things, increasing the Commitments (as defined
in the Existing Credit Agreement) and extending the Termination Date (as
defined in the Existing Credit Agreement (capitalized terms used herein without
definition shall, prior to the effectiveness of the New Credit Agreement, have
the meanings assigned to such terms in the Existing Credit Agreement, and
thereafter shall have the meanings assigned to such terms in the New Credit
Agreement));
WHEREAS, the New Credit Agreement provides, as a condition precedent
to the effectiveness thereof, that the Borrower and each Lender shall have duly
executed and delivered to the Agent a counterpart of this Agreement and that
the transactions provided for in subsection 2A hereof shall have been
consummated; and
WHEREAS, in order to effect a reallocation among all Lenders of
Existing Lenders' Loans outstanding under the Existing Credit Agreement on the
Effective Date in a manner which coincides with the amount of Loans (as defined
in the New Credit Agreement) intended to be outstanding from each Lender under
the New Credit Agreement on the Effective Date, the parties hereto desire that
the transactions described in subsections 2A through 2D hereof be consummated
simultaneously with the effectiveness of the New Credit Agreement.
207
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
AGREEMENT
SECTION 1. CERTAIN DEFINED TERMS. The following terms used in this
Agreement shall have the following meanings:
"AGENT'S ACCOUNT" means the Agent's account at The Huntington National
Bank, Columbus, Ohio ABA: 044000024, Commercial Loan Servicing, Attn: Special
Processing, Phone 1141, Ref. Red Roof Inns, Inc.
"CONTINUED LOANS" means the aggregate principal amount outstanding of
all Loans (as defined in the Existing Credit Agreement) of all Existing Lenders
immediately prior to the transactions described in Section 2 hereof, which the
Lenders have agreed to maintain as Loans (as defined in the New Credit
Agreement) under the New Credit Agreement.
"EXISTING OUTSTANDINGS" means (i) as to any Existing Lender, the
amount set forth in Column 1 of Schedule A, which represents the aggregate
principal amount of such Lender's Loans outstanding on the Effective Date under
the Existing Credit Agreement and (ii) as to any New Lender, zero.
"INCREASED SHARE AMOUNT" means, as to any Increased Share Lender, the
amount set forth in Column 3 of Schedule A.
"INCREASED SHARE LENDERS" means all New Lenders and each other Lender
that will be increasing its outstandings to the Borrower under the New Credit
Agreement.
"NEW LENDERS" means all Lenders that are not Existing Lenders.
"NEW OUTSTANDINGS" means, as to any Lender, the amount set forth in
column 2 of Schedule A, which represents the aggregate principal amount of such
Lender's Loans outstanding on the Effective Date under the New Credit
Agreement.
"REDUCED SHARE AMOUNT" means, as to any Lender, the amount set forth
in column 3 of Schedule A.
"REDUCED SHARE LENDER'S PAYDOWN AMOUNT" means, as to each Reduced
Share Lender, such Lender's aggregate Reduced Share Amount with respect to all
Continued Loans.
In addition, terms defined in the introductory paragraph and the
recitals hereto shall have the meanings herein assigned to such terms therein.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise
-2-
208
specifically provided. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
SECTION 2. PAYMENTS BY BORROWER AND INCREASED SHARE LENDERS AND
DISTRIBUTIONS TO LENDERS; EFFECT OF PAYMENTS AND DISTRIBUTIONS.
A. PAYMENTS BY BORROWER AND INCREASED SHARE LENDERS. On the
Effective Date, after the satisfaction of all other conditions
precedent to the effectiveness of the New Credit Agreement and
simultaneously with such effectiveness:
(i) each Increased Share Lender shall pay to the
Agent, by deposit to the Agent's Account at not later than
12:00 noon (New York time) in same day funds, an amount equal
to the amount set forth in Column 3 of Schedule A; and
(ii) the Borrower shall pay to the Agent for the
account of the appropriate Lender, by deposit to the Agent's
Account not later than 12:00 noon (New York time) in same day
funds, an amount equal to the sum of:
(a) all accrued and unpaid interest with
respect to the Continued Loans; PLUS
(b) all fees owed to the Existing Agent and
each Existing Lender pursuant to Section 2.10 of the
Existing Credit Agreement; PLUS
(c) all other amounts owed to any Existing
Lender under the Existing Credit Agreement (with the
exception of the principal amount of Continued Loans
then held by any Existing Lender), including,
without limitation, any amount that would have been
owed pursuant to Section 2.8 of the Existing Credit
Agreement if all Continued Loans had been prepaid on
the Effective Date, to the extent specified in a
written notice from such Existing Lender delivered
to the Borrower and the Agent not less than two
Business Days prior to the Effective Date;
in each case as of the Effective Date. The Borrower acknowledges and agrees
that the failure of any Existing Lender to specify amounts due under the
Existing Credit Agreement as provided in clause (ii)(c) above shall not
preclude such Existing Lender from later claiming such amounts due and the
Borrower agrees to pay to such Existing Lender any such amounts that such
Existing Lender is entitled to receive under the Existing Credit Agreement or
this Agreement pursuant to the applicable notice and payment provisions of the
Existing Credit Agreement. Nothing in this Agreement shall affect the
obligation of the Borrower, which is absolute and unconditional, to repay the
Obligations (as defined in the Existing Credit Agreement) owed to each Existing
Lender.
-3-
209
B. DISTRIBUTIONS TO LENDERS. Upon receipt of all payments due
under subsection 2A, the Agent shall promptly (and if practicable on
the same Business Day as such payments are received) distribute such
payments as appropriate to each Reduced Share Lender and each other
Existing Lender entitled to a payment at its primary address set forth
below its name on the applicable signature page of the New Credit
Agreement, or at such other address as any such Lender may request by
written notice to the Agent prior to the Restatement Effective Date.
C. REALLOCATION OF CONTINUED LOANS. Upon receipt by Agent of
all payments required under subsection 2A hereof and the distribution
of such payments to the Lenders as provided herein, the Continued
Loans shall be Loans outstanding under the New Credit Agreement. The
Continued Loans shall be subject in all respects to the terms and
conditions of the New Credit Agreement.
D. EFFECT OF NON-PAYMENT. If the Agent does not timely
receive all payments due under subsection 2A, (i) the Agent shall
return to each Increased Share Lender the amount received from such
Increased Share Lender, (ii) the Agent shall (without affecting any
waiver of rights by the Borrower) declare this Agreement of no further
force or effect by written notice to each Lender, and (iii), if the
Agent shall declare this Agreement to be of no further force or
effect, the Existing Credit Agreement shall remain in full force and
effect. Each Increased Share Lender that fails to provide funds to the
Agent in accordance with the terms of subsection 2A shall be liable to
the Agent for such amounts as provided in Section 14.11 of the
Existing Credit Agreement. Each Increased Share Lender acknowledges
that its commitment to fund its Increased Share Amount is for the
benefit of the Borrower and nothing in this paragraph shall impair the
Borrower's rights with respect to any such Lender who fails to make
any payment due under subsection 2A.
SECTION 3. CONSENTS AND ACKNOWLEDGMENTS OF BORROWER AND LENDERS.
A. REALIGNMENT AGREEMENT. The Borrower and each Lender
consent and agree to the transactions contemplated by this Agreement
notwithstanding any contrary provision contained in the Existing
Credit Agreement or the New Credit Agreement.
B. ACKNOWLEDGMENTS OF LENDERS. Each Lender acknowledges that,
as of the date hereof (which acknowledgment shall be deemed made as of
the Effective Date immediately prior to the transactions provided for
in subsection 2A through 2C unless written notice to the contrary from
such Lender (with a copy to the Borrower) is received by an officer of
the Agent responsible for the transactions contemplated hereby prior
to 12:00 noon (New York time) on the day prior to the Effective Date)
that the information set forth opposite such Lender's name in Columns
1 and 2 of Schedule A is accurate.
C. ACKNOWLEDGMENTS OF BORROWER. The Borrower acknowledges
that, as of the date hereof (which acknowledgment shall be deemed made
as of the Effective Date
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immediately prior to the transactions provided for in subsection 2A
through 2C unless written notice to the contrary from Borrower is
received by an officer of Agent responsible for the transactions
contemplated hereby prior to 12:00 noon (New York time) on the day
prior to the Effective Date) that the information set forth opposite
each Lender's name in Columns 1 and 2 of Schedule A is accurate.
SECTION 4. MISCELLANEOUS.
A. INDEMNIFICATION. The Borrower and each Lender agree that
the role of the Agent provided for herein is within the scope of the
agency provided for in Section 14 of the Existing Credit Agreement and
that the provisions of such Section 14 of the Existing Credit
Agreement shall apply to the transactions contemplated hereby.
B. AGENT'S ROLE. The Agent's role hereunder is administrative
only and the Agent shall be fully justified in relying on any notice
received in connection herewith, the acknowledgments contained in
Section 3 hereof and the information contained in the Schedule hereto.
The Agent shall not be liable to any Lender for any apportionment or
distribution of payments made by it in good faith in accordance with
this Agreement and if any apportionment or payment is later determined
to have been made in error, the sole recourse of any Lender to whom
payment was due, but not made, shall be to recover from other Lenders
any excess payment which they are determined to have received.
C. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
D. NOTICES. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be
given shall be given in accordance with Section 10.2 of the New Credit
Agreement.
E. SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.
Notwithstanding anything in this Agreement, the Existing Credit
Agreement, the New Credit Agreement or implied by law to the contrary,
the agreements of the Borrower set forth in subsections 2.5, 2.8 and
14.7 of the Existing Credit Agreement shall survive the Effective Date
in respect of events or conditions arising prior to the Effective
Date.
F. SEVERABILITY. If any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, of such provision or obligation
in any other jurisdiction, shall not in any way be affected or
impaired thereby.
G. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose or
be given any substantive effect.
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H. AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Agreement, or consent
to any departure by the Borrower therefrom, shall in any event be
effective without concurrence of all parties hereto.
I. COUNTERPARTS; EFFECTIVENESS. This Agreement and any
amendments, waivers, consents, or supplements may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall
constitute but one and the same instrument. This Agreement shall
become effective upon the execution and delivery of a counterpart
hereof by each of the parties thereto; PROVIDED, HOWEVER, that any
Lender may deliver its counterpart signature page hereto by telecopy
to the Administrative Agent or the Administrative Agent's counsel,
which delivery (when confirmed by telephonic notice from such Lender
to the Administrative Agent) shall be binding on such Lender, and
PROVIDED FURTHER, that any such Lender shall promptly provide the
Administrative Agent or the Administrative Agent's counsel with an
adequate number (as determined by the Administrative Agent) of
originally executed signature pages hereto.
J. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
RED ROOF INNS, INC.
By:________________________________
Title: Vice President and
Treasurer
Address: 4355 Davidson Road
Hilliard, Ohio 43026-
2491
Facsimile No.: (614) 876-0544 or
(614) 876-3421
Attention: Mr. David L. Rea
-6-
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CIBC WOOD GUNDY SECURITIES CORP.,
as Syndication and Documentation
Agent and Arranger
By:________________________________
Title:
Address: 350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
-7-
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THE HUNTINGTON NATIONAL BANK,
as Collateral Agent,
Administrative Agent and
Arranger
By:_________________________________
Title:
Address: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
-8-
214
LENDERS
-------
CIBC INC.
By:________________________________
Title:
CIBC Wood Gundy Securities Corp.,
AS AGENT
Notice Address:
425 Lexington Avenue
New York, New York 10071
Facsimile No.: (212) 856-3991
Attention: Ms. Cheryl Root
with a copy to:
350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
Domestic
Office: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4817
Attention: Ms. Kelli Jones
Eurodollar
Office: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4817
Attention: Ms. Kelli Jones
-9-
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THE HUNTINGTON NATIONAL BANK
By:________________________________
Title:
Domestic
Office: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
Eurodollar
Office: 41 South High Street
Columbus, Ohio 43215
Facsimile No.: (614) 480-5791
Attention: Mr. Robert Friend
-10-
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BANK ONE, NA
By:________________________________
Title:
Domestic
Office: 100 East Broad Street
7th Floor
Columbus, Ohio 43271
Facsimile No.: (614) 248-3136
Attention: Ms. Leslie Smittle
Eurodollar
Office: 100 East Broad Street
7th Floor
Columbus, Ohio 43271
Facsimile No.: (614) 248-3136
Attention: Ms. Leslie Smittle
-11-
217
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Title:
Domestic
Office: One PNC Plaza-P1-POPP-19-2
249 Fifth Avenue
Pittsburgh, PA 15222
Facsimile No.: (412) 768-5754
Attention: Ms. Jan Detchin
Eurodollar
Office: One PNC Plaza-P1-POPP-19-2
249 Fifth Avenue
Pittsburgh, PA 15222
Facsimile No.: (412) 768-5754
Attention: Ms. Jan Detchin
-12-
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BANQUE NATIONALE DE PARIS
By:________________________________
Title:
Domestic
Office: 209 S. LaSalle Street
Chicago, Illinois 60604
Facsimile No.: (312) 977-1389
Attention: Mr. Steve Christy
Eurodollar
Office: 209 S. LaSalle Street
Chicago, Illinois 60604
Facsimile No.: (312) 977-1389
Attention: Mr. Steve Christy
-13-
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NBD BANK, A MICHIGAN BANKING CORPORATION
By:________________________________
Title:
Domestic
Office: 611 Woodward Avenue
Third Floor
Detroit, Michigan 48226
Facsimile No.: (313) 226-0857
Attention: Ms. Debbie Stuart
Eurodollar
Office: 611 Woodward Avenue
Third Floor
Detroit, Michigan 48226
Facsimile No.: (313) 226-0857
Attention: Ms. Debbie Stuart
-14-
220
HARRIS TRUST AND SAVINGS BANK
By:________________________________
Title:
Domestic
Office: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-5225
Attention: Ms. Arlett Hall
Eurodollar
Office: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-5225
Attention: Ms. Arlett Hall
-15-
221
BANK OF SCOTLAND
By:________________________________
Title:
Domestic
Office: 565 Fifth Avenue
New York, New York 10017
Facsimile No.: (212) 557-9460
Attention: Ms. Janet Taffe
Eurodollar
Office: 565 Fifth Avenue
New York, New York 10017
Facsimile No.: (212) 557-9460
Attention: Ms. Janet Taffe
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THE FIFTH THIRD BANK OF COLUMBUS
By:________________________________
Title:
Domestic
Office: 21 East State Street
Columbus, Ohio 43215
Facsimile No.: (614) 341-2606
Attention: Ms. Bobbie Meyers
Eurodollar
Office: 21 East State Street
Columbus, Ohio 43215
Facsimile No.: (614) 341-2606
Attention: Ms. Bobbie Meyers
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223
MITSUI LEASING (U.S.A.) INC.
By:________________________________
Title:
Domestic
Office: 200 Park Avenue
Suite 3214
New York, New York 10166
Facsimile No.: (212) 490-1684
Attention: Ms. Takako Sumi
Eurodollar
Office: 200 Park Avenue
New York, New York 10166
Facsimile No.: (212) 490-1684
Attention: Ms. Takako Sumi
-18-
224
NORWEST BANK MINNESOTA, N.A.
By:________________________________
Title:
Domestic
Office: Sixth and Marquette Ave.
Minneapolis, MN 55479
Facsimile No.: (612) 667-6932
Attention: Ms. Karen Bjorgan
Eurodollar
Office: Sixth and Marquette Ave.
Minneapolis, MN 55479
Facsimile No.: (612) 667-6932
Attention: Ms. Karen Bjorgan
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225
STAR BANK, NA
By:________________________________
Title:
Domestic
Office: 501 West Schrock Road
Westerville, Ohio 43081
Facsimile No.: (614) 794-5348
Attention: Ms. Tina Heidenreich
Eurodollar
Office: 501 West Schrock Road
Westerville, Ohio 43081
Facsimile No.: (614) 794-5348
Attention: Ms. Tina Heidenreich
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226
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION
By:________________________________
Title:
Domestic
Office: 200 S. Orange Avenue
Orlando, Florida 32801
Facsimile No.: (407) 237-6894
Attention: Ms. Sharon E. Kalish
Eurodollar
Office: 200 S. Orange Avenue
Orlando, Florida 32801
Facsimile No.: (407) 237-6894
Attention: Ms. Sharon E. Kalish
-21-
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Schedule A
Increased or
Reduced Share
Lender Existing Outstandings New Outstandings Amount
- ------ --------------------- ---------------- ------
CIBC Inc. 0.00 $13,090,000.00 $13,090,000.00
The Huntington National Bank $20,941,539.50 $13,090,000.00 (7,851,539.50)
Bank One, NA $14,958,364.75 $11,220,000.00 (3,738,364.75)
PNC Bank, National Association $11,966,636.75 $11,220,000.00 (746,636.75)
Banque Nationale de Paris 0.00 $ 7,480,000.00 $ 7,480,000.00
NBD Bank, a Michigan Banking
Corporation $ 8,975,000.00 $ 7,480,000.00 (1,495,000.00)
Harris Trust and Savings Bank $ 8,975,000.00 $ 7,480,000.00 (1,495,000.00)
Bank of Scotland 0.00 $ 3,740,000.00 $ 3,740,000.00
The Fifth Third Bank of Columbus $ 5,983,364.75 $ 3,740,000.00 (2,243,364.75)
Mitsui Leasing (U.S.A.) Inc. $ 5,983,364.75 $ 3,740,000.00 (2,243,364.75)
Norwest Bank Minnesota, N.A. $ 5,983,364.75 $ 3,740,000.00 (2,243,364.75)
Star Bank, NA $ 5,983,364.75 $ 3,740,000.00 (2,243,364.75)
Suntrust Bank, Central Florida,
National Association 0.00 $ 3,740,000.00 $ 3,740,000.00
---------------- -------------
$89,750,000.00 $93,500,000.00
-22-
228
EXHIBIT L
LENDER ASSIGNMENT AGREEMENT
To: RED ROOF INNS, INC.
4355 Davidson Road
Hilliard, Ohio 43026-2491
To: CIBC Wood Gundy Securities Corp.,
as the Syndication and Documentation Agent
350 South Grand Avenue
Suite 2600
Los Angeles, California 90071
To: The Huntington National Bank,
as the Administrative and Collateral Agent
41 South High Street
Columbus, Ohio 43215
Re: RED ROOF INNS, INC.
Gentlemen and Ladies:
We refer to CLAUSE (d) of SECTION 10.11.1 of the Amended and Restated
Credit Agreement, dated as of May 21, 1997 (together with all amendments and
other modifications, if any, from time to time thereafter made thereto, the
"CREDIT AGREEMENT"), among Red Roof Inns, Inc., a Delaware corporation (the
"BORROWER"), certain financial institutions, CIBC Wood Gundy Securities Corp.
and The Huntington National Bank, as arrangers, CIBC Wood Gundy Securities
Corp., as syndication and documentation agent (the "SYNDICATION AGENT"), and The
Huntington National Bank , as collateral and administrative agent for the
Lenders (the "ADMINISTRATIVE AGENT") (the Syndication Agent and the
Administrative Agent are herein collectively called the "AGENTS"). Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to CLAUSE (d) of SECTION
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to CLAUSE (c) of Section 10.11.1 of the Credit Agreement, of the
assignment and delegation to _________ (the "ASSIGNEE") of __% of the Loans and
Commitment of __________ (the "ASSIGNOR") outstanding under the Credit Agreement
on the date hereof. After giving effect to the foregoing assignment and
delegation, the Assignor's and the Assignee's Percentages and Commitment Amount
for the purposes of the Credit Agreement are set forth opposite such Person's
name on the signature pages hereof.
-1-
229
[Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]
The Assignee hereby acknowledges and confirms that it has received a
copy of the Credit Agreement and the exhibits related thereto, together with
copies of the documents which were required to be delivered under the Credit
Agreement as a condition to the making of the Loans thereunder. The Assignee
further confirms and agrees that in becoming a Lender and in making its
Commitment and Loans under the Credit Agreement, such actions have and will be
made without recourse to, or representation or warranty by the Agents or
Assignor, including any representation or warranty relating to the legality,
validity, genuineness, enforceability, collectability, interest rate, repayment
schedule or accrual status of the assigned loans or the assigned commitments,
the legality, validity, genuineness or enforceability of the Credit Agreement,
the related Notes, or any other Loan Document referred to in or delivered
pursuant to the Credit Agreement, or financial condition or creditworthiness of
the Borrower. The Assignee acknowledges that it has made its own independent
investigation and credit evaluation of the Borrower in connection with its
purchase of the assigned Loans and the assigned Commitments.
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agents
(a) the Assignee
(i) shall be deemed automatically to have become a
party to the Credit Agreement, have all the rights and
obligations of a "Lender" under the Credit Agreement and the
other Loan Documents as if it were an original signatory
thereto to the extent specified in the second paragraph
hereof; and
(ii) agrees to be bound by the terms and conditions
set forth in the Credit Agreement and the other Loan Documents
as if it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations under
the Credit Agreement and the other Loan Documents to the extent
specified in the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee] will pay to the Administrative Agent the processing fee referred to
in SECTION 10.11.1 of the Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Agents to acknowledge receipt of this document:
(A) Address for Notices:
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230
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Eurodollar Office:
Telephone:
Facsimile:
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by the first
sentence of the last paragraph of SECTION 4.6 (if so required) of the Credit
Agreement no later than the date of acceptance hereof by the Agents.
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
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231
Adjusted Commitment [ASSIGNOR]
Amount: $________________
Adjusted Percentage: ____%
By:_________________________
Title:
Commitment [ASSIGNEE]
Amount: $________________
Percentage: ____%
By:_________________________
Title:
Accepted and Acknowledged this ___ day of
______, 19__
CIBC Wood Gundy Securities Corp., as the
Syndication and Documentation Agent
By:___________________________
Title:
Accepted and Acknowledged this ___ day of
______, 19__
The Huntington National Bank,
as the Administrative and Collateral Agent
By:___________________________
Title:
Accepted and Acknowledged this ___ day of
______, 19__
Red Roof Inns, Inc.
By:___________________________
Title:_____________________
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232
EXHIBIT M
NOTICE OF PREPAYMENT
The Huntington National Bank, as Administrative Agent
41 South High Street
Columbus, Ohio 43215
Attention: [Loan Syndication]
Re: Credit Agreement, dated as of May 21, 1997
Gentlemen and Ladies:
This notice of prepayment is delivered to you pursuant to SECTION 3.1.1
of the Amended and Restated Credit Agreement, dated as of May 21, 1997 (together
with all amendments, if any, from time to time made thereto, the "CREDIT
AGREEMENT"), among Red Roof Inns, Inc., a Delaware corporation (the "BORROWER"),
certain financial institutions, CIBC Wood Gundy Securities Corp. and The
Huntington National Bank, as arrangers, CIBC Wood Gundy Securities Corp., as
syndication and documentation agent, and The Huntington National Bank, as
collateral and administrative agent. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.
We hereby notify you that a [voluntary] [mandatory] prepayment of
principal on the [Revolving Notes] [Swingline Notes] in the amount of $________
will be made on _____ __, _____.1/ This prepayment shall be applied to the [Base
Rate
- --------
1/ Voluntary prepayments must be in an aggregate minimum amount of (i) for
Eurodollar Rate Loans, $3,000,000 and integral multiples of $500,000 in excess
thereof or such lesser amount as will prepay such Loan in full; (ii) for Base
Rate Loans, $500,000 and integral multiples of $100,000 in excess thereof or
such lesser amount as will prepay such Loan in full; and (iii) for Swing Loans,
$50,000 or integral multiples of $10,000 or such lesser amount as will prepay
such Loan in full.
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233
Loans] [Eurodollar Rate Loans with an Interest Period ending on , 19 ].2/
Very truly yours,
RED ROOF INNS, INC.
By:__________________________
Title:____________________
- --------
2/ Three Business Days' notice required for voluntary prepayments of any
Eurodollar Rate Loan. Same Business Day's notice (by 11:00 a.m. New York time in
the case of a Revolving Loan and by 1:00 p.m. New York time in the case of a
Swing Loan) required for voluntary prepayment of any Base Rate Loan.
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EXHIBIT N
OFFICER'S CERTIFICATE
REGARDING FINANCIAL MATTERS
In connection with execution and delivery of that certain Amended and
Restated Credit Agreement dated as of May 21, 1997 ("CREDIT AGREEMENT"), among
Red Roof Inns, Inc., a Delaware corporation (the "BORROWER"), certain financial
institutions (the "LENDERS"), CIBC Wood Gundy Securities Corp. and The
Huntington National Bank, as arrangers, CIBC Wood Gundy Securities Corp., as
syndication and documentation agent, and The Huntington National Bank, as
collateral and administrative agent (the "ADMINISTRATIVE AGENT"), and each of
the other documents entered into in connection therewith (collectively, the
"LOAN DOCUMENTS"), and pursuant to SECTION 5.1.13 of the Credit Agreement, the
undersigned hereby certifies to the Administrative Agent and Lenders as follows:
1. I am the duly qualified and acting Vice President and Treasurer of
the Borrower. I am familiar with the assets, businesses, and liabilities of the
Borrower and its Subsidiaries, and I am duly authorized to execute this
Officer's Certificate Regarding Financial Matters (this "CERTIFICATE") on behalf
of the Borrower. Any and all capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Credit Agreement.
2. I have reviewed the contents of this Certificate and I have
discussed the meaning of its contents with counsel. I have reviewed, or have
received information, data, and reports from officers or other employees of the
Borrower and its Subsidiaries who have reviewed the Loan Documents and the
contents of this Certificate and, in connection therewith, have made such
investigation and inquiries as I deem necessary and prudent. The financial
information, assumptions, and valuation techniques, including present value
analyses using appropriate rates over appropriate periods, which underlie and
form the basis for the representations made in this Certificate were reasonable
when made and were made in good faith and continue to be reasonable as of the
date hereof.
3. I understand that the Administrative Agent and Lenders are relying
on the truth and accuracy of this Certificate in connection with extensions of
credit under the Credit Agreement.
235
4. In connection with the transactions contemplated by the Credit
Agreement and the other Loan Documents, I have reviewed consolidated income
projections, consolidated balance sheet projections, and consolidated cash flow
projections for the Borrower (collectively, the "PROJECTIONS") for the five-year
period ending December, 2001, which give effect to all of the transactions
contemplated by the Credit Agreement and the other Loan Documents, and the
payment of all fees and expenses in connection with the foregoing. The
Projections are attached hereto as EXHIBIT A and incorporated herein by this
reference.
5. The Projections were prepared based on information compiled by
employees and corporate staff members of the Borrower and include certain
assumptions regarding increasing revenues and costs and changes in the economy,
which I have no reason to believe are not reasonable and prudent. In addition,
the Projections were prepared based on information regarding the Borrower's
anticipated performance as provided by personnel of the Borrower and based on
discussions with personnel of the Borrower. Based thereon, and to the best of my
knowledge, the Projections are reasonable and prudent. The Projections are,
however, subject to the uncertainty and approximation inherent in projections,
and accordingly, they are not guarantees of the Borrower's future performance.
6. I have reviewed the following financial statements which have been
prepared in accordance with GAAP:
(a) 1996 annual report for the Borrower.
(b) March 29, 1997 quarterly report for the Borrower.
(c) 1994, 1995 and 1996 consolidated income statements for the
Borrower.
7. Based on the foregoing, and to the best of my knowledge, I conclude
as follows:
(a) The Borrower is not insolvent and the execution and delivery of
the Credit Agreement and the other Loan Documents, and the consummation of the
transactions contemplated under the foregoing, including the granting by the
Borrower of the Liens as contemplated thereunder, or the payment by the Borrower
of any fees incurred in connection with the consummation of the transactions
contemplated under any of the foregoing, will not render the Borrower insolvent.
I understand that, in this context, "insolvent" means that the present fair
valuation of the assets and properties of a Person is less than such Person's
probable liability in respect of existing debts. I understand that the "fair
valuation" of the assets and properties of a Person means the amount realizable
within a reasonable time, either through collection or sale of such assets at
their regular market value, which is the amount obtainable by a capable and
diligent businessman from an interested buyer willing to purchase such assets
within a reasonable time under ordinary selling conditions. I also understand
that the term
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236
"debts" includes and legal liability, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed, or contingent.
(b) The execution and delivery of the Credit Agreement and the
other Loan Documents, the consummation of the transactions contemplated
thereunder, including the granting by the Borrower of the Liens contemplated
thereunder, and the payment by the Borrower of any fees incurred in connection
with the consummation of the transactions contemplated under any of the
foregoing, will not leave the Borrower with assets remaining which would
constitute unreasonably small capital or assets. In reaching this conclusion, I
understand that "unreasonably small capital or assets" depends upon the nature
of the particular business to be conducted, and I have reached my conclusion in
light of the needs and anticipated needs for capital and assets of the business
anticipated to be conducted by the Borrower and based upon the Projections and
other information described above.
(c) The Borrower does not intend to and does not believe that
it will, in connection with the execution and delivery of the Credit Agreement
and the other Loan Documents and the consummation of the transactions
contemplated thereunder, including the granting by the Borrower of the Liens
contemplated thereunder, and the payment of any fees in connection with the
consummation of the transactions contemplated under any of the foregoing, incur
debts beyond its ability to pay such debts as they mature. This conclusion is
based, in part, upon my review of the Projections which project that the
Borrower will have sufficient cash flow to pay all of its scheduled and
anticipated debts as they mature. I have concluded that Borrower's cash flows
will be sufficient to pay recurring current debt, short term debt, and long term
debt service as such debts require.
(d) The Borrower has not executed the Credit Agreement or the
other Loan Documents, or made any transfer or incurred any obligations under any
of the foregoing, with actual intent to hinder, delay, or defraud either present
or future creditors.
8. In reaching the conclusions set forth in this Certificate, I have
considered, among other things:
(a) the financial statements described in paragraph 6 above;
(b) all contingent liabilities of the Borrower, including
claims arising out of, pending, or, to the best knowledge of the undersigned,
threatened, litigation against any such entity, and in so doing, the undersigned
has computed the amount of such liabilities as the amount which, in light of all
of the facts and circumstances existing on the date hereof, represents the
amount that can reasonably be expected to become an actual or matured liability;
(c) the Projections;
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237
(d) historical and anticipated growth in revenue of the Borrower;
(e) the customary terms of trade payables of the Borrower;
(f) the amount of credit extended by and to customers of the
Borrower; and
(g) the level of capital customarily maintained by the Borrower
and other entities engaged in the same or similar business as the business of
the Borrower.
I hereby certify that the foregoing information is true and correct and
execute this Officer's Certificate Regarding Financial Matters as of this 21st
day of May, 1997.
-------------------------------------
Title: Vice President and Treasurer
238
May 21, 1997
The Lenders and the Agents
Referred to Below
c/o The Huntington National Bank,
as Administrative Agent
41 South High Street
Columbus, Ohio 43215
Re: RED ROOF INNS, INC.
-------------------
Ladies and Gentlemen:
We have acted as special New York Counsel to Red Roof Inns, Inc., (the
"Borrower"), in connection with the Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of May 21, 1997 among Borrower; the financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"); CIBC Wood Gundy Securities Corp. and The Huntington National Bank,
as arrangers; CIBC Wood Gundy Securities Corp., as syndication and documentation
agent (the "Syndication and Documentation Agent"); and The Huntington National
Bank, as collateral and administrative agent (the "Administrative Agent" and,
together with the Syndication and Documentation Agent, the "Agents").
Capitalized terms defined in the Credit Agreement and not otherwise defined
herein are used herein as therein defined.
We have reviewed executed originals of the following documents:
(a) the Credit Agreement;
(b) the Pledge Agreement dated as of the date hereof between
Borrower and the Administrative Agent;
(c) the Notes executed and delivered by Borrower on the date
hereof;
239
The Lenders and
the Agents -2- May 21, 1997
(d) the Realignment Agreement dated as of the date hereof among
the Borrower, the financial institutions listed on the signature pages
thereof and the Administrative Agent;
(e) the Mortgages executed and delivered by Borrower as of the
date hereof; and
(f) the Mortgage Amendments executed and delivered by Borrower as
of the date hereof.
The documents referred to in items (a) through (f) above are sometimes
hereinafter referred to collectively as the "Documents" and individually as a
"Document".
In addition, we have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments, and have conducted
such other investigations of fact and law, as I have deemed necessary or
advisable for purposes of this opinion.
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of each
Document to which it is a party, are within its corporate powers and have been
duly authorized by all necessary corporate action on the part of the Borrower.
2. The execution and delivery by the Borrower of each Document to which
it is a party, and the performance by the Borrower of all of its obligations
under each Document to which it is a party, (i) require no action by or in
respect of, or filing with, any governmental body, agency or official under
United States federal or New York State law and (ii) do not (A) violate any
United States federal or New York State law or regulation that in our experience
is normally applicable to general business corporations in relation to
transactions of the type contemplated by the Credit Agreement, (B) result in a
breach of, contravene, require consent under, constitute a default under or
result in the acceleration or required prepayment under the Senior Note
Indenture or (C) result in the creation or imposition of any Lien on any
property of any Borrower under the Senior Note Indenture.
3. Each of the Credit Agreement, the Realignment Agreement and the
Pledge Agreement constitutes a valid and binding agreement of the Borrower, and
the Notes executed and delivered on the date hereof constitute valid and binding
obligations of the Borrower, in each case enforceable against
240
The Lenders and
the Agents -3- May 21, 1997
the Borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and equitable
principles of general applicability.
4. Assuming that the certificates evidencing the Pledged Notes (as
defined in the Pledge Agreement) listed on Schedule I to the Pledge Agreement,
in each case endorsed by an appropriate person in blank or accompanied by
instruments of transfer or assignment in blank duly indorsed by an appropriate
person, have been delivered on or prior to the date hereof to the Administrative
Agent, and have been continuously held by the Administrative Agent since such
delivery, in each case in the State of New York, and the good faith of, and the
absence of notice of any adverse claim thereto on the part of, any Agent,
Lender, Issuer or other holder of a Secured Obligation (as defined in the Pledge
Agreement) (collectively, the "Secured Parties"), such delivery, together with
the Pledge Agreement, is effective to create, in favor of the Administrative
Agent for the benefit of the Secured Parties, a valid and perfected security
interest in all right, title and interest of the Borrower in such Pledged Notes
securing the Secured Obligations (as defined in the Pledge Agreement), which
security interest will have priority over all other security interests in such
Pledged Notes created under the Uniform Commercial Code as in effect in the
State of New York. No filing under New York State law is necessary to create or
perfect such security interest in such Pledged Notes.
The foregoing is subject to the following qualifications:
(a) We express no opinion as to the right, title or interest of the
Borrower in or to any Collateral or the value given therefor.
(b) Except as expressly set forth in paragraph 3 above, we express
no opinion as to the creation, perfection or priority of any security
interest or lien or any action by or in respect of, or filing with, any
governmental body, agency or official in respect thereof.
(c) We note the possible unenforceability of certain remedial
provisions contained in the Pledge Agreement; however, none of such
provisions renders the Pledge Agreement invalid and the Pledge
Agreement contains, in our judgment, adequate remedial provisions for
the practical realization of the rights and benefits afforded thereby.
(d) As to various provisions in the Documents that grant the Agents
or the Lenders certain rights to make determinations or take actions in
their discretion, we assume that such discretion will be exercised in
good faith and in a commercially reasonable manner.
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The Lenders and
the Agents -4- May 21, 1997
(e) We express no opinion as to the effect (if any) of any law of
any jurisdiction (except the State of New York) in which any Lender or
Collateral is located that may limit the rate of interest that such
Lender may charge or collect.
(f) We express no opinion as to the effect of Section 548 of the
United States Bankruptcy Code or any similar provisions of State law.
(g) We have assumed that (i) the Borrower is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization and (ii) the execution, delivery and the
performance by the Borrower of each Document to which it is a party
require no action by or in respect of, or filing with, any governmental
body, agency or official (other than any such action or filing under
United States federal or New York State law or such as have been duly
taken or made) and do not contravene, or constitute a default under,
any provision of applicable law or regulation (other than United States
federal and New York State laws and regulations that in our experience
are normally applicable to general business corporations in relation to
transactions of the type contemplated by the Credit Agreement) or of
the certificate of incorporation or by-laws of the Borrower or of any
judgment, injunction, order or decree or any agreement or other
instrument binding upon the Borrower (other than the Senior Note
Indenture).
We are members of the bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the Delaware General
Corporation Law and the federal laws of the United States of America.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person (other than an assignee or participant permitted
under Section 10.11 of the Credit Agreement) without our prior written consent.
Very truly yours,
242
EXHIBIT O
May 21, 1997
The Lenders and the Agents Referred to Below
c/o The Huntington National Bank,
as Administrative Agent
41 South High Street
Columbus, Ohio 43215
Re: RED ROOF INNS, INC.
Ladies and Gentlemen:
I have acted as Assistant General Counsel to Red Roof Inns, Inc., a
Delaware corporation ("Borrower"), in connection with the Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of May 21, 1997 among
Borrower; the financial institutions that are, or may from time to time become,
parties thereto (the "Lenders"); CIBC Wood Gundy Securities Corp. ("CIBC") and
The Huntington National Bank ("HNB"), as arrangers; CIBC, as syndication and
documentation agent (the "Syndication and Documentation Agent"); and HNB, as
collateral and administrative agent (the "Administrative Agent" and, together
with the Syndication and Documentation Agent, the "Agents"). Capitalized terms
used in this letter and not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement. The execution, delivery, and
performance of obligations under the Credit Agreement and all related
instruments and documents are referred to in this letter as the "Transaction".
In connection with the Transaction, Borrower has executed and delivered
the following documents:
(a) the Credit Agreement;
(b) the Pledge Agreement dated as of the date hereof between
Borrower and the Administrative Agent;
(c) the Notes executed and delivered by Borrower on the date
hereof;
(d) the Realignment Agreement dated as of the date hereof among
Borrower, the financial institutions listed on the signature
pages thereof and the Administrative Agent;
(e) the Mortgages executed and delivered by Borrower as of the
date hereof; and
(f) the Mortgage Amendments executed and delivered by Borrower as
of the date hereof.
The documents referred to in items (a) through (f) above are sometimes
hereinafter referred to collectively as the "Documents" and individually as a
"Document".
Also in connection with the Transaction, I have examined originals or
copies, certified or otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and other instruments,
including, without limitation, a Certificate of Good Standing issued by the
Secretary of State of Delaware as of May 7, 1997 (the "Good Standing
Certificate"), and have conducted such other investigations of fact and law, as
I have deemed necessary or advisable for purposes of the opinions expressed in
this letter.
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The Lenders and the Agents
May 21, 1997
Page 2
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, I am of the opinion that:
1. Based solely upon my examination of (a) the Good Standing
Certificate, (b) the Amended and Restated Certificate of Incorporation of
Borrower, and (c) the Amended and Restated Bylaws of Borrower, copies of each of
which have been delivered to the Agents, Borrower is a validly existing
corporation in good standing under the laws of the State of Delaware, with
corporate power to enter into each of the Documents to which it is a party, and
to perform its obligations thereunder. In my capacity as Assistant General
Counsel of Borrower, without independent investigation, I have no actual
knowledge of any state of facts that would cause the foregoing statement to be
untrue.
2. Borrower is qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the conduct of its business or
the ownership or leasing of its properties makes such qualification necessary,
except for failures to be so qualified or licensed that, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
3. The execution, delivery, and performance of each Document have been
duly authorized by all necessary corporate action on the part of Borrower, and
each Document has been duly executed and delivered by Borrower.
4. Borrower's execution and delivery of, and performance of its
obligations under, the Documents do not (a) violate any provision of the Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws of
Borrower, or (b) result in any breach of, constitute a default under, require
consent under, result in or require the creation of any Lien on any Property of
Borrower, or result in the acceleration or required prepayment of any
indebtedness pursuant to the terms of, any agreement (other than the Indenture),
instrument or order (including any arbitral award) to which Borrower or any of
Borrower's assets is subject.
5. To my knowledge, there is no action, suit, claim, or proceeding
pending or threatened against Borrower that would be reasonably likely to result
in a Material Adverse Effect.
6. The authorized capital stock of RRI Financial, Inc. ("Financial")
consists of twenty-five thousand (25,000) shares of common stock, no par value
per share, of which one hundred (100) shares are issued and outstanding. The
authorized capital stock of RRI Investment Co. ("Investment") consists of
twenty-five thousand (25,000) shares of common stock, no par value per share, of
which one hundred (100) shares are issued and outstanding. All of such
outstanding shares have been duly and validly issued, and are fully paid and
nonassessable. Borrower is the record and beneficial owner of all issued and
outstanding shares of common stock of Investment. Investment is the record and
beneficial owner of all issued and outstanding shares of common stock of
Financial.
The foregoing is subject to the following qualifications:
(a) I express no opinion as to the right, title, or interest
of Borrower in or to any Collateral or the value given therefor.
(b) I express no opinion as to the creation, perfection or
priority of any security interest or lien or any action by or in
respect of, or filing with, any governmental body, agency, or official
in respect thereof.
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The Lenders and the Agents
May 21, 1997
Page 3
(c) As to various provisions in the Documents that grant the
Agents or the Lenders certain rights to make determinations or take
actions in their discretion, I assume that such discretion will be
exercised in good faith and in a commercially reasonable manner.
(d) I express no opinion as to the effect (if any) of any law
of any jurisdiction in which any Lender is located that may limit the
rate of interest that such Lender may charge or collect.
(e) I express no opinion as to the effect of Section 548 of
the United States Bankruptcy Code or any similar provisions of state
law.
I am a member of the bar of the State of Ohio. Except with respect to
the opinions set forth in item 1, above, the foregoing opinions are limited to
the laws of the State of Ohio.
The opinions expressed in this letter are rendered solely to you in
connection with the above matter. This letter may not be relied upon by you for
any other purpose or relied upon by any other person (other than an assignee or
participant permitted under Section 10.11 of the Credit Agreement) without my
prior written consent.
Sincerely,
Sara L. Todd
245
EXHIBIT P
Title Endorsements
A. If available in the state where the Property is located (or if unavailable,
the local equivalent, if any), the following endorsements:
1. 100 (Comprehensive); ALTA Form 9 is acceptable.
2. 103.3 (Forced Removal), if applicable.
3. 103.7 (Access); "land abuts upon and has vehicular and
pedestrian ingress and egress to and from a physically open,
publicly dedicated and accepted street."
4. 116 (Survey).
5. 116.4 (Contiguity), if applicable.
5. 116.7 (Subdivision Map Act), if applicable.
6. Revolver Endorsement (including additional advances).
7. 111.5 (Variable Rate).
8. Tie-In Endorsement (or, if tie-in endorsement is not
available, last-dollar endorsement).
9. 115 (Separate Tax Parcel).
10. 119.2 (Leasehold), if applicable.
B. The Agents shall have the right to request additional endorsements (if
available in the state where the Property is located) if, based upon a review of
the title condition of the Property, an institutional lender in a lending
transaction similar to the transaction contemplated by the Credit Agreement
would reasonably request such endorsement to address a particular exception or
to address an exclusion from the legal description of the Property (e.g.,
reservation of mineral rights); provided, however, that the foregoing shall not
be construed to allow the Agents to request additional endorsements which would
be generally applicable to the Properties (e.g., zoning) and which are not
designed to address a specific title concern with respect to the Property.