-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W1qXhDgHWpY8qOWNrMuh+/pHD2Q/Zy67e3CXOQSLTd9LeS83IVKucVlfpKW2AonE koijOFJk3XaM07McDvhQMA== 0001021408-02-003179.txt : 20020415 0001021408-02-003179.hdr.sgml : 20020415 ACCESSION NUMBER: 0001021408-02-003179 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 33 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERISTAR HOSPITALITY CORP CENTRAL INDEX KEY: 0001012967 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752648842 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11903 FILM NUMBER: 02569200 BUSINESS ADDRESS: STREET 1: 1010 WISCONSIN AVENUE N W CITY: WASHINGTON STATE: DC ZIP: 20007 BUSINESS PHONE: 9725506800 MAIL ADDRESS: STREET 1: 1010 WISCONSIN AVENUE N W CITY: WASHINGTON STATE: DC ZIP: 20007 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL HOSPITALITY CORP DATE OF NAME CHANGE: 19960428 10-K 1 d10k.txt FORM 10-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended December 31, 2001 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 1-11903 MERISTAR HOSPITALITY CORPORATION (Exact name of issuer as specified in its charter) MARYLAND 75-2648842 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1010 WISCONSIN AVENUE, N.W., 20007 WASHINGTON, D.C. (Zip code) (Address of principal executive offices) Registrant's telephone number, including area code: (202) 295-1000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered: ------------------- ------------------------------------------ Common Stock, par value New York Stock Exchange $.01 per share Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ___. Based on the average sale price at March 5, 2002, the aggregate market value of the voting stock held by nonaffiliates of the registrant was $753,622,272. The number of shares of the Registrant's common stock outstanding as of March 5, 2002 was 44,502,187. DOCUMENTS INCORPORATED BY REFERENCE: Part III - Those portions of the Registrant's definitive proxy statement relating to Registrant's 2001 Annual Meeting of Stockholders which are incorporated into Items 10, 11, 12, and 13. PART I ITEM 1. BUSINESS MERISTAR HOSPITALITY CORPORATION MeriStar Hospitality Corporation is a real estate investment trust and owns a portfolio of upscale, full-service hotels. Our hotels are diversified geographically as well as by franchise and brand affiliations. As of December 31, 2001, we owned 112 hotels with 28,653 rooms. Our hotels are located in major metropolitan areas or rapidly growing secondary markets in the United States and Canada. A majority of the hotels are operated under nationally recognized brand names such as Hilton(R), Sheraton(R), Westin(R), Marriott(R), Radisson(R), Doubletree(R) and Embassy Suites(R). We believe the upscale, full-service segment of the lodging industry offers strong potential operating results and investment opportunites. The real estate market has recently experienced a significant slowdown in the construction of upscale, full-service hotels. Also, upscale, full-service hotels have particular appeal to both business executives and upscale leisure travelers. We believe the combination of these factors offers good potential ownership opportunities for us in this sector of the lodging industry. We were created on August 3, 1998, when American General Hospitality Corporation, a corporation operating as a real estate investment trust, merged with CapStar Hotel Company. In connection with the merger between CapStar and American General, we created MeriStar Hotels & Resorts, Inc., a separate publicly traded company, to be the lessee and manager of nearly all of our hotels. At December 31, 2001, MeriStar Hotels managed all of our hotels. We share certain key executive officers and five board members with MeriStar Hotels. Also, an intercompany agreement aligns our interests with the interests of MeriStar Hotels, with the objective of benefiting both companies' shareholders. Changes to the federal tax laws governing Real Estate Investment Trusts, or REITs, were enacted in 1999 and became effective on January 1, 2001. Under those changes, we are permitted to create subsidiaries that lease the properties we currently own, and these subsidiaries are taxable in a manner similar to subchapter C corporations. Because of these changes in the tax laws, we have formed a number of wholly-owned taxable subsidiaries to which subsidiaries of MeriStar Hotels assigned their participating leases. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay MeriStar Hotels a management fee. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements were structured to substantially mirror the economics and terms of the former leases. BUSINESS Given the challenging operating environment that has resulted from a slowing economy coupled with the disruptions caused by the events of September 11, 2001, we intend to focus on maximizing the profitability of our existing hotels by actively overseeing their operation by MeriStar Hotels. In addition, we have taken steps to strengthen our balance sheet and to maintain financial flexibility and liquidity. We believe these steps will position us to take advantage of opportunities that may arise in the future. The Intercompany Agreement We are a party to an intercompany agreement with MeriStar Hotels. So long as the agreement remains in effect, MeriStar Hotels is prohibited from making real property investments a REIT could make unless: . We are first given the opportunity, but elect not to pursue the investment; . The investment is on land already owned or leased by MeriStar Hotels or subject to a lease or purchase option in favor of MeriStar Hotels; 2 . MeriStar Hotels will operate the property under a trade name owned by MeriStar Hotels; or . The investment is a minority investment made as part of a lease or management agreement arrangement. We have a right of first refusal with respect to any real property investment to be sold by MeriStar Hotels. The intercompany agreement will generally grant MeriStar Hotels the right of first refusal with respect to any management opportunity at any of our properties we do not elect to have managed by a hotel brand owner. We will make such an opportunity available to MeriStar Hotels only if we determine that: . Consistent with our status as a REIT, we must enter into a management agreement with an unaffiliated third party with respect to the property; . MeriStar Hotels is qualified to be the manager of that property; and . The property is not to be operated by the owner of a hospitality trade name under that trade name. Because of the provisions of the intercompany agreement, we are restricted in the nature of our business and the opportunities we may pursue. Provision of Services We may provide each other with services as we may reasonably request from time to time. These may include administrative, renovation supervision, corporate, accounting, financial, risk management, legal, tax, information technology, human resources, acquisition identification and due diligence, and operational services. We believe we compensate each other in an amount that would be charged by an unaffillated third party for comparable services. The arrangements relating to the provision of these services were not subject to arm's-length negotiation. Equity Offerings If we or MeriStar Hotels desire to engage in a securities issuance, the issuing party will give notice to the other party as promptly as practicable of its desire to engage in a securities issuance. The notice will include the proposed material terms of such issuance, to the extent determined by the issuing party, including whether the issuance is proposed to be pursuant to public or private offering, the amount of securities proposed to be issued and the manner of determining the offering price, and other terms of the securities. The non-issuing party will cooperate with the issuing party to effect any securities issuance of the issuing party by assisting in the preparation of any registration statement or other document required in connection with the issuance and, in connection with that issuance, providing the issuing party with such information as may be required to be included in the registration statement or other document. Term The intercompany agreement will terminate upon the earlier of August 3, 2008, or the date of a change in ownership or control of MeriStar Hotels. Loan to MeriStar Hotels We are obligated to lend MeriStar Hotels up to $50 million for general corporate purposes under a revolving credit agreement. The interest rate on the revolving credit facility equals 650 basis points over the 30-day London Interbank Offered Rate and the maturity date of the facility is the 91st day following the maturity of MeriStar Hotels' senior credit facility, as amended, restated, refinanced or renewed. As of December 31 2001, there was $36.0 million outstanding under this revolving credit agreement. We 3 amended the revolving credit agreement with MeriStar Hotels to include covenants similar to those in its senior credit facility. MeriStar Hotels also issued us a term note effective January 1, 2002. This $13.1 million term note refinances outstanding accounts payable MeriStar Hotels owed to us. The term note bears interest at 650 basis points over the 30-day LIBOR. The maturity date is the same as that of the revolving credit agreement. Recent Events Amendment to our Senior Secured Credit Agreement In December 2001, we amended our senior secured credit agreement to allow us to extend the maturity of the revolving credit facility from July 2002 to July 2003 and provide financial covenant relief through the maturity of the facility, among other revisions. On February 25, 2002, we amended our revolving credit agreement. The amendment allows us to reduce the revolving commitments to below $300 million. On March 1, 2002, we reduced the borrowing capacity on our revolving credit agreement from $310 million to $150 million. Senior Note Offerings On February 7, 2002, our operating partnership and MeriStar Hospitality Finance Corp. III, a wholly owed subsidiary of our operating partnership, issued $200 million aggregate principal amount of 9.125% senior notes due 2011 to "Qualified Institutional Buyers" as defined in Rule 144A under the Securities Act of 1933. On December 19, 2001, our operating partnership and MeriStar Hospitality Finance Corp. II, a wholly owned subsidiary of our operating partnership, issued $250 million aggregate principal amount of 10.50% senior notes due 2009 to "Qualified Institutional Buyers" as defined in Rule 144A under the Securities Act of 1933. These notes are unsecured obligations of our operating partnership and the wholly owned subsidiary. We and a number of our direct and indirect subsidiaries guarantee payments of principal and interest on the notes on a senior unsecured basis. We used the net proceeds of approximately $423.0 million from these offerings to repay outstanding term loans and revolving indebtedness under our senior secured credit agreement. REIT Modernization Act Until January 1, 2001, in order to maintain our tax status as a REIT, we were not permitted to engage in the operations of our hotel properties. To comply with this requirement, we leased all of our real property to third-party lessee/managers - MeriStar Hotels and Prime Hospitality. On January 1, 2001, changes to the U.S. federal tax laws governing REITs, commonly known as the "REIT Modernization Act" became effective. As a result, we are now permitted to create taxable subsidiaries, which are subject to taxation similar to a subchapter C-Corporation, and are permitted to lease our real property. Although a taxable subsidiary may lease real property, it is restricted from being involved in certain activities prohibited by the REIT Modernization Act. First, a taxable subsidiary is not permitted to manage the properties itself; it must enter into an "arm's length" management agreement with an independent third-party manager that is actively involved in the trade or business of hotel management and manages properties on behalf of other owners. Second, the taxable subsidiary is not permitted to lease a property that contains gambling operations. Third, the taxable subsidiary is restricted from owning a brand or franchise. We believe establishing taxable subsidiaries to lease our properties provides a more efficient alignment of and ability to capture the economic interests of property ownership. In 2000, we established a subcommittee of independent members of our Board of Directors to negotiate the transfer of our existing leases with subsidiaries of MeriStar Hotels to our taxable subsidiaries. Accordingly, effective January 1, 2001, our taxable subsidiaries executed agreements with subsidiaries of MeriStar Hotels. These 4 agreements assigned our existing leases to our taxable subsidiaries. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels for each property they previously leased. The management agreements were structured to substantially mirror the economics of the former lease agreements. The Management Agreements MeriStar Hotels manages all 112 of our hotels under management agreements with our taxable subsidiaries. Management Fees and Performance Standards Each taxable subsidiary pays MeriStar Hotels a management fee for each hotel equal to a specified percentage of aggregate hotel operating revenues, increased or reduced, as the case may be, by 20% of the positive or negative difference between: . The actual excess of total operating revenues over total operating expenses; and . A projected excess of total operating revenues over total operating expenses. The total management fee for a hotel in any fiscal year will not be less than 2.5% or greater than 4.0% of aggregate hotel operating revenues. Term and Termination The management agreements with MeriStar Hotels generally have initial terms of 10 years with three renewal periods of five years each, except for four management agreements which have initial terms of one year which renew annually thereafter. A renewal will not go into effect if a change in the federal tax laws permits us or one of our subsidiaries to operate the hotel directly without adversely affecting our ability to qualify as a REIT or if MeriStar Hotels elects not to renew the agreement. We may elect not to renew the management agreements only as provided below. Our taxable subsidiaries have the right to terminate a management agreement for a hotel upon the sale of the hotel to a third party or if the hotel is not restored after a significant casualty loss. Upon that termination, the relevant taxable subsidiary will be required to pay MeriStar Hotels the fair market value of the management agreement. That fair market value will be equal to the present value of the remaining payments (discounted using a 10% rate) of the existing term under the agreement, based on the operating results for the 12 months preceding the termination. Our taxable subsidiaries will be able to credit against any termination payments, the present value of projected fees (discounted using a 10% rate) under any management agreements or leases entered into between MeriStar Hotels and us (or our subsidiaries) after August 3, 1998. If a hotel's gross operating profit is less than 85% of the amount projected in the hotel's budget in any fiscal year and gross operating profit from that hotel is less than 90% of the projected amount in the next fiscal year, our taxable subsidiaries will have the right to terminate the management agreement for the hotel, unless: . We did not materially comply with the capital expenditures contemplated by the budget for either or both of the applicable fiscal years; or . MeriStar Hotels cures the shortfall by agreeing to reduce its management fee for the next fiscal year by the amount of the shortfall between the actual operating profit for the second fiscal year and 90% of the projected gross operating profit for that year. MeriStar Hotels can only use the cure right once during the term of each management agreement. Assignment 5 MeriStar Hotels does not have the right to assign a management agreement without the prior written consent of the relevant taxable subsidiary. A change in control of MeriStar Hotels will require the consent of the relevant taxable subsidiary, and that subsidiary may grant or withhold its consent in its sole discretion. Acquisition Strategy We focus our attention on investments in hotels located in markets with economic, demographic and supply dynamics favorable to hotel owners. Through an extensive due diligence process, we select those acquisition targets where we believe selective capital improvements and well selected third-party management will increase the hotel's ability to attract key demand segments, enhance hotel operations and increase long-term value. In order to evaluate the relative merits of each investment opportunity, our senior management and MeriStar Hotels create detailed plans covering all areas of renovation and operation. These plans serve as the basis for our acquisition decisions and guide subsequent renovation and operating plans. Until January 1, 2001, in order to maintain our qualification as a REIT, we were required to make annual distributions to our stockholders of at least 95% of our real estate investment trust taxable income, determined without regard to the deduction for dividends paid and by excluding net capital gains. After January 1, 2001, pursuant to the REIT Modernization Act, the percentage of required annual distributions was reduced to 90%. As a result of this annual distribution requirement, we rely heavily on our ability to raise new capital through debt and equity offerings in order to complete acquisitions. That ability is dependent on the then-current status of the capital markets. Competition We compete primarily in the upper upscale sector of the full-service segment of the lodging industry. Each geographic market where we own hotels has other full- and limited-service hotels that compete with our hotels. Competition in the U.S. lodging industry is based on a number of factors, most notably convenience of location, brand affiliation, price, range of services and guest amenities offered, quality of customer service and overall product. Employees As of December 31, 2001, we employed approximately 30 persons, all of whom work at our corporate headquarters. Franchises We employ a flexible branding strategy based on each particular hotel's market environment and other unique characteristics. Accordingly, we use various national brand names pursuant to licensing arrangements with national franchisors. We have included a listing of all of our properties, along with the affiliated brand names, under Item 2 of this Form 10-K. Governmental Regulation Americans with Disabilities Act - Under the Americans with Disabilities Act, all public accommodations are required to meet certain requirements related to access and use by disabled persons. These requirements became effective in 1992. Although significant amounts have been and continue to be invested in ADA required upgrades to our hotels, a determination that we are not in compliance with the ADA could result in a judicial order requiring compliance, imposition of fines or an award of damages to private litigants. We are likely to incur additional costs of complying with the ADA; however, such costs are not expected to have a material adverse effect on our results of operations or financial condition. Environmental Laws - Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or 6 remediation of hazardous or toxic substances on, under or in property. Laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. In addition, the presence of contamination from hazardous or toxic substances, or the failure to properly remediate contaminated property, may adversely affect the owner's ability to sell or rent real property or to borrow funds using real property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of these substances at the disposal or treatment facility, whether or not the facility is or ever was owned or operated by those persons. Federal and state laws also regulate the operation and removal of underground storage tanks. In connection with the ownership and operation of the hotels, we could be held liable for the costs of remedial action with respect to the regulated substances and storage tanks and claims related thereto. Activities have been undertaken to close or remove storage tanks located on the property of several of the hotels. All of our hotels have undergone Phase I environmental site assessments, which generally provide a nonintrusive physical inspection and database search, but not soil or groundwater analyses, by a qualified independent environmental engineer. The purpose of a Phase I is to identify potential sources of contamination for which the hotels may be responsible and to assess the status of environmental regulatory compliance. The Phase I assessments have not revealed any environmental liability or compliance concerns that we believe would have a material adverse effect on our results of operations or financial condition, nor are we aware of any material environmental liability or concerns. Nevertheless, it is possible that these environmental site assessments did not reveal all environmental liabilities or compliance concerns or that material environmental liabilities or compliance concerns exist of which we are currently unaware. In addition, our hotels have been inspected to determine the presence of asbestos. Federal, state and local environmental laws, ordinances and regulations also require abatement or removal of asbestos-containing materials and govern emissions of and exposure to asbestos fibers in the air. Asbestos-containing materials are present in various building materials such as sprayed-on ceiling treatments, roofing materials or floor tiles at some of the hotels. Operations and maintenance programs for maintaining asbestos-containing materials have been or are in the process of being designed and implemented, or the asbestos-containing materials have been scheduled to be or have been abated, at these hotels. Any liability resulting from non-compliance or other claims relating to environmental matters are not expected to have a material adverse effect on our results of operations or financial condition. The Operating Partnership The following summary information is qualified in its entirety by the provisions of the MeriStar Hospitality Operating Partnership, L.P. limited partnership agreement. We have filed a copy of that agreement as an exhibit to this Form 10-K. MeriStar Hospitality Operating Partnership, L.P., our subsidiary operating partnership, holds, both directly and indirectly, substantially all of our assets. We are the sole general partner of our operating partnership; we and approximately 104 other persons and entities are limited partners of the operating partnership. The partnership agreement of our operating partnership gives the general partner full control over the business and affairs of the operating partnership. The agreement also gives the general partner the right, in connection with the contribution of property to the operating partnership or otherwise, to issue additional partnership interests in the operating partnership in one or more classes or series. These issuances may have such designations, preferences and participating or other special rights and powers (including rights and powers senior to those of the existing partners) as the general partner may determine. Our operating partnership's partnership agreement provides for five classes of partnership interests: Common OP Units, Class B OP Units, Class C OP Units, Class D OP Units and Profits-Only OP Units. As of March 5, 2002, the partners of the operating partnership own the following aggregate numbers of OP Units: . We and our wholly-owned subsidiaries own a number of Common OP Units equal to the number of issued and outstanding shares of our common stock, par value $0.01; 7 . Independent third parties own 4,115,590 OP Units (consisting of 2,759,210 Common OP Units, 964,223 Class C OP Units and 392,157 Class D OP Units). . Certain of our executive officers and executive officers of MeriStar Hotels, Inc. own 737,500 Profits-Only OP Units and 5,758 Common OP units. Holders of Common OP Units and Class B OP Units receive distributions per OP Unit equivalent to the dividend paid on each of our common shares. Holders of Class C OP Units receive a non-cumulative, quarterly distribution equal to $0.5575 per Class C OP Unit so long as the Common OP Units and Class B OP Units receive a distribution for such quarter and the dividend rate on our common stock has not exceeded $0.5575. Class C OP Units automatically convert into Common OP Units once that dividend rate is exceeded. Holders of Class D OP Units receive a 6.5% cumulative annual preferred return based on an assumed price per common share of $22.16; the return is compounded quarterly to the extent not paid on a current basis, and holders are entitled to a liquidation preference of $22.16 per Class D OP Unit. All net income and capital received by the operating partnership (after payment of the annual preferred return and, if applicable, the liquidation preference) will be shared by the holders of the Common OP Units in proportion to the number of Common OP Units in the relevant operating partnership owned by each such holder. Each Common OP Unit, Class B OP Unit, Class C OP unit and Class D OP Unit held by third parties is redeemable by the holder for one share of our common stock or, at our option, for cash in an amount equal to the market value of a share of common stock. In addition, we have the option to redeem the Class D OP Units at any time after April 1, 2000 at a price of $22.16 per share for cash or, at our option, for shares of common stock having a value equal to the redemption price. The holders have the option to redeem the Class D OP Units at any time after April 1, 2004 for cash or, at the holders' option, for shares of common stock having a value equal to $22.16. Profits-only OP Units are issued pursuant to our Profits-Only Operating Partnership Units Plan. We have filed this plan as an exhibit to this Form 10-K. Under that plan, holders of Profits-Only OP Units receive quarterly distributions equivalent to the dividend paid on our common stock. 8 RISK FACTORS Financing Risks Our significant amount of debt could limit our operational flexibility or otherwise adversely affect our financial condition. We are subject to the risks normally associated with debt financing, including the risks that: . Our cash flow from operations may be insufficient to make required payments of principal and interest; . We are unable to be able to refinance existing indebtedness, including secured indebtedness; and . The terms of any refinancing may not be as favorable as the terms of existing indebtedness. We may be required to refinance our indebtedness, and the failure to refinance our indebtedness may have an adverse effect on us. As of February 15, 2002, we had $15.3 million of debt maturing in 2002, $75.6 million of debt maturing in 2003 and $171.2 million of debt maturing in 2004. If we do not have sufficient funds to repay our indebtedness at maturity, we may have to refinance the indebtedness through additional debt financing. This additional financing might include private or public offerings of debt securities and additional non-recourse or other collateralized indebtedness. If we are unable to refinance our indebtedness on acceptable terms, we might be forced to dispose of hotels or other assets on disadvantageous terms. This could potentially result in losses and adverse effects on cash flow from operating activities. If we are unable to make required payments of principal and interest on indebtedness secured by our hotels, these properties could be foreclosed upon by the lender with a consequent loss of income and asset value. Our senior secured credit facility and other debt instruments have restrictive covenants that could affect our financial condition. As of February 15, 2002, we had approximately $67.0 million outstanding under our senior secured credit agreement. Our ability to borrow under the credit agreement is subject to financial covenants, including leverage and interest rate coverage ratios and minimum net worth requirements. Our credit agreement limits our ability to effect mergers, asset sales and change of control events, and limits dividends to the lesser of 90% of funds from operations and 100% of funds from operations less a capital reserve equal to 4% of gross room revenues. The credit agreement also contains a cross-default provision which would be triggered by a default or acceleration of $20 million or more of indebtedness secured by our assets or $5 million or more of any other indebtedness. The recent amendment to our credit facility limits dividends paid in each of the first three quarters of 2002 to the lesser of (1) $0.01 per share of common stock of MeriStar Hospitality Corporation or (2) $750,000. As of February 15, 2002, we had outstanding the following borrowings: . $300 million of senior unsecured notes due 2008 bearing interest at 9%; . $400 million of senior unsecured notes due 2011 bearing interest at 9.125%; . $250 million of senior unsecured notes due 2009 bearing interest at 10.50%; . $205 million of senior subordinated unsecured notes due 2007 bearing interest at a weighted-average annual rate of 8.71%; and . $154.3 million of outstanding convertible notes due 2004 bearing interest at 4.75%. Some of our indirect subsidiaries have guaranteed the issuers' payment obligations under the senior unsecured notes on a senior unsecured basis. The issuers and the subsidiary guarantors have guaranteed our payment obligations under the senior subordinated notes on an unsecured, senior subordinated basis. 9 The indentures relating to all of the notes contain limitations on our ability to effect mergers and change of control events, as well as other limitations, including limitations on: . Incurring additional indebtedness and issuing capital stock; . Declaring and paying dividends; . Selling our assets; . Conducting transactions with our affiliates; and . Incurring liens. Debt instruments we issue in future offerings will likely contain similar restrictive covenants. We may be able to incur substantially more debt, which would increase the risks associated with our substantial leverage. Although the terms of our debt instruments restrict our ability to incur additional indebtedness, our organizational documents do not limit the amount of indebtedness we may incur. If we add new debt to our current debt, the related risks we now face could intensify and increase the risk of default on our indebtedness. Rising interest rates could have an adverse effect on our cash flow and interest expense. Some of our borrowings under our credit facility bear interest at a variable rate. In addition, in the future we may incur indebtedness bearing interest at a variable rate, or we may be required to retain our existing indebtedness at higher interest rates. Accordingly, increases in interest rates could increase our interest expense and adversely affect our cash flow, reducing the amounts available to make payments on our other indebtedness. Operating Risks The recent economic slowdown and the September 11, 2001 terrorist attacks have adversely affected our REVPAR performance and, if it worsens or continues, these effects could be material. We have experienced declines in revenue per available room, or RevPAR, as follows: . 16.1% decline during the third quarter of 2001, as compared to the comparable period of 2000 . 24.1% decline during the fourth quarter of 2001, as compared to the comparable period of 2000; and . 10.4% decline during full year 2001, as compared to full year 2000. These declines are due to the economic slowdown that began in 2001, as well as the terrorist attacks of September 11, 2001. A sharper-than-anticipated decline in business and leisure travel was the primary cause of the declines, which were principally reflected in decreased occupancies. We expect that RevPAR in 2002 will decline approximately 2.5% compared to 2001. If the current economic slowdown worsens significantly or continues for a protracted period of time, the declines in occupancy could also lead to further declines in average daily room rates and could have a material adverse effect on our EBITDA, funds from operations and earnings. The economic slowdown and the resulting declines in RevPAR began in March 2001. Those trends are currently continuing. The decline in occupancy during the second, third and fourth quarters of 2001 has led to declines in room rates as hotels compete more aggressively for guests. If the hotel industry is negatively affected by one or more particular risks, our operating results could suffer. 10 Until January 1, 2001, we leased all but eight of our hotels to MeriStar Hotels. Each of those leases was a 12-year participating lease under which MeriStar Hotels was required to pay us a fixed base rent plus participating rent based on a percentage of revenues at the hotel. As a result of changes to the federal tax laws governing REITs, which became effective on January 1, 2001, MeriStar Hotels assigned those leases to our taxable REIT subsidiaries and those subsidiaries have entered into management agreements with MeriStar Hotels to manage our hotels. As a result of this new lease structure, we report operating revenues and expenses from the hotels subject to this new lease structure. Therefore, we are subject to the risk of fluctuating hotel operating margins at those hotels. Hotel operating expenses include but are not limited to wage and benefit costs, supplies, repair and maintenance expenses, utilities, insurance and other operating expenses. These operating expenses are more difficult to predict and control than percentage lease revenue, resulting in increased unpredictability in our operating margins. Various factors could adversely affect our hotel revenues, which are subject to all of the operating risks inherent in the lodging industry. These risks include the following: . changes in general and local economic conditions; . cyclical overbuilding in the lodging industry; . varying levels of demand for rooms and related services; . competition from other hotels, motels and recreational properties, some of which may be owned or operated by companies having greater marketing and financial resources than we do; . dependence on business and commercial travelers and tourism, which may fluctuate and be seasonal; . decreases in air travel; . fluctuations in operating costs; . the recurring costs of necessary renovations, refurbishment and improvements of hotel properties; . changes in governmental regulations that influence or determine wages, prices and construction and maintenance costs; and . changes in interest rates and the availability of credit. In addition, demographic, geographic or other changes in one or more of the markets of our hotels could impact the convenience or desirability of the sites of some hotels, which would in turn affect their operations. Also, due to the level of fixed costs required to operate full-service hotels, we generally cannot reduce significant expenditures necessary for the operation of hotels when circumstances cause a reduction in revenue. Acts of terrorism, the threat of terrorism and the ongoing war against terrorism have impacted and will continue to impact our industry and our results of operations. The terrorist attacks of September 11, 2001 have had a negative impact on our hotel operations in the third and fourth quarters causing lower than expected performance in an already slowing economy. The events of September 11 have caused a significant decrease in our hotels' occupancy and average daily rate due to disruptions in business and leisure travel patterns, and concerns about travel safety. Major metropolitan area and airport hotels have been adversely affected by concerns about air travel safety and a significant overall decrease in the amount of air travel. Prior to the September 11 terrorist attacks, RevPAR at our hotels for the third quarter was down 8.9% from the RevPAR for the same period in 2000 and occupancy was down 4.5%. For the remainder of September following the terrorist attacks, RevPAR was down 41.7% from the corresponding period in 2000 and occupancy was down 34.3%. During October, November and December 2001, RevPAR was down 25.6%, 24.1%, and 21.7% respectively, and occupancy was down 17.5%, 15.8% and 13.2%, respectively, from the same periods in 2000. In addition, the September 11, 2001 terrorist attacks have had a dramatic effect on the insurance and reinsurance industries. Many countries are being subjected to losses or cancellations of insurance policies, 11 or renewals of existing coverages but with extreme price increases. At our insurance policy renewals in mid-2002, we may be subject to restrictions as compared to our current coverage types or levels; price increases; or a combination of both restrictions and price increases. The September 11 terrorist attacks were unprecedented in scope, and in their immediate, dramatic impact on travel patterns. We have not previously experienced such events, and it is currently not possible to accurately predict if and when travel patterns will be restored to pre-September 11 levels. While we have had improvements in our operating levels from the period immediately following the attacks, we believe the uncertainty associated with subsequent incidents, threats and the possibility of future attacks will continue to hamper business and leisure travel patterns for the next several quarters. We have significant operational and financing relationships with MeriStar Hotels, and MeriStar Hotels' operating or financial difficulties could adversely affect our hotels' operations or our financial position. MeriStar Hotels manages all 112 of our hotels. As a result, we depend heavily on MeriStar Hotels' ability to provide efficient, effective management services to our hotels. Although we monitor the peformance of our properties on an on-going basis, MeriStar Hotels is responsible for the day-to-day management of the properties. In addition to this operating relationship with MeriStar Hotels, we have a revolving credit agreement that allows MeriStar Hotels to borrow from us. That revolving credit agreement matures 91 days following the maturity of MeriStar Hotels' senior credit facility. The maturity date of MeriStar Hotels' senior credit facility is February 28, 2003. MeriStar Hotels has borrowed $36 million as of December 31, 2001 under their revolving credit agreement with us. MeriStar Hotels has incurred significant net losses of $(18.9) million and $(9.4) million for the years ended December 31, 2001 and 2000, respectively. If MeriStar Hotels were unable to continue in business as a hotel operator, we would have to find a new manager for our hotels. This transition could significantly disrupt the operations of our hotels, and lead to lower operating results from our properties. In addition, if MeriStar Hotels was unable to repay its borrowings from us, we would experience a loss from the write-off of this asset. The lodging business is seasonal. Generally, hotel revenues are greater in the second and third calendar quarters than in the first and fourth calendar quarters. This may not be true, however, for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during tourist season than other times of the year. Because of the September 11 events, our operating results for the 2001 third and fourth quarters were lower than expected. Seasonal variations in revenue at our hotels will cause quarterly fluctuations in our revenues. Events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel, may also adversely affect our earnings. We may be adversely affected by the limitations in our franchise and licensing agreements. As of December 31, 2001, approximately 88% of our hotels were operated pursuant to existing franchise or license agreements with nationally recognized hotel brands. The franchise agreements generally contain specific standards for, and restrictions and limitations on, the operation and maintenance of a hotel in order to maintain uniformity within the franchisor system. Those limitations may conflict with our philosophy, shared with MeriStar Hotels, of creating specific business plans tailored to each hotel and to each market. Standards are often subject to change over time, in some cases at the discretion of the franchisor, and may restrict a franchisee's ability to make improvements or modifications to a hotel without the consent of the franchisor. In addition, compliance with standards could require a franchisee to incur significant expenses or capital expenditures. Action or inaction on our part or by our third-party operator could result in a breach of standards or other terms and conditions of the franchise agreements, and could result in the loss or cancellation of a franchise license. Loss of franchise licenses without replacement would likely have an adverse effect on our hotel revenues. In connection with terminating or changing the franchise affiliation of a currently-owned hotel or a subsequently acquired hotel, we may be required to incur significant expenses or capital expenditures. Moreover, the loss of a franchise license could have a material adverse effect upon the operations or the 12 underlying value of the hotel covered by the franchise due to the loss of associated name recognition marketing support and centralized reservation systems provided by the franchisor. The franchise agreements covering the hotels expire or terminate, without specified renewal rights, at various times and have differing remaining terms. As a condition to renewal, the franchise agreements frequently comtemplate a renewal application process, which may require substantial capital improvements to be made to the hotel. Unexpected capital expenditures could adversely affect our results of operations and our ability to make payments on our indebtedness. The lodging industry is highly competitive. We have no single competitor or small number of competitors that are considered to be dominant in the industry. We operate in areas that contain numerous competitors, some of which may have substantially greater resources than us. Competition in the lodging industry is based generally on location, availability, room rates or accommodations price, range and quality of services and guest amenities offered. New or existing competitors could significantly lower rates, offer greater conveniences, services or amenities; or significantly expand, improve or introduce new facilities in markets in which we compete. All of these factors could adversely affect our operations and the number of suitable business opportunities. Costs of compliance with environmental laws could adversely affect our operating results. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in property. Laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. In addition, the presence of contamination from hazardous or toxic substances, or the failure to properly remediate contaminated property, may adversely affect the owner's ability to sell or rent real property or to borrow funds using real property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of these substances at the disposal or treatment facility, whether or not the facility is or ever was owned or operated by those persons. Federal and state laws also regulate the operation and removal of underground storage tanks. In connection with the ownership and operation of the hotels, we could be held liable for the costs of remedial action with respect to the regulated substances and storage tanks and claims related thereto. Activities have been undertaken to close or remove storage tanks located on the property of several of the hotels. All of our hotels have undergone Phase I environmental site assessments, which generally provide a nonintrusive physical inspection and database search, but not soil or groundwater analyses, by a qualified independent environmental engineer. The purpose of a Phase I is to identify potential sources of contamination for which the hotels may be responsible and to assess the status of environmental regulatory compliance. The Phase I assessments have not revealed any environmental liability or compliance concerns that we believe would have a material adverse effect on our results of operations or financial condition, nor are we aware of any material environmental liability or concerns. Nevertheless, it is possible that these environmental site assessments did not reveal all environmental liabilities or compliance concerns or that material environmental liabilities or compliance concerns exist of which we are currently unaware. In addition, our hotels have been inspected to determine the presence of asbestos. Federal, state and local environmental laws, ordinances and regulations also require abatement or removal of asbestos-containing materials and govern emissions of and exposure to asbestos fibers in the air. Asbestos-containing materials are present in various building materials such as sprayed-on ceiling treatments, roofing materials or floor tiles at some of the hotels. Operations and maintenance programs for maintaining asbestos-containing materials have been or are in the process of being designed and implemented, or the asbestos-containing materials have been scheduled to be or have been abated, at these hotels. Any liability resulting from non-compliance or other claims relating to environmental matters could have a material adverse effect on our results of operations or financial condition. 13 Aspects of our operations are subject to government regulation, and changes in that regulation may have significant effects on our business. A number of states regulate the licensing of hotels and restaurants, including liquor license grants, by requiring registration, disclosure statements and compliance with specific standards of conduct. MeriStar Hotels believes our hotels are substantially in compliance with these requirements or, in the case of liquor licenses, that they have or will promptly obtain the appropriate licenses. Compliance with, or changes in, these laws could reduce the revenue and profitability of our hotels and could otherwise adversely affect our revenues, results of operations and financial condition. Under the Americans with Disabilities Act, or ADA, all public accommodations are required to meet federal requirements related to access and use by disabled persons. These requirements became effective in 1992. Although significant amounts have been and continue to be invested in ADA required upgrades to our hotels, a determination that our hotels are not in compliance with the ADA could result in a judicial order requiring compliance, imposition of fines or an award of damages to private litigants. We invest in a single industry. Our current strategy is to acquire interests only in hospitality and lodging. As a result, we are subject to the risks inherent in investing in a single industry. The effects on cash available for distribution resulting from a downturn in the hotel industry may be more pronounced than if we had diversified our investments. We have a high concentration of hotels in the upscale, full-service segment, which may increase our susceptibility to an economic downturn. As a percentage of total rooms, we currently have 85% of our hotels in the upper-upscale, full-service segment. This hotel segment generally demands higher room rates. In an economic downturn, hotels in this segment may be more susceptible to a decrease in revenues, as compared to hotels in other segments that have lower room rates. This characteristic may result from hotels in this segment generally targeting business and high-end leisure travelers. In periods of economic difficulties, business and leisure travelers may seek to reduce travel costs by limiting trips or seeking to reduce costs on their trips. This could have a material adverse effect on our revenues and results of operations. Corporate Structure Risks We have overlapping officers and directors with MeriStar Hotels. We share five of the ten members of our board of directors and several senior executives with MeriStar Hotels. Our relationship with MeriStar Hotels is governed by an intercompany agreement. That agreement restricts each party from taking advantage of business opportunities without first presenting those opportunities to the other party. We may have conflicting views with MeriStar Hotels on operation and management of our hotels, and with respect to lease arrangements, acquisitions and dispositions. Inherent potential conflicts of interest will be present in all of the numerous transactions among MeriStar Hotels and us. We have restrictions on our business and on our future opportunities that could affect our business. We are a party to an intercompany agreement with MeriStar Hotels. So long as the agreement remains in effect, MeriStar Hotels is prohibited from making real property investments a REIT could make unless: . We are first given the opportunity, but elect not to pursue the investments; . The investment is on land already owned or leased by MeriStar Hotels or subject to a lease or purchase option in favor of MeriStar Hotels; . MeriStar Hotels will operate the property under a trade name owned by MeriStar Hotels; or . The investment is a minority investment made as part of a lease or management agreement. 14 The intercompany agreement generally grants MeriStar Hotels the right of first refusal with respect to any management opportunity at any of our properties we do not elect to have managed by a hotel brand owner. We will make such an opportunity available to MeriStar Hotels only if we determine that: . Consistent with our status as a real estate investment trust, we must enter into a management agreement with an unaffiliated third party with respect to the property; . MeriStar Hotels is qualified to be the manager of that property; and . We decide to have the property operated by the owner of a hospitality trade name under that trade name. Because of the provisions of the intercompany agreement, we are restricted in the nature of our business and the opportunities we may pursue. In addition, under the intercompany agreement, each party must cooperate with the other party to effect any securities issuance of the other party by assisting in the preparation of any registration statement or other document required in connection with the issuance. We may have conflicts relating to sale of hotels subject to management agreements. Our management agreements with MeriStar Hotels require us to pay a termination fee to MeriStar Hotels if we elect to sell a hotel or if we elect not to restore a hotel after a casualty. We must pay this fee if we do not replace the hotel with another hotel subject to a management agreement with a fair market value equal to the fair market value of MeriStar Hotels' remaining management fee due under the management agreement to be terminated. Where applicable, the termination fee is equal to the present value of the remaining payments (discounted using a 10% rate) of the existing term under the agreement, based on the operating results of the hotel for the 12 months preceding termination. Our decision to sell a hotel may, therefore, have significantly different consequences for MeriStar Hotels and us. We lack control over management and operations of the hotels. We depend on the ability of MeriStar Hotels to operate and manage our hotels. In order to maintain our REIT status, we cannot operate our hotels. As a result, we are unable to directly implement strategic business decisions for the operation and marketing of our hotels, such as decisions with respect to the setting of room rates, food and beverage operations and similar matters. Our relationship with MeriStar Hotels could have a negative impact on our acquisitions. Our relationship with MeriStar Hotels could negatively impact our ability to acquire additional hotels because hotel management companies, franchisees and others who would have approached us with acquisition opportunities in hopes of establishing lessee or management relationships may not do so knowing that we will rely primarily on MeriStar Hotels to manage the acquired properties. These persons may instead provide acquisition opportunities to hotel companies that will allow them to manage the properties following the sale. This could have a negative impact on our acquisition activities in the future. There are potential conflicts of interest relating to our relationship with MeriStar Hotels The terms of the intercompany agreement were not negotiated on an arm's-length basis. Because the two companies share some of the same executive officers and directors, there is a potential conflict of interest with respect to the enforcement and termination of the intercompany agreement to our benefit and to the detriment of MeriStar Hotels, or to the benefit of MeriStar Hotels and to our detriment. Furthermore, because of the independent trading of the two companies, stockholders in each company may develop divergent interests which could lead to conflicts of interest. The divergence of interests could also reduce the anticipated benefits of our intercompany agreement with MeriStar Hotels. 15 Federal Income Tax Risks We are a REIT, and our failure to qualify as a REIT will result in additional tax liability and will likely reduce the amount available for payment on our indebtedness. We have operated and intend to continue to operate in a manner designed to permit us to qualify as a REIT for federal income tax purposes. To qualify as a REIT, we must apply highly technical and complex provisions of the Internal Revenue Code of 1986. Some of these provisions have only limited judicial or administrative interpretations. In addition, there are no judicial or administrative interpretations with respect to the REIT Modernization Act. The determination of various factual matters and circumstances not entirely within our control may affect our ability to continue to qualify as a REIT. The complexity of these provisions and of the applicable income tax regulations promulgated under the Internal Revenue Code is greater in the case of a real estate investment trust that holds its assets through a partnership, as we do. Legislation, new regulations, administrative interpretations or court decisions may change the tax laws with respect to qualification as a REIT or the federal income tax consequences of that qualification. If we fail to qualify as a REIT in any taxable year, we will not be allowed a deduction for distributions to our stockholders in computing our taxable income. We will also be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at the applicable corporate rate. In addition, unless we were entitled to relief under statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which we lost our REIT qualification. This disqualification would reduce our funds available for payments on our indebtedness because of our additional tax liability for the year or years involved. We would likely cease to qualify as a REIT if the Internal Revenue Service were successfully to determine: . Our operating partnership should properly be treated as a corporation for federal income tax purposes; or . Any of the other partnerships or the joint ventures or limited liability companies in which we or the operating partnership holds an interest is properly treated as a corporation for federal income tax purposes. The imposition of a corporate tax on any of these entities, with an accompanying loss of our real estate investment trust status, could substantially reduce the amount of cash available for payment on our indebtedness. If we were to fail to qualify as a REIT, we no longer would be subject to the distribution requirements of the Internal Revenue Code. To the extent that distributions to stockholders would have been made in anticipation of our qualifying as a REIT, we might be required to borrow funds or to liquidate assets to pay the applicable corporate income tax. Although we currently operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us to decide to revoke the REIT election. Because we are a REIT, we are required to distribute most of our taxable income. This may have an effect on our ability to make payments on our indebtedness. To obtain the favorable tax treatment accorded to REITs under the Internal Revenue Code, we generally will be required each year to distribute to our stockholders at least 90% of our REIT income, determined without regard to the deduction for dividends paid and by excluding net capital gains. We will be subject to income tax on any undistributed REIT taxable income and net capital gain, and to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay with respect to any calendar year are less than the sum of: . 85% of our ordinary income for the calendar year; . 95% of our capital gain net income for that year; and . 100% of our undistributed income from prior years. 16 The requirement to distribute a substantial portion of our net taxable income could cause us to distribute amounts that otherwise would be spent on future acquisitions, unanticipated capital expenditures or repayment of debt which would require us to borrow funds or to sell assets to fund the cost of these items. We intend to make distributions to our stockholders to comply with the distribution provisions of the Internal Revenue Code and generally to avoid federal income taxes and the nondeductible 4% excise tax. Our income will consist primarily of our share of income of our operating partnership and our cash flow will consist primarily of our share of distributions from the operating partnership. It is possible, however, that certain events could in the future require us to borrow funds directly or through our operating partnership on a short- or long-term basis to meet the distribution requirements necessary for us to continue to qualify as a REIT, and avoid federal income taxes and the 4% nondeductible excise tax. These possible events include differences in timing between the receipt of income and the payment of expenses in arriving at our taxable income or the taxable income of our operating partnership, the effect of nondeductible capital expenditures, and the creation of reserves or required debt amortization payments. In these circumstances, we might need to borrow funds directly in order to avoid adverse tax consequences even if we believe that the then-prevailing market conditions generally are not favorable for those borrowings or that those borrowings are not advisable in the absence of those tax considerations. We will determine our operating partnership's distributions. The amount of those distributions is dependent on a number of factors, including: . the amount of cash available for distribution; . our operating partnership's financial condition; . our decision to reinvest funds rather than to distribute the funds; . restrictions in our debt instruments; . the operating partnership's capital expenditure requirements; . the annual distribution requirements under the REIT provisions of the Internal Revenue Code; and . other factors as we deem relevant. Although we intend to continue to satisfy the annual distribution requirement to avoid corporate income taxation on the earnings that we distribute, we may not be able to do so. Other Risks We rely on the knowledge and experience of some key personnel, and the loss of these personnel may have a material adverse effect on our operations. We place substantial reliance on the lodging industry knowledge and experience and the continued services of our senior management, led by Paul W. Whetsell and John Emery. While we believe that, if necessary, we could find replacements for these key personnel, the loss of their services could have a material adverse effect on our operations. In addition, Messrs. Whetsell and Emery are currently engaged, and in the future will continue to engage, in the management of MeriStar Hotels. Messrs. Whetsell and Emery may experience conflicts of interest in allocating management time, services and functions between MeriStar Hotels and us. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Information both included and incorporated by reference in this annual report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, 17 strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: . the current slowdown of the national economy; . economic conditions generally and the real estate market specifically; . the impact of the September 11, 2001 terrorist attacks or actual or threatened future terrorist incidents; . legislative/regulatory changes, including changes to laws governing the taxation of REITs; . availability of capital; . interest rates; . competition; . supply and demand for hotel rooms in our current and proposed market areas; and . changes in general accounting principles, policies and guidelines applicable REITs. These risks and uncertainties, along with the risk factors discussed above under "Risk Factors", should be considered in evaluating any forward-looking statements contained in this supplemental information. We undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. 18 ITEM 2. PROPERTIES We maintain our corporate headquarters in Washington, D.C. and own hotel properties throughout the United States and Canada. As of December 31, 2001, we owned 112 hotels. We lease land for thirteen of our hotels: Hilton Hotel - Washington, DC; Hilton Hotel - San Pedro, California; Jekyll Inn - Jekyll Island, Georgia; Hilton Hotel - Clearwater, Florida; Doral Forrestal - Princeton, New Jersey; Hilton Hartford - Hartford, Connecticut; Hotel Maison de Ville - New Orleans, Louisiana; Courtyard by Marriott Meadowlands - Secaucus, New Jersey; Wyndham Hotel Albuquerque - Albuquerque, New Mexico; Hilton Hotel Toledo -Toledo, Ohio; Wyndham Airport Hotel - San Jose, California; Courtyard by Marriott - Lake Buena Vista, Florida; and Radisson Hotel - Rochester, New York. We also lease part of the land for three of our hotels: Westin Morristown - Morristown, New Jersey; Doral Palm Springs - Palm Springs, California; and Westin Resort Key Largo - Key Largo, Florida. No one hotel property is material to our operations. A typical hotel has meeting and banquet facilities, food and beverage facilities, and guest rooms and suites. Our hotels generally feature comfortable, modern guest rooms, extensive meeting and convention facilities and full-service restaurant and catering facilities. Our hotels are designed to attract meeting, convention, and banquet/reception functions from groups and associations, upscale business and vacation travelers, and the local community. The following table sets forth certain information with respect to the hotels for the year ended December 31, 2001: Guest Hotel Location Rooms ----- -------- ----- Sheraton Hotel .............. Mesa, AZ 273 Crowne Plaza Hotel .......... Phoenix, AZ 250 Embassy Suites .............. Tucson, AZ 204 Courtyard by Marriott ....... Century City, CA 134 Hilton Hotel ................ Irvine, CA 289 Marriott Hotel .............. Los Angeles, CA 469 Courtyard by Marriott ....... Marina Del Rey, CA 276 Hilton Hotel ................ Monterey, CA 204 Doral Palm Springs .......... Palm Springs, CA 285 Hilton Hotel ................ Sacramento, CA 331 Holiday Inn Select .......... San Diego, CA 317 Sheraton Hotel .............. San Francisco, CA 525 Crowne Plaza Hotel .......... San Jose, CA 239 Wyndham Hotel ............... San Jose, CA 355 Hilton Hotel ................ San Pedro, CA 226 Santa Barbara Inn ........... Santa Barbara, CA 71 Holiday Inn ................. Colorado Springs, CO 200 Sheraton Hotel .............. Colorado Springs, CO 500 Embassy Suites .............. Englewood, CO 236 Hilton Hotel ................ Hartford, CT 388 Ramada Hotel ................ Meriden, CT 150 Ramada Hotel ................ Shelton, CT 155 Doubletree Bradley Airport .. Windsor Locks, CT 200 Embassy Row Hilton Hotel .... Washington, DC 193 Georgetown Inn .............. Washington, DC 96 The Latham Hotel ............ Washington, DC 143 South Seas Plantation ....... Captiva, FL 579 Hilton Hotel ................ Clearwater, FL 426 Ramada Hotel................. Clearwater, FL 289 19 Hilton Hotel ...................... Cocoa Beach, FL 296 Holiday Inn ....................... Ft. Lauderdale, FL 240 Howard Johnson Resort ............. Key Largo, FL 100 Westin Hotel ...................... Key Largo, FL 200 Courtyard by Marriott ............. Lake Buena Vista, FL 314 Sheraton Hotel .................... Lake Buena Vista, FL 489 Radisson Hotel .................... Marco Island, FL 268 Holiday Inn ....................... Madeira Beach, FL 149 Radisson Hotel .................... Orlando, FL 742 Safety Harbor Resort and Spa ...... Safety Harbor, FL 193 Best Western Hotel ................ Sanibel Island, FL 46 Sanibel Inn ....................... Sanibel Island, FL 96 Seaside Inn ....................... Sanibel Island, FL 32 Song of the Sea ................... Sanibel Island, FL 30 Sundial Beach Resort .............. Sanibel Island, FL 243 Doubletree Hotel .................. Tampa, FL 496 Doubletree Guest Suites ........... Atlanta, GA 155 Westin Atlanta Airport ............ Atlanta, GA 495 Jekyll Inn ........................ Jekyll Island, GA 262 Wyndham Hotel ..................... Marietta, GA 218 Radisson Hotel .................... Arlington Heights, IL 247 Radisson Hotel & Suites ........... Chicago, IL 350 Holiday Inn ....................... Rosemont, IL 507 Radisson Hotel .................... Schaumburg, IL 200 Doubletree Guest Suites ........... Indianapolis, IN 137 Radisson Plaza .................... Lexington, KY 367 Hilton Hotel ...................... Louisville, KY 321 Holiday Inn Select ................ Kenner, LA 303 Hilton Hotel & Towers ............. Lafayette, LA 327 Maison de Ville ................... New Orleans, LA 23 Radisson Hotel .................... Annapolis, MD 219 Radisson Hotel .................... Baltimore, MD 148 Sheraton Hotel .................... Columbia, MD 287 Hilton Hotel ...................... Detroit, MI 151 Hilton Hotel ...................... Grand Rapids, MI 224 Holiday Inn Sports Complex ........ Kansas City, MO 163 Sheraton Airport Plaza ............ Charlotte, NC 222 Hilton Hotel ...................... Durham, NC 194 Courtyard by Marriott ............. Durham, NC 146 Ramada Hotel ...................... Mahwah, NJ 139 Sheraton Hotel .................... Mahwah, NJ 225 Westin Hotel ...................... Morristown, NJ 199 Four Points Hotel ................. Mt. Arlington, NJ 124 Doral Forrestal ................... Princeton, NJ 290 Courtyard by Marriott ............. Secaucus, NJ 165 Marriott Hotel .................... Somerset, NJ 440 Doubletree Hotel .................. Albuquerque, NM 295 Wyndham Hotel ..................... Albuquerque, NM 276 Crowne Plaza Hotel ................ Las Vegas, NV 201 St. Tropez Suites ................. Las Vegas, NV 149 Radisson Hotel .................... Rochester, NY 171 Radisson Hotel .................... Middleburg Heights, OH 237 Hilton Hotel ...................... Toledo, OH 213 Westin Hotel ...................... Oklahoma City, OK 395 Crowne Plaza Hotel ................ Lake Oswego, OR 161 Sheraton Hotel .................... Frazer, PA 198 20 Embassy Suites ................... Philadelphia, PA 288 Holiday Inn Select ............... Trevose, PA 215 Hilton Hotel ..................... Arlington, TX 309 Doubletree Hotel ................. Austin, TX 350 Hilton & Towers .................. Austin, TX 320 Holiday Inn Select ............... Bedford, TX 243 Radisson Hotel ................... Dallas, TX 304 Renaissance Hotel ................ Dallas, TX 289 Sheraton Hotel ................... Dallas, TX 348 Hilton Hotel ..................... Houston, TX 291 Marriott Hotel ................... Houston, TX 302 Hilton Hotel ..................... Houston, TX 295 Sheraton Hotel ................... Houston, TX 382 Holiday Inn Select ............... Irving, TX 409 Hilton Hotel ..................... Midland, TX 249 Hilton Hotel ..................... Salt Lake City, UT 287 Holiday Inn ...................... Alexandria, VA 178 Radisson Hotel ................... Alexandria, VA 253 Hilton Hotel ..................... Arlington, VA 209 Hilton Hotel ..................... Arlington, VA 386 Hilton Hotel ..................... Bellevue, WA 179 Crowne Plaza Hotel ............... Madison, WI 226 Holiday Inn ...................... Madison, WI 194 Holiday Inn ...................... Calgary, Alberta, Canada 170 Sheraton Hotel ................... Guildford, B.C., Canada 278 Holiday Inn ...................... Vancouver, B.C., Canada 100 Ramada Hotel ..................... Vancouver, B.C., Canada 118 ------------- Total Rooms 28,653 ============= 21 ITEM 3. LEGAL PROCEEDINGS In the course of our normal business activities, various lawsuits, claims and proceedings have been or may be instituted or asserted against us. Based on currently available facts, we believe that the disposition of matters pending or asserted will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS We have not submitted any matters to a vote of security holders during the fourth quarter of 2001. 22 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is listed on the New York Stock Exchange under the symbol "MHX." The following table sets forth for the periods indicated the high and low closing sale prices for our common stock on the NYSE. Price ----- High Low ---- --- 2002: First Quarter (through March 5, 2002) $17.55 $13.75 2001: Fourth Quarter (ended December 31, 2001) 14.22 9.24 Third Quarter (ended September 30, 2001) 23.30 8.65 Second Quarter (ended June 30, 2001) 23.75 18.50 First Quarter (ended March 31, 2001) 22.00 19.08 2000: Fourth Quarter (ended December 31, 2000) 20.63 18.38 Third Quarter (ended September 30, 2000) 22.81 20.25 Second Quarter (ended June 30, 2000) 21.02 17.63 First Quarter (ended March 31, 2000) 17.44 15.06 ______________ The last reported sale price of our common stock on the NYSE on March 5, 2002 was $17.55. As of March 5, 2002, there were approximately 615 holders of record of our common stock. On December 17, 2001, we declared a dividend of $0.01 per share relating to the fourth quarter of 2001. That dividend was paid on January 31, 2002 to stockholders of record as of December 28, 2001. We intend to make regular quarterly distributions to our stockholders. Based on the current outlook, we expect to retain our quarterly dividend at $0.01 per share through the third quarter of 2002. Any future distributions will be at the discretion of our Board of Directors and will be determined by factors including our operating results, capital expenditure requirements, the economic outlook, the Internal Revenue Service dividend payout requirements for REITs and such other factors as our Board of Directors deems relevant. Also, the indentures related to our senior notes, senior unsubordinated unsecured notes and convertible notes contain limitations on our ability to declare and pay dividends. Therefore, we cannot provide assurance that any such distributions will be made in the future. In order to maintain our qualification as a REIT, we were required to make annual distributions to our stockholders of at least 90% of our taxable income (excluding net capital gains). Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet these distribution requirements. In that event, we would seek to borrow the amount to obtain the cash necessary to make distributions to retain our qualification as a REIT for Federal income tax purposes. The distributions made for 2001 were 59% return of capital and 41% ordinary income. Recent Sales of Unregistered Securities On January 7, 1999, our operating partnership privately issued 65,875 Common OP Units as part of the purchase of the Holiday Inn Madison, Wisconsin. 23 On March 29, 2000, our operating partnership issued 462,500 Profits-Only OP Units, or POPs, to certain of our employees pursuant to our POPs Plan. On April 16, 2001, our operating partnership issued 350,000 POPs to certain of our employees pursuant to our POPs Plan. 24 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth our selected historical financial data. We have extracted the selected operating results and balance sheet data from our consolidated financial statements for each of the periods presented. The following information should be read in conjunction with our consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report on Form 10-K.
Year Ended December 31, ----------------------------------------------------------- 2001 2000 1999 1998 1997 ---------- --------- -------- -------- -------- (amounts in thousands, except per share amounts and operating data) Revenue: Hotel operations: Participating lease revenue ................................ $ 17,295 $ 391,729 $ 368,012 $ 135,994 $ - Rooms ...................................................... 706,381 - - 275,610 207,736 Food, beverage, office rental and other .................... 361,212 9,049 6,892 110,519 103,521 Management services and other revenues ..................... - - - 3,174 5,136 ----------- --------- --------- --------- -------- Total revenues .......................................... 1,084,888 400,778 374,904 525,297 316,393 ----------- --------- --------- --------- -------- Operating expenses: Departmental expenses: Rooms ...................................................... 170,925 - - 65,048 51,075 Food, beverage and other ................................... 241,110 2,731 1,964 80,327 77,373 Undistributed operating expenses: Administrative and general ................................. 169,279 9,445 5,749 62,350 50,332 Property and other operating costs ......................... 235,650 47,481 47,027 122,963 55,111 Depreciation and amortization .............................. 117,732 111,947 103,099 60,703 20,990 Write down of investment in STS Hotel Net .................. 2,112 - - - - Loss on asset impairment ................................... 43,582 - - - - Swap termination costs ..................................... 9,297 - - - - Loss on fair value of non-hedging derivatives .............. 6,666 - - - - FelCor merger costs ........................................ 5,817 - - - - Costs to terminate leases with Prime Hospitality Corporation ............................................. 1,315 - - - - Restructuring charge ....................................... 1,080 - - - - ----------- --------- --------- --------- -------- Total operating expense ................................. 1,004,565 171,604 157,839 391,391 254,881 ----------- --------- --------- --------- -------- Net operating income .......................................... 80,323 229,174 217,065 133,906 61,512 Interest expense, net ......................................... 122,376 117,524 100,398 64,378 21,024 Minority interests ............................................ (2,958) 10,240 11,069 5,121 1,425 Provision for income taxes .................................... (1,178) 2,028 2,102 15,699 14,911 ----------- --------- --------- --------- -------- Income (loss) before gain (loss) on sale of assets, extraordinary gain (loss) and cumulative effect of accounting change .......................................... (37,917) 99,382 103,496 48,708 24,152 Gain (loss) on sale of assets, net of tax (A) ................. (2,132) 3,425 - - - Extraordinary gain (loss), net of tax (B) ..................... (2,713) 3,054 (4,532) (4,080) (4,092) Cumulative effect of accounting change, net of tax (C) ........ - - - (921) - ----------- --------- --------- --------- -------- Net income (loss) ....................................... $ (42,762) $ 105,861 $ 98,964 $ 43,707 $ 20,060 =========== ========= ========= ========= ======== Basic earnings per share before extraordinary gain (loss) ..... $ (0.91) $ 2.21 $ 2.19 $ 1.45 $ 1.29 Diluted earnings per share before extraordinary gain (loss) ... $ (0.91) $ 2.14 $ 2.11 $ 1.40 $ 1.27 Dividends per common share(D) ................................. $ 1.525 $ 2.02 $ 2.02 $ 0.82 $ - Shares of common stock issued and outstanding (E) ............. 44,524 44,380 47,257 46,718 24,867
25
2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- Other Financial Data: EBITDA (F) .................................................. $ 198,055 $ 341,121 $ 320,164 $ 194,609 $ 82,502 Net cash provided by operating activities ................... 150,135 224,037 229,193 162,796 59,882 Net cash used in investing activities ....................... (68,890) (14,286) (187,952) (785,505) (586,259) Net cash (used in) provided by financing activities ......... (58,351) (212,121) (42,812) 543,256 588,428 Balance Sheet Data: Investments in hotel properties, gross ...................... $3,183,677 $3,193,730 $3,118,723 $2,957,543 $ 950,052 Total assets ................................................ 3,009,860 3,013,008 3,094,201 2,998,460 1,124,642 Long-term debt .............................................. 1,700,134 1,638,319 1,676,771 1,602,352 492,771 Operating Data: Owned Hotels and Properties: Number of hotels (E) ..................................... 112 114 116 117 47 Number of guest rooms (E) ................................ 28,653 29,090 29,348 29,351 12,019 Total revenues (in thousands) ............................ $1,084,888 $400,778 $374,904 $525,297 $316,393 Average occupancy (G) .................................... 66.0% 72.2% 71.6% 71.5% 72.0% ADR (H) .................................................. $ 105.04 $ 107.60 $ 101.14 $ 95.00 $ 86.87 RevPAR (I) ............................................... $ 69.37 $ 77.71 $ 72.44 $ 67.90 $ 62.55
________________ (A) During 2001, we sold two hotels and realized a loss on sales of the assets. During 2000, we sold three limited service hotels and realized a gain on sales of the assets. (B) In accordance with generally accepted accounting principles, we have recorded the following transactions as extraordinary items: . During 1997, 1998, and 1999 we refinanced some loan facilities. The write-offs of deferred costs associated with these facilities were extraordinary. . During 2000, we repurchased some of our convertible notes at a discount. That gain on the repurchase was recorded as extraordinary. . During 2001, we repaid term loans under the credit facility. The write-off of deferred financing costs associated with this facility was recorded as extraordinary. (C) We adopted AICPA Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities" on July 1, 1998. The cumulative effect of this accounting change was a pre-tax reduction of income for the year ended December 31, 1998 of $1,485 ($921 net of tax effect) (D) We did not declare any dividends prior to August 3, 1998. (E) As of December 31 for the periods presented. (F) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Management believes that EBITDA is a useful measure of operating performance because (i) it is industry practice to evaluate hotel properties based on operating income before interest, depreciation and amortization and minority interests of common and preferred OP Unit holders, which is generally equivalent to EBITDA, and (ii) EBITDA is unaffected by the debt and equity structure of the entity. EBITDA does not represent cash flow from operations as defined by generally accepted accounting principles, or GAAP, is not necessarily indicative of cash available to fund all cash flow needs, should not be considered as an alternative to net income under GAAP for purposes of evaluating our results of operations, and may not be comparable to other similarly titled measures used by other companies. (G) Represents total number of rooms occupied by hotel guests on a paid basis divided by total available rooms. (H) Represents total room revenue divided by total number of rooms occupied by hotel guests on a paid basis. 26 (I) Represents total room revenue divided by total available rooms. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General We own a portfolio of upscale, full-service hotels in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of December 31, 2001, we owned 112 hotels, with 28,653 rooms, all of which were leased by our taxable subsidiaries and managed by MeriStar Hotels & Resorts, Inc. Prior to January 1, 2001, in order to maintain our tax status as a REIT, we were not permitted to participate in the operations of our hotel properties. To comply with this requirement through December 31, 2000, all of our properties were subject to leases involving two third-party lessees, MeriStar Hotels and Prime Hospitality Corporation. On January 1, 2001, changes to the federal tax laws governing REITs became effective. Those changes are commonly known as the REIT Modernization Act, or RMA. The RMA permits real estate investment trusts to create taxable subsidiaries that are subject to taxation similar to subchapter C-Corporations. We have created a number of these taxable subsidiaries to lease our real property. The RMA prohibits our taxable subsidiaries from engaging in the following activities: . Managing the properties they lease (our taxable subsidiaries must enter into an "arm's length" management agreement with an independent third-party manager that is actively involved in the trade or business of hotel management and manages properties on behalf of other owners); . Leasing a property that contains gambling operations; and . Owning a brand or franchise. We believe establishing taxable subsidiaries to lease the properties we own provides a more efficient alignment of and ability to capture the economic interests of property ownership. Under the prior lease structure with MeriStar Hotels, we received lease payments based on the revenues generated by the properties; MeriStar Hotels, however, operated the properties in order to maximize net operating income from the properties. This inconsistency could potentially result in the properties being operated in a way that did not maximize revenues. With the assignment of the leases from MeriStar Hotels to our taxable subsidiaries and the execution of the new management agreements (as described below), we gained the economic risks and rewards usually associated with ownership of real estate, and property revenues became the basis for MeriStar Hotels' management fees. Subsidiaries of MeriStar Hotels assigned the participating leases to our wholly-owned taxable subsidiaries as of January 1, 2001. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to MeriStar Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics of the former leases. The assignment of the leases from MeriStar Hotels to our taxable subsidiaries did not result in any cash consideration exchanged among the parties except for the transfer of hotel operating assets and liabilities to the taxable subsidiaries. Under the new management agreements, the base management fee is 2.5% of total hotel revenue. MeriStar Hotels can also earn incentive management fees, based on meeting performance thresholds, of up to 1.5% of total hotel revenue. The agreements have an initial term of 10 years with three renewal periods of five years each at the option of MeriStar Hotels, subject to some exceptions. Because these leases have been assigned to our taxable subsidiaries, we now bear the operating risk associated with our hotels. During 2001, we acquired the eight leases from Prime Hospitality for our hotels that were previously leased and managed by Prime. These hotels are managed by MeriStar Hotels. The management agreements with MeriStar Hotels are identical to the other management agreements between MeriStar 27 Hotels and us except that the term on four of the agreements is one year with additional one-year renewal periods. The terrorist attacks of September 11, 2001 have had a severely negative impact on our hotel operations in the third and fourth quarter, causing lower-than-expected performance in an already slowing economy. The events of September 11 have caused a significant decrease in our hotels' occupancy and average daily rate due to disruptions in business and leisure travel patterns. Our major metropolitan area and airport hotels have been particularly affected due to concerns about air travel safety and a significant overall decrease in the amount of air travel. In response to the decline in operations following the terrorist attacks, we have worked with MeriStar Hotels to aggressively review and reduce our hotels' cost structure. We have implemented numerous cost-cutting strategies, including the following items: . reducing overall staffing, and reducing hours for remaining hourly staff, . instituting hiring and wage freezes for all properties, . revising operating procedures to gain greater efficiencies and/or reduce costs, . closing underutilized or duplicative facilities and outlets, . creating revised minimum staffing guides for each department in our hotels; and . reducing capital expenditures to focus primarily on life-safety requirements, and deferring or terminating discretionary capital outlays. The September 11, 2001 terrorist attacks were unprecedented in scope, and in their immediate, dramatic impact on travel patterns. We have not previously experienced such events, and it is currently not possible to accurately predict if and when travel patterns will be restored to pre-September 11 levels. While we have had improvements in our operating levels from the period immediately following the attacks, we believe the uncertainty associated with subsequent incidents and the possibility of future attacks will continue to hamper business and leisure travel patterns for the next several quarters. In addition, the September 11, 2001 terrorist attacks have had a dramatic effect on the insurance and reinsurance industries. Many companies are being subject to losses or cancellations of insurance polices, or renewals of existing coverage but with extreme price increases. At our insurance policy renewals in mid-2002, we may be subject to restrictions as compared to our current coverages, price increases, or a combination of both restrictions and increases. On May 9, 2001, we and our operating partnership entered into an Agreement and Plan of Merger with FelCor Lodging Trust Incorporated and its operating partnership. On September 13, the SEC declared the S-4 registration statement filed by Felcor effective. On September 21, 2001, we mutually agreed with FelCor to terminate the merger agreement due to unfavorable market conditions. We incurred $5.8 million of costs related to this merger through December 31, 2001 and these costs have been expensed in our statement of operations. During the third quarter of 2001, we incurred a restructuring charge in connection with personnel changes primarily as a result of the termination of our merger agreement with FelCor. This restructuring is expected to reduce our annualized corporate overhead expenditures by approximately 7.3%, or $0.8 million. The restructuring included eliminating corporate staff positions and office space no longer needed under the new structure. Critical Accounting Policies Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to the impairment of long-lived assets and the recording of certain accrued liabilities. Some of our estimates are material to the financial statements. 28 These estimates are therefore particularly sensitive as future events could cause the actual results to be significantly different from our estimates. Our critical accounting policies are as follows: . Impairment of long-lived assets; . Estimating certain accrued liabilities; and . Determining the impact of future interest rate changes on our statement of operations. Impairment of long-lived assets Whenever events or changes in circumstances indicate that the carrying values of long-lived assets (including property and equipment and all intangibles) may be impaired, we perform an analysis to determine the recoverability of the asset's carrying value. The carrying value of the asset includes the original purchase price (net of depreciation) plus the value of all capital improvements (net of depreciation). If the analysis indicates that the carrying value is not recoverable from future cash flows, we write down the asset to its estimated fair value and recognize an impairment loss. The estimated fair value is based on what we estimate the current sale price of the asset to be based on comparable sales information or other estimates of the asset's value. Any impairment losses we recognize are recorded as operating expenses. In 2001, we recognized $43.6 million of impairment losses. We did not recognize any impairment losses in 2000 or 1999. We review long-lived assets for impairment when one or more of the following events have occurred: a. Current or immediate short-term (future twelve months) projected cash flows are significantly less than the most recent historical cash flows. b. The unplanned departure of an executive officer or other key personnel which could adversely affect our ability to maintain our competitive position and manage future growth. c. A significant adverse change in legal factors or an adverse action or assessment by a regulator, which could affect the value of our long-lived assets. d. Events which could cause significant adverse changes and uncertainty in business and leisure travel patterns. We make estimates of the undiscounted cash flows from the expected future operations of the asset. In projecting the expected future operations of the asset, we base our estimates on future budgeted earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, amounts and use growth assumptions to project these amounts out over the expected life of the underlying asset. Our growth assumptions are based on assumed future improvements in the national economy and improvements in demand for lodging; if actual conditions differ from those in our assumptions, the actual results of each asset's actual future operations could be significantly different from the estimated results we used in our analysis. Our operating results are also subject to the risks set forth under "Risk Factors-Operating Risks." Estimating certain accrued liabilities Estimates for certain accruals such as real and personal property taxes could have a material effect on our financial statements. Currently, we estimate real and personal property taxes based on a combination of preliminary estimates from state and local jurisdictions and historical information. The assessed values of these properties could change significantly from the values or rates we use in our estimates. Property tax assessments are subject to periodic and often lengthy appeals. For example, in instances where a jurisdiction increases our assessed value, we frequently appeal that assessment. Similarly, when hotel operations decline, we may appeal an assessment as too high if it is based on past operating results. These appeals of assessed values are subject to a potentially wide range of outcomes. As a result of the economic slowdown and events of September 11, 2001, we have filed a number of appeals for lower assessments. As of December 31, 2001, we had ongoing appeals in several jurisdictions with respect to more than 20 properties. We accrue for these liabilities based on our judgment of the most reasonably likely outcome of the appeals. If we were unsuccessful in all of our current appeals, we would have to recognize approximately $2 million of additional expense. We cannot predict with certainty the outcome of these appeals, or their effect on our accruals for such items. Also, actual property tax expense could vary greatly from our estimates used for the current property tax accrual based on a change in the assessed value, a change in the tax rate, and/or a different outcome of the appeals process than we currently expect. Determining impact of future interest rate changes on our statement of operations FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires a company to recognize all derivatives as either assets or liabilities in the balance sheet and record those instruments at fair value. FAS No. 137 and No. 138 amended certain provisions of FAS No. 133. We adopted these accounting pronouncements effective January 1, 2001. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows. We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. Our interest rate swap agreements were initially designated as hedges against changes in future cash flows associated with specific variable rate debt obligations. As of December 31, 2001, we had three swap agreements with notional amounts totaling $300 million. A portion of these swap agreements ($148.6 29 million) provide cash flow hedges on our floating London Interbank Offered Rate or LIBOR rate debt payments. The remaining swap agreements ($151.4 million) have been converted to non-hedging derivatives due to our repayment of the floating-rate borrowings they originally hedged and they are currently being marked to market through our statement of operations. For our swap agreements that provide hedges against future cash flows, the related change in fair value is recorded as unrealized gains or losses in our stockholders' equity as a component of accumulated other comprehensive income. For the portion of our swaps that were redesignated to non-hedging derivatives, the related change in fair value is recorded as realized gains or losses in our statement of operations. We have interest rate exposure going forward as the change in fair value of our non-hedging derivatives will have an impact on our statement of operations. For more information regarding our interest rate hedging activities, see "Quantitative and Qualitative Disclosures About Market Risk." Financial Condition December 31, 2001 compared with December 31, 2000 Our total assets decreased by $3.1 million to $3,009.9 million at December 31, 2001 from $3,013.0 million at December 31, 2000 primarily due to: . the decrease of $13.3 million in due from MeriStar Hotels; . the sale of two hotels and the use of the $9.7 million in proceeds to pay down debt; and . depreciation on hotel assets; partially offset by . the note receivable from MeriStar Hotels for $36 million, . capital expenditures of $44.5 million at the hotels, and . the increase in operating assets of $62.5 million related to the assignment of the hotel leases with MeriStar Hotels to our taxable subsidiaries. Total liabilities increased by $120.5 million to $1,897.5 million at December 31, 2001 from $1,777.0 million at December 31, 2000 due mainly to: . net borrowings of long-term debt of $61.8 million; . a $16.6 million increase in accrued interest due to the issuance of $500 million aggregate principal amount of senior secured notes sold in January 2001; . the adoption of FAS No. 133 and the related recording of a $12.1 million liability for our derivative instruments; and . the increase in operating liabilities of $65.7 million related to the assignment of the hotel leases with MeriStar Hotels and Prime Hospitality to our taxable subsidiaries; partially offset by . a decrease of $23.5 million in dividends and distributions payable due to a lower fourth quarter dividend in 2001. (The fourth quarter dividend was $0.01 per share in 2001 and $0.505 per share in 2000.) Long-term debt increased by $61.8 million to $1,700.1 million at December 31, 2001 from $1,638.3 million at December 31, 2000 due primarily to: . $500 million in senior unsecured notes issued in January, . $250 million in senior unsecured notes issued in December; partially offset by . $674 million of net repayments of our revolving credit facility using proceeds of the senior unsecured notes borrowings and cash generated by operations. Minority interests decreased $11.7 million to $89.8 million at December 31, 2001 from $101.5 million at December 31, 2000, due to: . $6.9 million of net redemptions of operating partnership units for common stock, . $6.6 million of current year distributions to minority interest holders, and . $3.5 million of current year net losses allocated to minority interest holders; partially offset by . $5.4 million of POPs awarded to certain employees. Stockholders' equity decreased $112.0 million to $1,022.6 at December 31, 2001 from $1,134.6 million at December 31, 2000 due primarily to: . $68.2 million of dividends, 30 . $6.4 million increase in accumulated other comprehensive loss due mainly to the adoption of FAS No. 133, and . $42.8 million of net loss for 2001; partially offset by . $5.4 million of net redemptions of operating partnership units for common stock. Results of Operations Year ended December 31, 2001 compared with the year ended December 31, 2000 Until January 1, 2001, MeriStar Hotels leased substantially all of our hotels from us. Under the leases, MeriStar Hotels assumed all of the operating risks and rewards of these hotels and paid us a percentage of each hotel's revenue under the lease agreements. Therefore, for financial statement purposes through December 31, 2000, MeriStar Hotels recorded all of the operating revenues and expenses of the hotels in its statements of operations, and we recorded lease revenue earned under the lease agreements in our statement of operations. Effective January 1, 2001, MeriStar Hotels assigned the hotel leases to our newly created, wholly-owned, taxable REIT subsidiaries, and our taxable REIT subsidiaries entered into management agreements with MeriStar Hotels to manage the hotels. As a result of this change, our wholly-owned taxable REIT subsidiaries have assumed the operating risks and rewards of the hotels and now pay MeriStar Hotels a management fee to manage the hotels for us. For consolidated financial statement purposes, effective January 1, 2001, we now record all of the revenues and expenses of the hotels in our statements of operations, including the management fee paid to MeriStar Hotels. Our total revenues and total operating expenses increased $684.1 million and $833.0 million, respectively, for the year ended December 31, 2001 as compared to the same period in 2000. As described in the preceding paragraph, the significant increases primarily result from the fact that we now record the hotel operating revenue and expenses in our consolidated financial statements effective January 1, 2001, while we only recorded lease revenue in 2000. As a result, our operating results for the year ended December 31, 2001 are not directly comparable to the same period in 2000. For comparative purposes, the following shows the results for the year ended December 31, 2000 on a pro forma basis assuming the leases with MeriStar Hotels were converted to management contracts on January 1, 2000, compared to actual results for the year ended December 31, 2001 (in thousands except for per share data): 2001 2000 ---- ---- Revenue $1,084,888 $1,197,182 Total expenses 1,126,941 1,085,532 Minority interest (2,958) 10,240 Taxes (1,178) 2,028 Net income (loss) before gain (loss) on sale of assets and extraordinary items (37,917) 99,382 Net income (loss) (42,762) 105,861 Recurring FFO $ 147,044 $ 226,083 Recurring FFO per share, diluted $ 2.77 $ 4.11 The following table provides our hotels' operating statistics on a same- store basis for the years ended December 31, 2001 and 2000. 2001 2000 Change ----------- ------------- ----------- Revenue per available room $ 69.37 $ 77.46 (10.4)% Average daily rate $105.04 $107.69 (2.5)% Occupancy 66.0% 71.9% (8.2)% Overall, disruptions in business and leisure travel patterns and travel safety concerns due to the terrorist attacks on September 11, 2001, coupled with the slowing United States economy, had a major negative effect 31 on our hotels during the second half of 2001. The events have been marked by a sharp reduction in business and leisure travel. This contributed to the 10.4% reduction in revenue per available room and the 8.2% reduction in occupancy for 2001 compared to the 2000. These reductions became more pronounced during the third and fourth quarters of 2001. Total revenue decreased $112.3 million to $1,084.9 million in 2001 from $1,197.2 million in 2000 due primarily to: . $75.9 million decrease in room revenue related to the decrease in occupancy, . $21.4 million decrease in food and beverage revenue due to the decrease in occupancy, and . $10.2 million decrease in lease revenue due to a smaller number of leased hotels compared to 2000. Total expenses increased $41.4 million to $1,126.9 million for 2001 from $1,085.5 million in 2000 due primarily to: . $9.3 million payment to terminate $300 million on interest rate swaps in conjunction with the sale of $500 million of senior unsecured notes and the repayment of related term loans, . $6.7 million charge to recognize the effect of interest rate swaps that were converted to non-hedging derivatives upon the repayment of portions of our senior secured credit facility in December 2001 in conjunction with the sale of $250 million of senior unsecured notes, . $43.6 million loss on asset impairment related to the write-down of certain hotel assets. These write-downs resulted from the negative impact of changes in the economic climate on the value of our assets, . $2.1 million charge to write-off our investment in STS Hotel Net, . $5.8 million in costs related to our terminated merger with FelCor Lodging Trust, . $1.3 million in costs to terminate leases with Prime Hospitality Corporation, . $1.1 million charge due to a restructuring at corporate headquarters, . $5.7 million increase in depreciation on hotel assets, and . $3.3 million increase in property operating costs due primarily to a $2.2 million increase in energy costs; partially offset by . $13.9 million decrease in room expenses due to lower occupancy, and . $15.5 million decrease in food and beverage expenses due to lower occupancy. In 2001, we repaid our term loans under our revolving credit agreement which resulted in an extraordinary loss of $1.6 million (net of tax) from the write-off of deferred financing costs related to those term loans. In December 2001 we amended the terms of our senior credit agreement. We incurred $4.4 million of costs related to the amended agreement of which $3.2 million represents deferred financing costs and $1.1 million (net of tax) resulted in an extraordinary loss. The White Paper on Funds From Operations, or FFO, approved by the Board of Governors of the National Association of Real Estate Investment Trusts or NAREIT in October 1999 defines FFO as net income (loss), computed in accordance with generally accepted accounting principles, also called GAAP, excluding gains (or losses) from sales of properties, plus real estate related depreciation and amortization and after comparable adjustments for our portion of these items related to unconsolidated partnerships and joint ventures. Extraordinary items under GAAP are excluded from the calculation of FFO. We believe FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of our ability to incur and service debt, to make capital expenditures and to fund other cash needs. FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our financial performance or to cash flow from operating activities determined in accordance with GAAP as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions, and other commitments and uncertainties. We use recurring FFO as a measure of our performance. Recurring FFO represents FFO, as defined above, adjusted for significant non-recurring items. The following is a reconciliation between income (loss) before gain (loss) on the sale of assets and extraordinary items and recurring FFO on a diluted basis for the years ended December 31, 2001 and 2000 (in thousands): 32
2001 2000 ------------ ------------ Income (loss) before gain (loss) on sale of assets and extraordinary items $ (37,917) $ 99,382 Minority interest to Common OP Unit Holders (3,523) 9,675 Interest on convertible debt 7,329 7,488 Hotel depreciation and amortization 113,167 107,996 Deferred cost of sale of asset - 1,542 Non-recurring items (net of minority interests and income taxes): Swap termination costs 8,998 - Loss on fair value of non-hedging derivatives 6,500 - Write down of investment in STS Hotel Net 2,046 - Loss on asset impairment 42,497 - FelCor merger costs 5,622 - Costs to terminate leases with Prime Hospitality Corporation 1,272 - Restructuring charges 1,053 - ----------- ----------- Recurring FFO $ 147,044 $ 226,083 =========== ===========
Year ended December 31, 2000 compared with the year ended December 31, 1999 Until January 1, 2001 substantially all of our hotels were leased to and operated by MeriStar Hotels. Participating lease revenue represents lease payments from the lessees pursuant to the participating lease agreements. Total revenue increased by $25.9 million to $400.8 million in 2000 compared to $374.9 million in 1999. This increase was primarily attributable to an increase of $23.7 million in participating lease revenue resulting from an increase in room revenue at our hotels under lease. The following table provides our hotels' operating statistics on a same-store basis for the year: 2000 1999 Change ----------- ----------- ---------- Revenue per available room $ 77.71 $ 73.51 5.71% Average daily rate $107.60 $101.92 5.57% Occupancy 72.2% 72.1% 0.14% Operating expenses increased to $171.6 million for the year ended December 31, 2001 from $157.8 million for the same period in 1999 due primarily to: . an increase in depreciation on hotel assets, and . an increase in administrative costs, as we added personnel during 2000 to address the operating changes associated with RMA and insurance costs. Net interest expense increased $17.1 million to $117.5 million for the year ended December 31, 2000, from $100.4 million in 1999 due mainly to: . lower capitalized interest due to a decrease in qualifying capital expenditures in 2000, . an increase in variable interest rates during 2000 and higher interest rates on swap arrangements executed in 2000; partially offset by . a lower average debt balance during 2000. Minority interests decreased $0.9 million to $10.2 million in 2000 from $11.1 million in 1999 due to: . the net redemption of operating partnership units; partially offset by . the increase in the allocation of income to minority interest holders. In 2000, we repurchased $18.2 million of our convertible notes at a discount. This resulted in an extraordinary gain of $3.1 million (net of tax effect). 33 In 2000, we sold three limited-service hotels and received $24.1 million. This resulted in a gain on sale of assets of $3.5 million ($3.4 million, net of tax). Liquidity and Capital Resources Sources of Cash We generated $150.1 million of cash from operations during 2001. Our principal sources of liquidity are cash on hand, cash generated from operations, and funds from external borrowings and debt offerings. We expect to fund our continuing operations through cash generated by our hotels. We also expect to finance hotel acquisitions, hotel renovations and joint venture investments through a combination of internally generated cash, external borrowings, and the issuance of OP Units and/or common stock. Factors that may influence our liquidity include: . Factors that affect our results of operations, including general economic conditions, demand for business and leisure travel, public concerns about travel safety and other operating risks described under the caption, "Risk Factors--Our results of operations are dependent on revenues generated by our hotels, which are subject to a number of risks related to the lodging industry, and our current operating structure (which became effective as of January 1, 2001) has significantly increased our exposure to those risks"; . Factors that affect our access to bank financing and the capital markets, including interest rate fluctuations, operational risks and other risks described under the caption "Risk Factors--Financing Risks"; and . The other factors described under the caption, "Special Note Regarding Forward-Looking Statements." We must distribute to stockholders at least 90% of our taxable income, excluding net capital gains to preserve the favorable tax treatment accorded to real estate investment trusts under the Internal Revenue Code. We expect to fund such distributions through cash generated from operations and borrowings on our credit agreement. In light of the dramatic business declines since the September 11, 2001 terrorist attacks, we expect our taxable income to decrease significantly in 2002. Any future distributions will be at the discretion of our Board of Directors and will be determined by factors including our operating results, capital expenditure requirements, the economic outlook, the Internal Revenue Service dividend payout requirements for REITs and such other factors as our Board of Directors deems relevant. We cannot provide assurance that any such distributions will be made in the future. Uses of Cash We used $68.9 million of cash in investing activities during 2001 primarily for: . the $36.0 million note receivable with MeriStar Hotels; and . $44.5 million of capital expenditures at hotels. These items were partially offset by: . $3.3 million of hotel operating cash received on lease conversions; and . $9.7 million of proceeds from selling two hotels. We used $58.4 million of cash in financing activities during 2001 primarily for: . $89.5 million of payments of dividends, and . $19.0 million from additional deferred financing costs related to issuing the $500 million and $250 million of senior unsecured notes, . $8.1 million of distributions to minority investors. These items were partially offset by: . $61.8 million of net borrowings of long-term debt. Long-Term Debt In January 2001, we issued $500 million aggregate principal amount of senior unsecured notes. These senior unsecured notes are structured as: . $300 million of 9.0% notes maturing in 2008, and 34 . $200 million of 9.13% notes maturing in 2011. We used the proceeds from these notes to repay outstanding debt under our revolving credit agreement and to make payments of $9.3 million to terminate certain swap agreements that hedged variable rates on loans that we repaid. The repayments of our term loans under our credit facility resulted in an extraordinary loss of $1.2 million (net of tax) from the write-off of deferred financing costs related to these term loans. In December 2001, we issued $250 million aggregate principal amount of senior unsecured notes. These notes have a 10.5% interest rate and mature in June 2009. We used the net proceeds to repay outstanding debt under our term loans and revolving credit agreement. The repayments of our term loans under our credit agreement resulted in an extraordinary loss of $1.5 million (net of tax) from the write-off of deferred financing costs related to those term loans. In February 2002, we issued a further $200 million aggregate principal amount of 9.13% senior unsecured notes due 2011. We used the proceeds from the issuance of these notes to repay approximately $195.0 million of the outstanding balance under our revolving credit agreement. In February 2002, we amended our revolving credit agreement. The amendment allows us to reduce the revolving commitments to below $300 million. In March, 2002, we reduced the borrowing capacity on our revolving credit agreement from $310 million to 150 million. Minimum payments due under our debt obligations as of December 31 (in thousands): 2002 .................................................. $ 15,543 2003 .................................................. 232,589 2004 .................................................. 171,168 2005 .................................................. 9,265 2006 .................................................. 10,006 Thereafter ............................................ 1,261,563 ---------- $1,700,134 ========== As of February 15, 2002, we had $67.0 million of debt outstanding under our senior secured credit agreement. The weighted average interest rate on borrowings outstanding under the senior secured credit agreement as of February 15, 2002 was 5.9%. Our senior credit agreement requires us to meet or exceed certain financial performance ratios at the end of each quarter. Travel disruptions and safety concerns following the terrorist attacks on September 11, 2001 and the slowdown of the national economy resulted in a significant negative impact to the lodging industry and our operations. This decline in operations would have caused us to be out of compliance with certain financial covenants specified in our senior credit agreement. On October 24, 2001, however, we finalized a temporary waiver on all affected financial covenants with our senior bank group and engaged in discussions to amend our senior credit agreement further. This waiver to the credit agreement allowed these financial covenants to be waived for the period beginning September 30, 2001 and ending February 28, 2002. In December 2001 we amended our senior credit agreement. This amendment relaxed our financial covenants and allows us to extend the maturity date on our credit facility from July 2002 to July 2003. We incurred $4.4 million of costs related to the amendment. Capital Resources We must make ongoing capital expenditures in order to keep our hotels competitive in their markets. We expect a combination of internally generated cash and external borrowings to provide capital for renovation work. Initial renovation programs for most of our hotels are complete or nearing completion. Once initial renovation programs for a hotel are completed, we expect to spend approximately 4% of hotel revenues annually for ongoing capital expenditure programs. These ongoing programs will include room and facilities refurbishments, renovations, and furniture and equipment replacements. For the year ended December 31, 2001, we spent $45.8 million on renovation and ongoing property capital expenditure programs. We intend to spend approximately $40 million during 2002 for our ongoing capital expenditure programs. In response to the decline in our operations following the September 11, 2001 terrorist attacks, we have significantly 35 curtailed our capital expenditure programs. We have taken the following steps: . re-prioritized all capital expenditures to focus nearly exclusively on life-safety requirements; . deferred or canceled all discretionary capital expenditures that did not cause us to incur a substantial penalty; and . reviewed our estimated 2002 capital requirements in light of the revised business levels we are currently experiencing. We will continue to monitor our capital requirements as compared to business levels, and will revise expenditures as necessary. We believe cash generated by operations, together with anticipated borrowing capacity under our senior credit agreements, will be sufficient to fund our existing working capital requirements, ongoing capital expenditures, and debt service requirements. We believe, however, that our future capital decisions will also be made in response to specific acquisition and/or investment opportunities, depending on conditions in the capital and/or other financial markets. Seasonality Demand in the lodging industry is affected by recurring seasonal patterns. For non-resort properties, demand is lower in the winter months due to decreased travel and higher in the spring and summer months during peak travel season. For resort properties, demand is generally higher in winter and early spring. Since the majority of our hotels are non-resort properties, our operations generally reflect non-resort seasonality patterns. We have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters, although the disruptions caused by the September 11, 2001 attacks and their aftermath may cause disruptions to this pattern. 36 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in interest rates on long-term debt obligations that impact the fair value of these obligations. Our policy is to manage interest rates through the use of a combination of fixed and variable rate debt. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we borrow at a combination of fixed and variable rates, and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes. We have no cash flow exposure due to general interest rate changes for our fixed long-term debt obligations. The table below presents, as of December 31, 2001, the principal amounts (in thousands of dollars) for our fixed and variable rate debt instruments, weighted-average interest rates, and fair values by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
Long-term Debt -------------------------------------------------------------------------- Average Variable Average Expected Maturity Fixed Rate Interest Rate Rate Interest Rate --------------------------- ---------------- ----------------- ------------- ---------------- 2002 $ 15,543 8.6% $ - N/A 2003 8,589 8.2% 224,000 6.5% 2004 171,168 5.1% - N/A 2005 9,265 8.1% - N/A 2006 10,006 8.1% - N/A Thereafter 1,261,563 9.0% - N/A --------------- ----------------- -------------- ------------ Total $1,476,134 8.5% $224,000 6.5% =============== ================= ============== ============ Fair Value at 12/31/01 $1,401,073 $224,000 =============== =============
Upon the issuance of our $250 million aggregate principal amount of senior unsecured notes in December 2001, we reduced the term loans and our revolver under our senior secured credit agreement by an aggregate amount of $245 million. At that time, we converted three swap agreements to non-hedging derivatives. These swap agreements had notional principal amounts of approximately $151.4 million and were originally designated to hedge variable rate borrowings under our senior secured credit facility that were repaid. We recognized a $6.7 million loss related to this swap conversion. Upon the issuance of our $500 million aggregate principal amount of senior unsecured notes in January 2001, we reduced the term loans under our senior secured credit agreement by $300 million. At that time, we terminated three swap agreements with a notional amount of $300 million. These swap agreements were originally designated to hedge variable rate term loans that were repaid. We made net payments totaling $9.3 million to our counter parties to terminate these swap agreements, and recognized a $9.3 million loss related to those terminated swaps. As of December 31, 2001, we had three swap agreements with notional principal amounts totaling $300 million. A portion of these swap agreements ($148.6 million) provide hedges against the impact future interest rates have on our floating London Interbank Offered Rate, or LIBOR rate, debt instruments. The remaining portion of the swap agreements ($151.4 million) has been converted to non-hedging derivatives. The swap agreements effectively fix the 30-day LIBOR between 4.77% and 6.38%. The swap agreements expire between December 2002 and July 2003. For the years ended December 31, 2001 and 2000, we have (made)/received net payments of approximately $(6,285) and $3,081, respectively. In anticipation of the August 1999 completion of our mortgage-backed secured facility, we entered into two separate hedge transactions during July 1999. Upon completion of the secured facility, we terminated the underlying treasury lock agreements, resulting in a net payment to us of $5.1 million. This 37 amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the secured facility is 7.76%. Additionally, in anticipation of the August 1997 offering of $150 million aggregate principal amount of our 8.75% senior subordinated notes due 2007, we entered into separate hedge transactions during June and July 1997. Upon completion of the subordinated notes offering, we terminated the underlying swap agreements, resulting in a net payment to us of $836,000. This amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the subordinated notes is 8.69%. As of December 31, 2001, after consideration of the hedge agreements described above, 95.6% of our debt was fixed and our overall weighted average interest rate was 8.49%. Although we conduct business in Canada, the Canadian operations were not material to our consolidated financial position, results of operations or cash flows during the years ended December 31, 2001, 2000 and 1999. Additionally, foreign currency transaction gains and losses were not material to our results of operations for the years ended December 31, 2001, 2000 and 1999. Accordingly, we were not subject to material foreign currency exchange rate risk from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign subsidiaries. To date, we have not entered into any significant foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. 38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following Consolidated Financial Statements, Supplementary Data and Financial Statement Schedules are filed as part of this Annual Report on Form 10-K: MeriStar Hospitality Corporation Independent Auditors' Report ..................................................................... 40 Consolidated Balance Sheets as of December 31, 2001 and 2000 ..................................... 41 Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999 ....... 42 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999. ......................................................................................... 44 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 ....... 45 Notes to the Consolidated Financial Statements ................................................... 46 Schedule III - Real Estate and Accumulated Depreciation .......................................... 61
All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or the Notes thereto. 39 INDEPENDENT AUDITORS' REPORT The Board of Directors MeriStar Hospitality Corporation: We have audited the accompanying consolidated balance sheets of MeriStar Hospitality Corporation and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2001. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule of real estate and accumulated depreciation. These consolidated financial statements and financial statement schedule are the responsibility of MeriStar Hospitality's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MeriStar Hospitality Corporation and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Washington, D.C. January 28,2002, except as to Note 16 which is as of February 7, 2002 40 MERISTAR HOSPITALITY CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2001 AND 2000 (in thousands, except per share amounts)
2001 2000 ----------- ----------- ASSETS Investments in hotel properties $ 3,183,677 $ 3,193,730 Accumulated depreciation (397,380) (287,229) ------------ ------------ 2,786,297 2,906,501 Cash and cash equivalents 23,448 250 Accounts receivable, net of allowance for doubtful accounts of $973 and $0 47,178 2,833 Prepaid expenses and other 18,306 2,767 Note receivable from MeriStar Hotels 36,000 - Due from MeriStar Hotels 8,877 22,221 Investments in and advances to affiliates 41,714 42,196 Restricted cash 21,304 19,918 Intangible assets, net of accumulated amortization of $11,224 and $9,729 26,736 16,322 ----------- ------------ $ 3,009,860 $ 3,013,008 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities $ 129,786 $ 74,420 Accrued interest 45,009 28,365 Income taxes payable 350 1,151 Dividends and distributions payable 1,090 24,581 Deferred income taxes 9,031 10,140 Interest rate swaps 12,100 - Long-term debt 1,700,134 1,638,319 ----------- ------------ Total liabilities 1,897,500 1,776,976 ----------- ------------ Minority interests 89,797 101,477 Stockholders' Equity: Common stock, par value $0.01 per share Authorized- 250,000 shares Issued - 48,761 and 48,463 shares 487 485 Additional paid-in capital 1,183,463 1,177,218 Retained earnings (deficit) (68,241) 42,837 Accumulated other comprehensive income (12,503) (6,081) Unearned stock-based compensation (5,287) (7,550) Less common stock held in treasury - 4,237 and 4,083 shares (75,356) (72,354) ----------- ------------ Total stockholders' equity 1,022,563 1,134,555 ----------- ------------ $ 3,009,860 $ 3,013,008 =========== ============
See accompanying notes to consolidated financial statements. 41 MERISTAR HOSPITALITY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (in thousands, except per share amounts)
2001 2000 1999 ---------- ----------- ---------- Revenue: Participating lease revenue $ 17,295 $ 391,729 $ 368,012 Hotel operations: Rooms 706,381 - - Food and beverage 269,382 - - Other operating departments 81,971 - - Office rental, parking and other revenue 9,859 9,049 6,892 ---------- ----------- ---------- Total revenue 1,084,888 400,778 374,904 ---------- ----------- ---------- Hotel operating expenses by department: Rooms 170,925 - - Food and beverage 194,495 - - Other operating departments 43,558 - - Office rental, parking and other operating expenses 3,057 2,731 1,964 Undistributed operating expenses: Administrative and general 169,279 9,445 5,749 Property operating costs 160,041 - - Property taxes, insurance and other 75,609 47,481 47,027 Depreciation and amortization 117,732 111,947 103,099 Write down of investment in STS Hotel Net 2,112 - - Loss on asset impairment 43,582 - - Swap termination costs 9,297 - - Loss on fair value of non-hedging derivatives 6,666 - - FelCor merger costs 5,817 - - Costs to terminate leases with Prime Hospitality Corporation 1,315 - - Restructuring charge 1,080 - - ---------- ----------- ---------- Total operating expenses 1,004,565 171,604 157,839 ---------- ----------- ---------- Net operating income 80,323 229,174 217,065 Interest expense, net 122,376 117,524 100,398 ---------- ----------- ---------- Income (loss) before minority interests, income taxes, gain (loss) on sale of assets and extraordinary gain (loss) (42,053) 111,650 116,667 Minority interests (2,958) 10,240 11,069 ---------- ----------- ---------- Income (loss) before income taxes, gain (loss) on sale of assets and extraordinary gain (loss) (39,095) 101,410 105,598 Income tax expense (benefit) (1,178) 2,028 2,102 ---------- ----------- ---------- Income (loss) before gain (loss) on sale of assets and extraordinary gain (loss) (37,917) 99,382 103,496 Gain (loss) on sale of assets, net of tax effect of $(44) in 2001 and $70 in 2000 (2,132) 3,425 - Extraordinary gain (loss) on early extinguishment of debt, net of tax effect of $(57) in 2001, $62 in 2000, ($93) in 1999 (2,713) 3,054 (4,532) ---------- ----------- ---------- Net income (loss) $ (42,762) $ 105,861 $ 98,964 ========== =========== ==========
42
2001 2000 1999 --------- ----------- ---------- Earnings per share: Basic: Income (loss) before extraordinary gain (loss) $(0.91) $2.21 $ 2.19 Extraordinary gain (loss) (0.06) 0.07 (0.10) --------- ----------- ---------- Net income (loss) $(0.97) $2.28 $ 2.09 ========= =========== ========== Diluted: Income (loss) before extraordinary gain (loss) $(0.91) $2.14 $ 2.11 Extraordinary gain (loss) (0.06) 0.06 (0.08) --------- ----------- ---------- Net income (loss) $(0.97) $2.20 $ 2.03 ========= =========== ==========
See accompanying notes to consolidated financial statements. 43 MERISTAR HOSPITALITY CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (in thousands)
Common Stock -------------------------------------- Issued Treasury Accumlated ------------------ ------------------- Additional Other Unearned Paid In Retained Comprehen- Stock-Based Shares Amount Shares Amount Capital Earnings sive Income Compensation Total -------- -------- --------- --------- ---------- --------- ------------ ------------- ----------- Balance, January 1, 1999 46,718 $ 467 - $ - $1,133,357 $ 27,222 $ (6,487) $ - $1,154,559 Net income for the year - - - - - 98,964 - - 98,964 Foreign currency translation adjustment - - - - - - 1,240 - 1,240 ---------- Comprehensive income 100,204 Issuances of common stock 95 1 - - 1,990 - - - 1,991 Shares repurchased - - (407) (6,252) - - - - (6,252) Redemption of OP Units 851 9 - - 29,403 - - - 29,412 Dividends declared - - - - - (96,018) - - (96,018) -------- ------- -------- -------- --------- --------- ------------ ------------- ---------- Balance, December 31, 1999 47,664 477 (407) (6,252) 1,164,750 30,168 (5,247) - 1,183,896 Net income for the year - - - - - 105,861 - - 105,861 Foreign currency translation adjustment - - - - - - (834) - (834) ---------- Comprehensive income 105,027 Issuances of common stock 133 1 - - 1,831 - - - 1,832 Issuances of restricted stock 589 6 - - 10,614 - - (10,620) - Amortization on unearned stock-based compensation - - - - - - - 3,070 3,070 Shares repurchased - - (3,676) (66,102) - - - - (66,102) Redemption of OP Units 77 1 - - 23 - - - 24 Dividends declared - - - - - (93,192) - - (93,192) -------- ------- -------- -------- --------- --------- ------------ ------------- ---------- Balance, December 31, 2000 48,463 485 (4,083) (72,354) 1,177,218 42,837 (6,081) (7,550) 1,134,555 Net income (loss) for the year - - - - - (42,762) - - (42,762) Foreign currency translation adjustment - - - - - - (1,176) - (1,176) Derivative instruments transition adjustment (2,842) (2,842) Change in valuation of derivative instruments (2,404) (2,404) ---------- Comprehensive income (loss) (49,184) Issuances of common stock 48 - - 847 - - - 847 Forfeiture of restricted stock (28) (28) Amortization on unearned stock-based compensation - - - - - - - 2,263 2,263 Shares repurchased - - (154) (3,002) - - - - (3,002) Redemption of OP Units 250 2 - - 5,426 - - - 5,428 Dividends declared - - - - - (68,316) - - (68,316) -------- ------- -------- -------- --------- --------- ------------ ------------- ---------- Balance, December 31, 2001 48,761 $ 487 (4,237) $(75,356) $1,183,463 $ (68,241) $ (12,503) $ (5,287) $1,022,563 ======== ======= ======== ======== ========== ========= ============ ============= ==========
See accompanying notes to the consolidated financial statements. 44 MERISTAR HOSPITALITY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (in thousands)
2001 2000 1999 ------------ ----------- ----------- Operating activities: Net income (loss) $ (42,762) $ 105,861 $ 98,964 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 117,732 111,947 103,099 (Gain) loss on assets sold, before tax effect 2,176 (3,495) - Extraordinary (gain) loss on early extinguishment of debt, before tax effect 2,770 (3,116) 4,625 Loss on asset impairment 43,582 - - Loss on fair value of non-hedging derivatives 6,666 - - Write down of investment in STS Hotel Net 2,112 - - Minority interests (2,958) 10,240 11,069 Amortization of unearned stock-based compensation 2,263 3,070 - Deferred income taxes (1,109) 795 892 Changes in operating assets and liabilities: Accounts receivable, net 2,855 (1,505) 1,716 Prepaid expenses and other (2,039) 6,370 (5,260) Income tax receivable - - 339 Intangible assets, net - - (245) Due from MeriStar Hotels 13,344 (10,745) (4,039) Accounts payable, accrued expenses, accrued interest and other liabilities 6,304 4,194 17,303 Income taxes payable (801) 421 730 ------------ ----------- ----------- Net cash provided by operating activities 150,135 224,037 229,193 ------------ ----------- ----------- Investing activities: Investment in hotel properties, net (44,476) (90,703) (170,063) Proceeds from disposition of assets 9,715 24,148 8,900 Investments in and advances to affiliates, net - (2,111) (31,298) Hotel operating cash received in lease conversions 3,257 - - Purchases of minority interests - - (72) Notes receivable from MeriStar Hotels (36,000) 57,110 9,890 Change in restricted cash (1,386) (2,730) (5,309) ------------ ----------- ----------- Net cash used in investing activities (68,890) (14,286) (187,952) ------------ ----------- ----------- Financing activities: Deferred financing costs (18,927) (1,615) (6,899) Proceeds from issuance of long-term debt 933,250 179,388 484,924 Principal payments on long-term debt (871,467) (214,724) (410,217) Proceeds from issuances of common stock, net 847 1,741 1,991 Purchases of OP units (1,513) (7,535) - Purchases of treasury stock (3,002) (66,102) (6,252) Dividends paid to stockholders (89,470) (94,062) (94,774) Distributions to minority investors (8,069) (9,212) (11,585) ------------ ----------- ----------- Net cash used in financing activities (58,351) (212,121) (42,812) ------------ ----------- ----------- Effect of exchange rate changes on cash and cash equivalents 304 64 (53) Net increase (decrease) in cash and cash equivalents 23,198 (2,306) (1,624) Cash and cash equivalents, beginning of year 250 2,556 4,180 ------------ ----------- ----------- Cash and cash equivalents, end of year $ 23,448 $ 250 $ 2,556 ============ =========== ===========
See accompanying notes to consolidated financial statements. 45 MERISTAR HOSPITALITY CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2001, 2000 AND 1999 (dollars in thousands, except per share amounts) 1. Organization We own a portfolio of primarily upscale, full-service hotels in the United States and Canada. Our portfolio is diversified by franchise and brand affiliations. As of December 31, 2001, we owned 112 hotels, with 28,653 rooms, all of which were leased by our taxable subsidiaries and managed by MeriStar Hotels & Resorts, Inc. We were created on August 3, 1998, when American General Hospitality Corporation, a corporation operating as a real estate investment trust, or REIT, merged with CapStar Hotel Company. In connection with the merger between CapStar and American General, we created MeriStar Hotels, a separate publicly traded company, to be the lessee and manager of nearly all of our hotels. On January 1, 2001, changes to the federal tax laws governing real estate investment trusts became effective. Those changes are commonly known as the REIT Modernization Act, or RMA. The RMA permits real estate investment trusts to create taxable subsidiaries that are subject to taxation similar to subchapter C-Corporations. Because of the RMA, we have created a number of these taxable subsidiaries to lease our real property. The RMA prohibits our taxable subsidiaries from engaging in the following activities: . Managing the properties they lease (our taxable subsidiaries must enter into an "arm's length" management agreement with an independent third-party manager that is actively involved in the trade or business of hotel management and manages properties on behalf of other owners); . Leasing a property that contains gambling operations; and . Owning a brand or franchise. We believe establishing taxable subsidiaries to lease the properties we own provides a more efficient alignment of and ability to capture the economic interests of property ownership. Under the prior lease structure with MeriStar Hotels, we received lease payments based on the revenues generated by the properties; MeriStar Hotels, however, operated the properties in order to maximize net operating income from the properties. This inconsistency could potentially result in the properties being operated in a way that did not maximize revenues. With the assignment of the leases from MeriStar Hotels to our taxable subsidiaries and the execution of the new management agreements (as described below), we gained the economic risks and rewards usually associated with ownership of real estate, and property revenues became the basis for MeriStar Hotels' management fees. Subsidiaries of MeriStar Hotels assigned the participating leases to our wholly-owned taxable subsidiaries as of January 1, 2001. In connection with the assignment, the taxable subsidiaries executed new management agreements with a subsidiary of MeriStar Hotels to manage our hotels. Under these management agreements, the taxable subsidiaries pay a management fee to MeriStar Hotels for each property. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics of the former leases. The assignment of the leases from MeriStar Hotels to our taxable subsidiaries did not result in any cash consideration exchanged among the parties except for the transfer of hotel operating assets and liabilities to the taxable subsidiaries. Under the new management agreements, the base management fee is 2.5% of total hotel revenue. MeriStar Hotels can also earn incentive management fees, based on meeting performance thresholds, of up to 1.5% of total hotel revenue. The agreements have an initial term of 10 years with three renewal periods of five years each at the option of MeriStar Hotels, subject to some exceptions. Because these leases have been assigned to our taxable subsidiaries, we now bear the operating risk associated with our hotels. On May 9, 2001, our operating partnership and we entered into an Agreement and Plan of Merger with FelCor Lodging Trust Incorporated and its operating partnership. On September 13, the Securities and 46 Exchange Commission rendered our S-4 document effective. On September 21, 2001, we mutually agreed with FelCor to terminate the merger agreement due to unfavorable market conditions. We have incurred $5,817 of costs related to this merger through December 31, 2001 and these costs have been expensed in our statement of operations. 2. Summary of Significant Accounting Policies Principles of Consolidation - Our consolidated financial statements include the accounts of all of our majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. We use the equity method to account for investments in unconsolidated joint ventures and affiliated companies in which we hold a voting interest of 50% or less and exercise significant influence. We use the cost method to account for our investment in entities in which we do not have the ability to exercise significant influence. Cash Equivalents and Restricted Cash - We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash represents amounts required to be maintained in escrow under certain of our credit facilities. Investments in Hotel Properties - We record investments in hotel properties at cost (the allocated purchase price for hotel acquisitions) or at fair value at the time of contribution (for contributed property). We depreciate property and equipment balances using the straight-line method over lives ranging from five to 40 years. For the years ended December 31, 2001, 2000 and 1999, we capitalized interest of $6,098, $8,613, and $12,540, respectively. We carry properties held for sale at the lower of their carrying values or estimated fair values less costs to sell. We discontinue depreciation of these properties when a property is classified as held for sale. Our properties held for sale are not material and, therefore, are included in investments in hotel properties. Intangible Assets - Intangible assets consist primarily of deferred financing fees. We amortize these deferred fees on a straight-line basis over the lives of the related borrowings. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of - Whenever events or changes in circumstances indicate that the carrying values of long-lived assets (including property and equipment and all intangibles) may be impaired, we perform an analysis to determine the recoverability of the asset's carrying value. The carrying value of the asset includes the original purchase price (net of depreciation) plus the value of all capital improvements (net of depreciation). If the analysis indicates that the carrying value is not recoverable from future cash flows, we write down the asset to its estimated fair value and recognize an impairment loss. The estimated fair value is based on what we estimate the current sale price of the asset to be based on comparable sales information or other estimates of the asset's value. Any impairment losses we recognize are recorded as operating expenses. In 2001, we recognized $43.6 million of impairment losses. We did not recognize any impairment losses in 2000 or 1999. We review long-lived assets for impairment when one or more of the following events have occurred: a. Current or immediate short-term (future twelve months) projected cash flows are significantly less than the most recent historical cash flows. b. The unplanned departure of an executive officer or other key personnel which could adversely affect our ability to maintain our competitive position and manage future growth. c. A significant adverse change in legal factors or an adverse action or assessment by a regulator, which could affect the value of our long-lived assets. d. Events which could cause significant adverse changes and uncertainty in business and leisure travel patterns. We make estimates of the undiscounted cash flows from the expected future operations of the asset. In projecting the expected future operations of the asset, we base our estimates on future budgeted earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, amounts and use growth assumptions to project these amounts out over the expected life of the underlying asset. Our growth assumptions are based on assumed future improvements in the national economy and improvements in demand for lodging. Income Taxes - We account for income taxes in accordance with the provisions of Statement of Financial Accounting Standards or SFAS No. 109, "Accounting for Income Taxes." Deferred income taxes reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts. In conjunction with the merger on August 3, 1998, we became a REIT and were therefore no longer subject to federal income taxes, provided that we comply with various requirements necessary to maintain REIT status. REITs are subject to state and local taxes in certain jurisdictions. When RMA became effective on January 1, 2001, we created taxable subsidiaries that are subject to taxation similar to subchapter C-corporations. Because of the RMA, we have created a number of these taxable subsidiaries as the lessees of our real property. The income of these taxable subsidiaries is subject to federal income tax. 47 Foreign Currency Translation - We maintain results of operations for our Canadian hotels in Canadian dollars and translate those results using the average exchange rates during the period. We translate assets and liabilities to U.S. dollars using the exchange rate in effect at the balance sheet date. We reflect resulting translation adjustments in accumulated other compensation income (loss). Revenue Recognition - Prior to January 1, 2001, we earned participating lease revenue from the leasing of all of our hotel operating properties. We earned participating lease revenue from only eight hotels in 2001. Participating lease revenue represented lease payments from lessees pursuant to participating lease agreements. Effective January 1, 2001, in conjunction with RMA, we began to earn rooms, food and beverage, and other revenue through the operations of our hospitality properties. We recognize those revenues as hotel services are delivered. Office, retail and parking rental is generally recognized on a straight-line basis over the terms of the respective leases. Paticipating Lease Agreement-Changes to the federal tax laws governing REITs became effective on January 1, 2000. Under those changes, we have created a number of taxable subsidiaries to lease our real property. Our taxable susidiaries are wholly-owned and are similar to a subchapter C-corporation. As a result, on January 1, 2001, MeriStar Hotels assigned their participating leases to our taxable subsidiaries and the taxable subsidiaries entered into management agreements with MeriStar Hotels to manage our properties. Under these management agreements, the taxable subsideries pay MeriStar Hotels a management fee. The taxable subsidiaries in turn make rental payments to us under the participating leases. The management agreements have been structured to substantially mirror the economics and terms of the former leases. Use of Estimates - Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Segment Information - SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," requires public entities to report selected information about operating segments in financial reports issued to shareholders. Based on the guidance provided in the standard, we have determined that our business is conducted in one reportable segment. The standard also establishes requirements for related disclosures about products and services, geographic areas and major customers. The following table summarizes geographic information required to be disclosed under SFAS No. 131: 2001 2000 1999 ------------- ------------- ------------ Revenue: U.S. $1,061,621 $ 394,257 $367,893 Foreign 23,267 6,521 7,011 ------------- ------------- ------------ $1,084,888 $ 400,778 $374,904 ============= ============= ============ Investments in hotel properties, net: U.S. $2,734,028 $2,850,348 Foreign 52,269 56,153 ------------- ------------- $2,786,297 $2,906,501 ============= ============= Comprehensive Income - SFAS No. 130, "Reporting Comprehensive Income," requires an enterprise to display comprehensive income and its components in a financial statement to be included in an enterprise's full set of annual financial statements or in the notes to financial statements. Comprehensive income represents a measure of all changes in equity of an enterprise that result from recognized transactions and other economic events for the period other than transactions with owners in their capacity as owners. Our comprehensive income includes net income and other comprehensive income from foreign currency items and derivative instruments. 48 Derivative Instruments and Hedging Activity - SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS No. 137 and No. 138 amended certain provisions of SFAS No. 133. We adopted these accounting pronouncements effective January 1, 2001. New Accounting Pronouncements - In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 143 "Accounting for Asset Retirement Obligations." In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment of Disposal of Long-Lived Assets," which supersedes SFAS No. 121. We are currently in the process of evaluating the effect these new standards will have on our financial statements. 3. Investments in Hotel Properties Investments in hotel properties consists of the following: December 31, -------------------------------- 2001 2000 -------------- ------------- Land $ 310,921 $ 317,072 Buildings 2,473,651 2,461,089 Furniture, fixtures and equipment 354,392 338,350 Construction-in-progress 44,713 77,219 -------------- ------------- Total $3,183,677 $3,193,730 ============== ============= 4. Investments in and Advances to Affiliates We have ownership interests in certain unconsolidated joint ventures and affiliated companies. In conjunction with the lease assignments from MeriStar Hotels on January 1, 2001, we acquired the ownership interest in Ballston Parking Associates of $1,629. We account for this investment using the cost method. In 1999, we invested $40,000 in MeriStar Investment Partners, LP ("MIP"), a joint venture established to acquire upscale, full-service hotels. Our investment is in the form of a preferred partnership interest. We receive a 16% preferred return on our investment. We account for this investment using the cost method. 5. Long-Term Debt Long-term debt consists of the following: December 31, ------------------------------- 2001 2000 -------------- -------------- Senior unsecured notes ......................... $ 750,000 $ - Credit facility ................................ 224,000 898,000 Secured facility ............................... 330,000 330,000 Subordinated notes ............................. 205,000 205,000 Convertible notes .............................. 154,300 154,300 Mortgage debt and other ........................ 52,335 59,036 Unamortized issue discount ..................... (15,501) (8,017) -------------- -------------- $1,700,134 $1,638,319 ============== ============== 49 Future Maturities- Aggregate future maturities of the above obligations are as follows: 2002 ............................................................ $ 15,543 2003 ............................................................ 232,589 2004 ............................................................ 171,168 2005 ............................................................ 9,265 2006 ............................................................ 10,006 Thereafter ...................................................... 1,261,563 -------------- $1,700,134 ============== Senior Unsecured Notes - In December 2001, we issued $250,000 aggregate principal amount of 10.5% senior notes due June 2009. The notes are unsecured obligations of certain subsidiaries of ours and we guarantee payment of principal and interest on the notes. The net proceeds from the sale of $248,420 were used to repay amounts outstanding under the credit facility. The repayments of term loans under the credit facility resulted in an extraordinary loss of $1,527 ($1,489, net of tax) from the write-off of deferred financing costs. In January 2001, we issued $300,000 aggregate principal amount of 9.0% senior notes due 2008 and $200,000 of 9.13% senior notes due 2011. The notes are unsecured obligations of certain subsidiaries of ours and we guarantee payment of principal and interest on the notes. The net proceeds from the sale of $492,000 were used to repay amounts outstanding under the credit facility and to make payments to terminate certain swap agreements that hedged variable rate loans that were repaid. The repayments of term loans under the credit facility resulted in an extraordinary loss of $1,243 ($1,224, net of tax) from the write-off of deferred financing costs. Credit Facility - In conjunction with the merger, we entered into a $1,000,000 senior secured credit facility. The credit facility was structured as a $300,000, five-year term loan facility; a $200,000, five-and-a-half year term loan facility; and a $500,000, three-year revolving credit facility with two, one-year optional extensions. We used the proceeds from the sales of senior unsecured notes in 2001 to repay amounts outstanding under the two term loans. The credit facility is secured by our common stock and our general partnership, limited partnership and limited liability ownership interests in our subsidiaries. The interest rate on the term loans and revolving facility ranges from 100 to 200 basis points over the 30-day LIBOR, depending on certain financial performance covenants and long-term senior unsecured debt ratings. The weighted average interest rate on borrowings outstanding under our credit facility as of December 31, 2001 and 2000 was 8.3%. As of December 31, 2001, we had $76,000 available to borrow under the credit facility. Our senior credit facility requires us to meet or exceed certain financial performance ratios at the end of each quarter. Travel disruptions and safety concerns following the terrorist attacks on September 11, 2001 and the slowdown of the national economy resulted in a significant negative impact to the lodging industry and our operations. This decline in operations would have caused us to be out of compliance with certain financial covenants specified in our senior credit agreement. On October 24, 2001, however, we finalized a temporary waiver on all affected financial covenants with our senior bank group and engaged in discussions to amend our senior credit agreement further. This waiver to the credit agreement allowed these financial covenants to be waived for the period beginning September 30, 2001 and ending February 28, 2002. In December 2001, we amended the terms of our senior credit facility. This permanently relaxed the financial covenants required under the loan and allows us to extend the maturity date of the credit facility from July 2002 until July 2003. We incurred $4,382 of costs related to the amended agreement. Secured Facility - In 1999 we completed a $330,000, 10-year non-recourse financing secured by a portfolio of 19 hotels. The loan bears a fixed interest rate of 8.01% and matures in 2009. We used most of the net proceeds to repay amounts outstanding under our prior credit facilities. 50 Subordinated Notes - In 1999 we issued $55,000 aggregate principal amount (issue price of $51,906, net of discount) of 8.75% senior subordinated notes due 2007. The net proceeds of $51,219 were used to repay amounts outstanding under our credit facility and to invest in MIP. These notes are our unsecured obligations and provide for semi-annual payments of interest on February 15 and August 15, commencing on August 15, 1999. In 1997, we completed the offering of $150,000 aggregate principal amount (issue price of $149,799, net of discount) of 8.75% senior subordinated notes due 2007, generating net proceeds of $144,620. The indenture pursuant to which the subordinated notes were issued contains certain covenants, including maintenance of certain financial ratios, reporting requirements, and other customary restrictions. The subordinated notes are our unsecured obligations and provide for semi-annual payments of interest on February 15 and August 15, commencing on February 15, 1998. Convertible Notes - In 1997, we completed the offering of $172,500 aggregate principal amount of 4.75% convertible subordinated notes due 2004, generating net proceeds of $167,581. The proceeds were used to repay amounts outstanding under our prior credit facility and to finance certain hotel acquisitions. The convertible notes are unsecured obligations and provide for semi-annual payments of interest on April 15 and October 15, commencing on April 15, 1998. During 2000, we repurchased $18,200 of our convertible notes at a discount. This resulted in an extraordinary gain of $3,116 ($3,054, net of tax effect). Mortgage Debt - In connection with the merger, we assumed mortgage debt secured by seven hotels. The mortgage debt matures between 2001 and 2012, and the interest rates on the mortgages range from 7.5% to 10.5%. Hedge Agreements and Other Derivatives- Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows. We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows, and by evaluating hedging opportunities. We do not enter into derivative instruments for any purpose other than cash flow hedging purposes. We recognized a transition adjustment of $2,842 as the fair value of our derivative instruments at January 1, 2001. We recorded a liability and corresponding charge to other comprehensive loss for this amount. As of December 31, 2001, the fair value of the derivative instruments represents a liability of $12,100. Upon the sale of our $250,000 senior unsecured notes in December 2001, we reduced the term loans and our revolver under our senior secured credit facility by an aggregate amount of $248,400. At that time, we converted three swap agreements to non-hedging derivatives. These swap agreements had notional principal amounts of approximately $151,400 and were originally designated to hedge interest rates on borrowings under our senior secured credit facility that were repaid. We recognized a $6,666 loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. Upon the sale of our $500,000 senior unsecured notes in January 2001, we reduced the term loans under our senior secured credit facility by $300,000. At that time, we terminated three swap agreements with a notional amount of $300,000. These swap agreements were originally designated as cash flow hedges of interest rates on the variable rate term loans that were repaid. We made net payments totaling $9,297 million to our counter parties to terminate these swap agreements, and recognized a $9,297 million loss related to those terminated swaps. As of December 31, 2001, we had three swap agreements with notional amounts totaling $300,000. A portion of these swap agreements ($148,600) provide hedges against the impact future interest rates have on our floating LIBOR debt instruments. The remaining portion of the swap agreements ($151,400) have been converted to non-hedging derivatives. The swap agreements effectively fix the 30-day LIBOR between 4.77% and 6.4%. The swap agreements expire between December 2002 and July 2003. For the year ended December 31, 2001 and 2000, we have (made)/received net payments of approximately $(6,285) and $3,081, respectively. 51 The fair value of swap agreements designated as cash flow hedges is $5,246 at December 31, 2001 and recorded in accumulated other comprehensive income. The estimated amount recorded in accumulated other comprehensive income expected to be reclassified to the statement of operations during 2002 is $4,735. In anticipation of the August 1999 completion of our mortgage-backed secured facility, we entered into two separate hedge transactions during July 1999. Upon completion of the secured facility, we terminated the underlying treasury lock agreements, resulting in a net payment to us of $5,100. This amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the secured facility is 7.76%. Additionally, in anticipation of the August 1997 offering of $150,000 aggregate principal amount of our 8.75% senior subordinated notes due 2007, we entered into separate hedge transactions during June and July 1997. Upon completion of the subordinated notes offering, we terminated the underlying swap agreements, resulting in a net payment to us of $836. This amount was deferred and is being recognized as a reduction to interest expense over the life of the underlying debt. As a result, the effective interest rate on the subordinated notes is 8.69%. As of December 31, 2001, after consideration of the hedge agreements described above, 95.6% of our debt was fixed and our overall weighted average interest rate was 8.49%. We have determined the fair value of our outstanding balance of long-term debt approximates $1,625,000 at December 31, 2001. 6. Income Taxes When the RMA became effective on January 1, 2001, we created taxable subsidiaries to lease certain of our properties. These subsidiaries are subject to taxation similar to C-corporations. The income of these taxable subsidiaries is subject to federal income tax. Our income taxes were allocated as follows:
2001 2000 1999 ------------ ------------ ------------ Taxes on income (loss) before gain (loss) on sale of assets and extraordinary gain (loss) .................... $(1,178) $2,028 $2,102 Taxes on gain (loss) on sale of assets .................. (44) 70 - Tax expense (benefit) on extraordinary gain (loss) ...... (57) 62 (93) ------------ ------------ ------------ Total income tax expense (benefit) .................... $(1,279) $2,160 $2,009 ============ ============ ============
Our income (loss) before taxes (including the gain (loss) on sale of assets and extraordinary items, and net of minority interests) was $(44,940), $107,889, and $101,066 in 2001, 2000 and 1999, respectively. Our total income tax expense (benefit) was $(1,279), $2,160 and $2,009, respectively. Therefore, our effective income tax rates were 2.7%, 2.0% and 2.0%, respectively. Our effective income tax rate differs from the federal statutory income tax rate as follows:
2001 2000 1999 ------------ ------------ ------------ Statutory tax rate 35.0% 35.0% 35.0% Effect of REIT dividends paid deduction (34.3) (35.0) (35.0) State and local taxes 1.8 1.7 1.7 Difference in effective rate on foreign subsidiaries 0.2 0.3 0.3 ------------ ------------ ------------ 2.7% 2.0% 2.0% ============ ============ ============
52 The components of income tax expense (benefit) related to income (loss) before gain (loss) on sale of assets and extraordinary gain (loss) are as follows: 2001 2000 1999 ------------ ------------ ------------ Current: Federal $ - $ - $ - State 400 800 1,020 Foreign 100 433 190 ------------ ------------ ------------ 500 1,233 1,210 Deferred: Federal (337) - - State (1,231) 685 842 Foreign (110) 110 50 ------------ ------------ ------------ (1,678) 795 892 ------------ ------------ ------------ $ (1,178) $ 2,028 $ 2,102 ============ ============ ============ The tax effects of the principal temporary differences that give rise to our net deferred tax liability are as follows: December 31, --------------------------- 2001 2000 ------------ ------------ Accelerated depreciation/basis difference $ 2,130 $ 2,611 Fair value of hotel assets acquired 6,800 6,800 Allowance for doubtful accounts 82 (30) Accrued vacation (15) (15) Accrued expenses 482 482 Net operating loss (449) - Other 1 292 ------------ ------------ Net deferred tax liability $ 9,031 $10,140 ============ ============ Our taxable subsidiaries had a net operating loss in 2001. We have not recorded a valuation allowance against the deferred tax assets this loss creates as of December 31, 2001 as we believe it is more likely than not we will realize these deferred tax assets. In conjunction with the merger and related transactions, we had several significant events that affect income tax-related balances for the years ended December 31, 2001 and 2000. These events are summarized below: . REITs are subject to federal income taxes in certain instances for asset dispositions occurring within 10 years of electing REIT status. We do not expect to incur federal tax liability resulting from the disposition of assets with built-in gain. The 2001 and 2000 asset dispositions were not subject to the built-in gain rules. . At the time of the merger in 1998, we established a new accounting basis for American General's assets and liabilities based on their fair values. In accordance with generally accepted accounting principles, we have provided a deferred income tax liability for the estimated future tax effect of differences between the accounting and tax bases of assets acquired from American General. This deferred income tax liability, related to future state and local income taxes, is estimated as $6,800, based on information available at the date of the merger and subsequently. 7. Stockholders' Equity and Minority Interests Common Stock Transactions- We are authorized to issue up to 100,000 shares of our preferred stock, par value $0.01 per share, from time to time with such rights, preferences and priorities as the Board of Directors shall designate. We have not issued any preferred stock. 53 In September 1999, our Board of Directors authorized the repurchase of up to 5,000 shares of our common stock from time to time in open market or privately negotiated transactions. As of December 31, 2001 we have repurchased a total of 4,200 shares for $75,356. In May 2000, we implemented a stock purchase plan that allowed eligible employees to purchase our common stock at a discount to market value. We had reserved 500,000 shares of common stock for issuance under this plan. In September 2001, we discontinued the stock purchase plan. OP Units - Substantially all of our assets are held indirectly by and operated through MeriStar Hospitality Operating Partnership, L.P., our subsidiary operating partnership. Our operating partnership's partnership agreement provides for five classes of partnership interests: Common OP Units, Class B OP Units, Class C OP Units, Class D OP Units and Profits-Only OP Units. Holders of Common OP Units and Class B OP Units receive distributions per OP Unit equivalent to the dividend paid on each of our common shares. Holders of Class C OP Units receive a non-cumulative, quarterly distribution equal to $0.5575 per Class C OP Unit so long as the common OP Units and Class B OP Units receive a distribution for such quarter and the dividend rate on our common stock does not exceed $0.5575. The Class C OP Units automatically convert into Common OP Units when that dividend rate is exceeded. Holders of Class D OP Units receive a 6.5% cumulative annual preferred return based on an assumed price per common share of $22.16; the return is compounded quarterly to the extent not paid on a current basis, and holders are entitled to a liquidation preference of $22.16 per Class D OP Unit. All net income and capital proceeds earned by the operating partnership (after payment of the annual preferred return and, if applicable, the liquidation preference) will be shared by the holders of the Common OP Units in proportion to the number of Common OP Units in the relevant operating partnership owned by each such holder. During 1999, we issued 65,875 Common OP Units to partially finance the purchase of a hotel, and we issued 974,588 Common OP units as a conditional component of a purchase agreement for a hotel we purchased in 1998. On March 21, 2001, June 28, 2001, September 18, 2001 and December 17, 2001, we declared our first, second, third and fourth quarter dividends, respectively, equivalent to an annual rate of $1.525 per share of common stock and Common OP Unit. The amount of the dividend for each quarter was $0.505 per share of common stock or Common OP Unit for the first, second and third quarters and $0.01 per share of common stock and OP unit for the fourth quarter. These dividends were paid on April 30, 2001, July 31, 2001, October 12, 2001 and January 31, 2002. On March 21, 2000, June 21, 2000, September 25, 2000 and December 20, 2000, we declared our first, second, third and fourth quarter dividends, respectively, equivalent to an annual rate of $2.02 per share of common stock or Common OP Unit. The amount of the dividend for each quarter was $0.505 per share of common stock or Common OP Unit. These dividends were paid on April 28, 2000, July 31, 2000, October 31, 2000 and January 31, 2001. On March 17, 1999, June 21, 1999, September 15, 1999 and December 6, 1999, we declared our first, second, third and fourth quarter dividends, respectively, equivalent to an annual rate of $2.02 per share of common stock and OP Unit. The amount of the dividend for each quarter was $0.505 per share of common stock or OP Unit. These dividends were paid on April 30, 1999, July 30, 1999, October 29, 1999 and January 31, 2000. 54 8. Earnings Per Share The following table presents the computation of basic and diluted earnings per share:
Year Ended December 31, ------------------------------------ 2001 2000 1999 ---------- ---------- ---------- Basic Earning Per Share Computation: Net income (loss) before extraordinary gain (loss) $ (40,049) $ 102,807 $ 103,496 Dividends paid on unvested restricted stock (502) (1,168) - ---------- ---------- ---------- Income (loss) available to common stockholders (40,551) 101,639 103,496 Weighted average number of shares of Common Stock outstanding 44,507 45,958 47,276 ---------- ---------- ---------- Basic earnings per share before extraordinary gain (loss) $ (0.91) $ 2.21 $ 2.19 ========== ========== ========== Diluted Earnings Per Share Computation: Income (loss) available to common shareholders $ (40,551) $ 101,639 $ 103,496 Minority interest, net of tax - 554 10,143 Interest on convertible debt, net of tax - 7,338 8,137 Dividends on unvested restricted stock - 254 - ---------- ---------- ---------- Adjusted net income $ (40,551) $ 109,785 $ 121,776 ---------- ---------- ---------- Weighted average number of shares of common stock outstanding 44,507 45,958 47,276 Common stock equivalents: Operating partnership units - 441 5,205 Stock options - 208 102 Convertible debt - 4,612 5,066 Restricted stock - 176 - ---------- ---------- ---------- Total weighted average number of diluted shares of common stock outstanding 44,507 51,395 57,649 ---------- ---------- ---------- Diluted earnings per share before extraordinary gain (loss) $ (0.91) $ 2.14 $ 2.11 ========== ========== ==========
9. Related-Party Transactions Pursuant to an intercompany agreement, we and MeriStar Hotels provide each other with, among other things, reciprocal rights to participate in certain transactions entered into by each party. In particular, MeriStar Hotels has a right of first refusal to become the manager of any real property we acquire. We also may provide each other with certain services. These may include administrative, renovation supervision, corporate, accounting, finance, risk management, legal, tax, information technology, human resources, acquisition identification and due diligence, and operational services, for which MeriStar Hotels is compensated in an amount that we would be charged by a third party for comparable services. During the years ended December 31, 2001, 2000 and 1999, we paid MeriStar Hotels a net amouunt of $151, $1,165 and $1,600 respectively, for such services. MeriStar Hotels has a revolving credit facility with us. On March 1, 2000, MeriStar repaid the remaining balance of $57,100 on its revolving credit agreement with us upon closing its bank revolving credit facility. At that time, the revolving credit facility was amended to reduce the maximum borrowing 55 limit from $75,000 to $50,000 and to increase the interest rate on the facility from LIBOR plus 350 basis points to LIBOR plus 650 basis points. During 2001, 2000 and 1999, we earned interest of $5,005, $955, and $4,907, respectively, from this facility. As of December 31, 2001, MeriStar Hotels had $36,000 of borrowings outstanding under this facility. Certain members of our management and our respective affiliates owned equity interests relating to a hotel that we acquired in January 1999. These persons and affiliates received an aggregate of $1,488 of our OP Units in exchange for their interests in the hotel. Of the $300,000 aggregate principal amount of 9.0% senior unsecured notes due in 2008 we sold in January 2001, $30,000 principal amount was sold at a price of 99.688% to an affiliate of Oak Hill Capital Partners. The notes purchased were identical to those purchased by third parties. Of the $200,000 aggregate principal amount of 9.13% senior unsecured notes due in 2011 we sold in January 2001, $20,000 principal amount was sold at a price of 99.603% to an affiliate of Oak Hill Capital Partners. The notes purchased were identical to those purchased by third parties. Of the $250,000 aggregate principal amount of 10.5% senior unsecured notes due in 2009 we sold in December 2001, $23,000 principal amount was sold at a price of 99.368% to an affiliate of Oak Hill Capital Partners. The notes purchased are identical to those purchased by third parties. 10. Stock-Based Compensation Stock Options In connection with the merger, we adopted a new equity incentive plan. This plan authorizes us to award up to 5,565,518 options on shares of common stock. We may grant awards to officers or other of our key employees or an affiliate. These options are exercisable in three annual installments and expire 10 years from the grant date. In addition, we adopted a new equity incentive plan for non-employee directors. The directors' plan authorizes us to award up to 500,000 options. These options are exercisable in three annual installments and expire 10 years from the grant date. 56 Stock option activity for 2001, 2000 and 1999 is as follows:
Equity Incentive Plan Directors' Plan --------------------------------- -------------------------------- Number of Average Number Average Shares Option Price of Shares Option Price ------------- ---------------- ------------ ---------------- Balance, January 1, 1999 3,703,379 $24.80 45,000 $21.38 Granted 1,015,750 19.37 35,000 23.63 Exercised (94,012) 15.64 - - Canceled (264,064) 27.87 - - ------------- ---------------- ------------ ---------------- Balance, December 31, 1999 4,361,053 23.56 80,000 22.36 Granted 584,875 16.13 35,000 19.00 Exercised (47,153) 17.26 - - Canceled (113,441) 28.62 - - ------------- ---------------- ------------ ---------------- Balance, December 31, 2000 4,785,334 22.68 115,000 21.34 Granted 88,500 13.33 47,500 23.00 Exercised (41,839) 16.12 - - Canceled (2,194,165) 26.87 - - ------------- ---------------- ------------ ---------------- Balance, December 31, 2001 2,637,830 $19.47 162,500 $21.83 ============= ================ ============ ================ Shares exercisable at December 31, 1999 2,577,620 $24.53 15,000 $21.38 ============= ================ ============ ================ Shares exercisable at December 31, 2000 3,482,816 $23.99 26,667 $22.56 ============= ================ ============ ================ Shares exercisable at December 31, 2001 2,020,759 $20.09 80,000 $21.69 ============= ================ ============ ================
The following table summarizes information about stock options outstanding at December 31, 2001:
Options Outstanding Options Exercisable --------------------------------------------------------- ------------------------------- Weighted Weighted Average Weighted Average Range of exercise Number Remaining Average Number Exercise prices outstanding Contractual Life Exercise Price exercisable Price - --------------------- ------------- ------------------- ----------------- ------------- ------------- $13.33 to $15.64 1,031,598 6.46 $15.13 801,434 $15.37 $16.25 to $19.00 72,750 7.89 17.43 39,169 17.02 $19.19 to 19.19 925,000 7.10 19.19 616,667 19.19 $19.75 to $29.44 624,407 6.62 25.25 496,914 26.10 $29.55 to $31.61 146,575 5.87 30.93 146,575 30.93 ------------- ------------------- ----------------- ------------- ------------- $13.33 to $31.61 2,800,330 6.71 $19.61 2,100,759 $20.15 ============= =================== ================= ============= =============
We have adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, we apply Accounting Principles Board Opinion No. 25 in accounting for the Equity Incentive Plan and, therefore, no compensation cost has been recognized for the Equity Incentive Plan. Pro forma information regarding net income and diluted earnings per share is required by SFAS No. 123, and has been determined as if we have accounted for our employee stock options under the fair value method. We estimated the fair value for these options at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 2001, 2000 and 1999:
2001 2000 1999 --------------- ---------------- -------------- Risk-free interest rate 3.6% 6.71% 6.70% Dividend rate $1.525 $2.02 $2.02 Volatility factor 0.57 0.27 0.31 Weighted average expected life 3.10 years 3.06 years 3.07 years
57 Our pro forma net income (loss) and diluted earnings (loss) per share as if the fair value method had been applied were $(45,215) and $(1.02) for 2001, $98,216 and $2.07 for 2000, $98,273 and $2.02 for 1999. The effects of applying SFAS No. 123 for disclosing compensation costs may not be representative of the effects on reported net income and diluted earnings per share for future years. Other Stock-Based Compensation As of December 31, 2001, we have granted 479,000 shares of restricted stock to employees. This restricted stock vests ratably over three-year or five-year periods. The issuance of restricted stock has resulted in $5,287 of unearned stock-based compensation recorded as a reduction to stockholders' equity on our balance sheet as of December 31, 2001. In 2000, we granted 462,500 Profits-Only OP Units, or POPs, to some of our employees pursuant to our POPs Plan. As of December 31, 2001, 387,500 POPs are outstanding. These POPs were originally eligible for vesting based on us achieving certain financial performance criteria. During 2001, we converted these POPs to fixed awards and extended the vesting period to 2004. In 2001, we granted 350,000 POPs to some of our employees pursuant to our POPs Plan. These POPs are fixed awards and vest ratably over three years. 11. Restructuring Charges During 2001, we incurred a restructuring charge of $1,080 in connection with operational changes at our corporate headquarters. The restructuring included eliminating seven corporate staff positions and office space no longer needed under the new structure. The restructuring charge consists of: Severance $ 168 Noncancelable lease cost 912 ------ Total $1,080 ====== During 2001, we applied $168 and $520 in severance and lease termination costs, respectively, against the restructuring reserve. Approximately $392 of the restructuring accrual remains at December 31, 2001. 12. Commitments and Contingencies We lease land at certain hotels from third parties. Certain leases contain contingent rent features based on gross revenues at the respective property. Future minimum lease payments required under these operating leases as of December 31, 2001 were as follows: 2002 $ 1,446 2003 1,446 2004 1,446 2005 1,449 2006 1,449 Thereafter 52,315 ------------- $59,551 ============= 58 We lease certain office, retail and parking space to outside parties under non-cancelable operating leases with initial or remaining terms in excess of one year. Future minimum rental receipts under these leases as of December 31, 2001 were as follows: 2002 $ 4,969 2003 4,190 2004 3,915 2005 2,398 2006 1,217 Thereafter 1,896 ------------- $18,585 ============= In the course of our normal business activities, various lawsuits, claims and proceedings have been or may be instituted or asserted against us. Based on currently available facts, we believe that the disposition of matters that are pending or asserted will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. 13. Acquisitions and Dispositions During 2001, we sold two hotels and received proceeds of $9,715. The sales resulted in a loss of $2,176 ($2,132, net of tax). During 2001, we terminated the leases of eight of our hotels from affiliates of Prime Hospitality Corporation for a total cost of $1,315. Concurrently, we signed long-term management agreements with MeriStar Hotels for four of these properties. The term on the remaining four management agreements is one year with additional one-year renewal periods. During 2000, we sold three limited-service hotels and received proceeds of $24,148. This resulted in a gain on sale of assets of $3,495 ($3,425, net of tax). We also purchased a full-service hotel for $19,400. Of the purchase amount, we paid $11,400 in cash and we will pay $8,000 from the hotel's future cash flow within the next five years. We funded the acquisition using existing cash and borrowings under our revolving credit facility. During 1999, we acquired one hotel for a purchase price of $10,642 of cash and $1,488 of OP Units. We funded the acquisition using existing cash and borrowings on our credit facility. We also sold two hotels during 1999 for a total price of $8,900. The resulting gain on the sales was immaterial. 14. Quarterly Financial Information (Unaudited) The following is a summary of our quarterly results of operations:
2001 2000 ------------------------------------------ ------------------------------------------- First Second Third Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter ------- ------- ------- ------- ------- ------- ------- ------- Total revenue ..................... $302,684 $307,167 $247,538 $227,499 $67,100 $81,539 $117,631 $134,508 Total operating expenses .......... 256,742 249,667 234,003 264,153 41,698 43,631 42,506 43,769 Net operating income (loss) ......................... 45,942 57,500 13,535 (36,654) 25,402 37,908 75,125 90,739 Income (loss) before extraordinary gain (loss) ...... 13,039 24,560 (17,302) (60,346) (3,426) 10,424 41,259 54,550 Net income (loss) ................. 11,815 24,560 (17,302) (61,835) (372) 10,424 41,259 54,550 Diluted earnings (loss) per share ...................... $ 0.25 $ 0.52 $ (0.39) $ (1.37) $ (0.01) $ 0.22 $ 0.83 $ 1.13
59 15. Supplemental Cash Flow Information
2001 2000 1999 ---------- ----------- ---------- Cash paid for interest and income taxes: Interest, net of capitalized interest of $6,098, $8,613, and $12,540, respectively $105,732 $120,539 $93,491 Income taxes 698 874 1,261 Non-cash investing and financing activities: OP Units issued in purchase of property and equipment - - 1,488 Redemption of OP Units 5,428 24 29,412 Dividends reinvested - 91 - Issuance of restricted stock - 10,620 - Deferred purchase price - 8,000 - Operating assets received and liabilities assumed from lease conversion: Accounts receivable 47,200 - - Prepaid expenses and other 13,500 - - Furniture and fixtures, net 152 - - Investment in affiliates, net 1,629 - - ---------- Total operating assets received 62,481 - - ========== Accounts payable and accrued expenses 65,706 - - Long-term debt 32 - - ---------- Total liabilities acquired 65,738 - - ==========
16. Subsequent Event On February 7, 2002, we sold $200,000 of senior unsecured notes. These notes have an interest rate of 9.13% and mature in January 2011. We used the proceeds to pay down our revolving credit facility. As a result of this financing, we redesignated some swap agreements as non-hedging derivatives. We recognized a $4,700 loss when this amount was transferred out of accumulated other comprehensive income because the debt being hedged was repaid. 60 MERISTAR HOSPITALITY CORPORATION SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2001 (dollars in thousands)
Costs subsequent Gross amount Initial cost to Company to acquisition at end of year ----------------------- --------------- -------------- Building Building Building Accum- and and and ulated Year of Encum- Improve Improve- Improve Deprecia Construc- Date Description brances Land ments Land ments Land ments tion tion Acquired Life - -------------------------------------------------------- --------------- -------------- -------------------------------- Hotel Assets: Salt Lake Airport Hilton, UT - 770 12,828 - 4,185 770 17,013 2,579 1980 3/3/1995 40 Radisson Hotel, Schaumburg, IL - 1,080 5,131 (230) 938 850 6,069 1,107 1979 6/30/1995 40 Sheraton Hotel, Colorado Springs, CO (1) 1,071 14,592 1 4,526 1,072 19,118 2,848 1974 6/30/1995 40 Hilton Hotel, Bellevue, WA 48 5,211 6,766 (441) 3,686 4,770 10,452 1,358 1979 8/4/1995 40 Marriott Hotel, Somerset, NJ (1) 1,978 23,001 - 4,811 1,978 27,812 4,092 1978 10/3/1995 40 Westin Atlanta Airport, Atlanta, GA - 2,650 15,926 (300) 9,517 2,350 25,443 3,734 1982 11/15/1995 40 Sheraton Hotel, Charlotte, NC (1) 4,700 11,057 - 4,032 4,700 15,089 2,123 1985 2/2/1996 40 Radisson Hotel Southwest, Cleveland, OH - 1,330 6,353 - 5,537 1,330 11,890 1,479 1978 2/16/1996 40 Orange County Airport Hilton, Irvine, CA (1) 9,990 7,993 - 3,723 9,990 11,716 1,544 1976 2/22/1996 40 The Latham Hotel, Washington, DC - 6,500 5,320 - 4,233 6,500 9,553 1,169 1981 3/8/1996 40 Hilton Hotel, Arlington, TX (1) 1,836 14,689 79 3,766 1,915 18,455 2,479 1983 4/17/1996 40 Hilton Hotel, Arlington, VA - 4,000 15,069 - 851 4,000 15,920 2,117 1990 8/23/1996 40 Southwest Hilton, Houston, TX - 2,300 15,665 (613) (2,871) 1,687 12,794 2,168 1979 10/31/1996 40 Embassy Suites, Englewood, CO (1) 2,500 20,700 - 3,537 2,500 24,237 2,973 1986 12/12/1996 40 Holiday Inn, Colorado Springs, CO - 1,600 4,232 (426) (257) 1,174 3,975 619 1974 12/17/1996 40 Embassy Row Hilton, Washington, DC - 2,200 13,247 - 3,276 2,200 16,523 1,888 1969 12/17/1996 40 Hilton Hotel & Towers, Lafayette, LA (1) 1,700 16,062 - 2,169 1,700 18,231 2,164 1981 12/17/1996 40 Hilton Hotel, Sacramento, CA (1) 4,000 16,013 - 2,686 4,000 18,699 2,236 1983 12/17/1996 40 Santa Barbara Inn, Santa Barbara, CA - 2,600 5,141 - 1,497 2,600 6,638 770 1959 12/17/1996 40 San Pedro Hilton, San Pedro, CA - 640 6,047 - 2,517 640 8,564 975 1989 1/28/1997 40 Doubletree Hotel, Albuquerque, NM (1) 2,700 15,075 - 2,376 2,700 17,451 1,957 1975 1/31/1997 40 Westchase Hilton & Towers, Houston, TX (1) 3,000 23,991 - 1,578 3,000 25,569 3,113 1980 1/31/1997 40 Sheraton Great Valley Inn, Frazer, PA - 2,150 11,653 11 3,610 2,161 15,263 1,576 1971 3/27/1997 40 Holiday Inn Calgary Airport, Calgary, Alberta, Canada - 751 5,011 (77) 1,675 674 6,686 666 1981 4/1/1997 40 Sheraton Hotel Dallas, Dallas, TX - 1,300 17,268 (569) (5,551) 731 11,717 2,389 1974 4/1/1997 40 Radisson Hotel Dallas, Dallas, TX - 1,800 17,580 (868) (7,542) 932 10,038 2,236 1972 4/1/1997 40 Sheraton Hotel Guildford, Surrey, BC, Canada - 2,366 24,008 (244) (1,335) 2,122 22,673 2,650 1992 4/1/1997 40 Doubletree Guest Suites, Indianapolis, IN - 1,000 8,242 - 999 1,000 9,241 1,057 1987 4/1/1997 40 Ramada Vancouver Centre, Vancouver, BC, Canada - 4,400 7,840 (451) 1,877 3,949 9,717 1,057 1968 4/1/1997 40 Holiday Inn Sports Complex, Kansas City, MO - 420 4,742 - 2,129 420 6,871 715 1975 4/30/1997 40 Hilton Crystal City, Arlington, VA - 5,800 29,879 - 1,674 5,800 31,553 3,464 1974 7/1/1997 40 Doral Palm Springs, Cathedral City, CA - 1,604 16,141 - 3,022 1,604 19,163 2,045 1985 7/1/1997 40 Radisson Hotel & Suites, Chicago, IL - 4,870 39,175 - 3,619 4,870 42,794 4,586 1971 7/15/1997 40 Georgetown Inn, Washington, DC - 6,100 7,103 - 1,824 6,100 8,927 884 1962 7/15/1997 40 Embassy Suites Center City, Philadelphia, PA (1) 5,500 26,763 - 3,529 5,500 30,292 3,085 1963 8/12/1997 40
61 Doubletree Hotel Austin, Austin, TX (1) 2,975 25,678 - 3,288 2,975 28,966 3,003 1984 8/14/1997 40 Radisson Plaza Hotel, Lexington, KY - 1,100 30,375 - 6,315 1,100 36,690 3,780 1982 8/14/1997 40 Jekyll Inn, Jekyll Island, GA - - 7,803 - 3,548 - 11,351 1,148 1971 8/20/1997 40 Holiday Inn Metrotown, Burnaby, BC, Canada - 1,115 5,303 (114) 796 1,001 6,099 620 1989 8/22/1997 40 Embassy Suites International Airport, Tucson, AZ - 1,640 10,444 - 2,392 1,640 12,836 1,230 1982 10/23/1997 40 Westin Morristown, NJ - 2,500 19,128 100 3,835 2,600 22,963 2,195 1962 11/20/1997 40 Doubletree Hotel Bradley International Airport, Windsor Locks, CT - 1,013 10,228 87 1,861 1,100 12,089 1,142 1985 11/24/1997 40 Sheraton Hotel, Mesa, AZ - 1,850 16,938 - 2,650 1,850 19,588 2,140 1985 12/5/1997 40 Metro Airport Hilton & Suites, Detroit, MI - 1,750 12,639 - 1,371 1,750 14,010 1,355 1989 12/16/1997 40 Marriott Hotel, Los Angeles, CA - 5,900 48,250 - 7,615 5,900 55,865 5,362 1983 12/18/1997 40 Austin Hilton & Towers, TX - 2,700 15,852 - 2,876 2,700 18,728 1,758 1974 1/6/1998 40 Dallas Renaissance North, TX - 3,400 20,813 - 3,826 3,400 24,639 2,320 1979 1/6/1998 40 Houston Sheraton Brookhollow Hotel, TX - 2,500 17,609 - 2,562 2,500 20,171 1,959 1980 1/6/1998 40 Seelbach Hilton, Louisville, KY - 1,400 38,462 - 7,265 1,400 45,727 4,117 1905 1/6/1998 40 Midland Hilton & Towers, TX - 150 8,487 - 1,814 150 10,301 968 1976 1/6/1998 40 Westin Oklahoma, OK - 3,500 27,588 - 2,745 3,500 30,333 2,908 1977 1/6/1998 40 Sheraton Hotel, Columbia, MD - 3,600 21,393 - 3,871 3,600 25,264 2,141 1972 3/27/1998 40 Radisson Cross Keys, Baltimore, MD - 1,500 5,615 - 1,566 1,500 7,181 598 1973 3/27/1998 40 Sheraton Fisherman's Wharf, San Francisco, CA (1) 19,708 61,751 - 4,984 19,708 66,735 5,983 1975 4/2/1998 40 Hartford Hilton, CT - 4,073 24,458 - 3,051 4,073 27,509 2,158 1975 5/21/1998 40 Holiday Inn Dallas DFW Airport South,TX 12,211 3,388 28,847 - 274 3,388 29,121 2,499 1974 8/3/1998 40 Courtyard by Marriott Meadowlands, NJ - - 9,649 - 144 - 9,793 829 1993 8/3/1998 40 Hotel Maison de Ville, New Orleans, LA - 292 3,015 - 58 292 3,073 261 1778 8/3/1998 40 Hilton Hotel Toledo, OH - - 11,708 - 90 - 11,798 1,017 1987 8/3/1998 40 Holiday Inn Select Dallas DFW Airport West, TX - 947 8,346 (270) (2,083) 677 6,263 828 1974 8/3/1998 40 Holiday Inn Select New Orleans International Airport LA (1) 3,040 25,616 - 2,786 3,040 28,402 2,317 1973 8/3/1998 40 Crowne Plaza Madison, WI (1) 2,629 21,634 - 441 2,629 22,075 1,875 1987 8/3/1998 40 Wyndham Albuquerque Airport Hotel, NM - - 18,889 - 241 - 19,130 1,628 1972 8/3/1998 40 Wyndham San Jose Airport Hotel, TX - - 35,743 - 1,296 - 37,039 3,120 1974 8/3/1998 40 Holiday Inn Select Mission Valley, CA - 2,410 20,998 - 302 2,410 21,300 1,822 1970 8/3/1998 40 Sheraton Safari Resort, Lake Buena Vista, FL - 4,103 35,263 - 9,058 4,103 44,321 3,528 1985 8/3/1998 40 Hilton Monterey, CA - 2,141 17,666 - 5,252 2,141 22,918 1,799 1971 8/3/1998 40 Hilton Hotel Durham, NC - 1,586 15,577 - 3,052 1,586 18,629 1,438 1987 8/3/1998 40 Wyndham Garden Hotel Marietta, GA - 1,900 17,077 - 694 1,900 17,771 1,486 1985 8/3/1998 40 Westin Resort Key Largo, FL - 3,167 29,190 - 675 3,167 29,865 2,542 1985 8/3/1998 40 Doubletree Guest Suites Atlanta, GA 8,393 2,236 18,514 - 3,900 2,236 22,414 1,831 1985 8/3/1998 40 Radisson Hotel Arlington Heights, IL - 1,540 12,645 - 8,291 1,540 20,936 1,443 1981 8/3/1998 40 Holiday Inn Select Bucks County, PA - 2,610 21,744 - 3,161 2,610 24,905 1,943 1987 8/3/1998 40 Hilton Hotel Cocoa Beach, FL - 2,783 23,076 - 1,925 2,783 25,001 2,123 1986 8/3/1998 40 Radisson Universal Orlando, FL - 9,555 73,486 - 8,484 9,555 81,970 6,747 1972 8/3/1998 40 Crowne Plaza Phoenix, AZ - 1,852 15,957 - 3,485 1,852 19,442 1,632 1981 8/3/1998 40
62
Hilton Airport Hotel Grand Rapids, MI (1) 2,049 16,657 - 1,116 2,049 17,773 1,481 1979 8/3/1998 40 Marriott West Loop Houston, TX (1) 2,943 23,934 - 4,409 2,943 28,343 2,229 1976 8/3/1998 40 Courtyard by Marriott Durham, NC - 1,406 11,001 - 76 1,406 11,077 946 1996 8/3/1998 40 Courtyard by Marriott, Marina Del Rey, CA - 3,450 24,534 - 2,659 3,450 27,193 2,148 1976 8/3/1998 40 Courtyard by Marriott, Century City, CA - 2,165 16,465 - 1,142 2,165 17,607 1,424 1986 8/3/1998 40 Courtyard by Marriott, Orlando, FL - - 41,267 - 2,593 - 43,860 3,653 1972 8/3/1998 40 Crowne Plaza, San Jose, CA (1) 2,130 23,404 (24) 1,676 2,106 25,080 2,128 1975 8/3/1998 40 Doubletree Hotel Westshore, Tampa, FL - 2,904 23,476 - 9,689 2,904 33,165 2,361 1972 8/3/1998 40 Howard Johnson Resort Key Largo, FL - 1,784 12,419 - 1,195 1,784 13,614 1,101 1971 8/3/1998 40 Radisson Annapolis, MD - 1,711 13,671 - 2,012 1,711 15,683 1,228 1975 8/3/1998 40 Holiday Inn Fort Lauderdale, FL - 2,381 19,419 - 2,192 2,381 21,611 1,763 1969 8/3/1998 40 Holiday Inn Madeira Beach, FL - 1,781 13,349 - 123 1,781 13,472 1,159 1972 8/3/1998 40 Holiday Inn Chicago O'Hare, IL 18,038 4,290 72,631 - 15,883 4,290 88,514 6,777 1975 8/3/1998 40 Holiday Inn & Suites Alexandria, VA - 1,769 14,064 - 1,639 1,769 15,703 1,242 1985 8/3/1998 40 Hilton Clearwater, FL - - 69,285 - 4,318 - 73,603 6,126 1980 8/3/1998 40 Radisson Rochester, NY - - 6,499 - 2,934 - 9,433 675 1971 8/3/1998 40 Radisson Old Towne Alexandria, VA - 2,241 17,796 - 3,824 2,241 21,620 1,632 1975 8/3/1998 40 Ramada Inn Clearwater, FL - 1,270 13,453 - 160 1,270 13,613 1,616 1969 8/3/1998 40 Crowne Plaza Las Vegas, NV - 3,006 24,011 - (206) 3,006 23,805 2,059 1989 8/3/1998 40 Crowne Plaza Portland, OR 4,754 2,950 23,254 - 211 2,950 23,465 2,047 1988 8/3/1998 40 Four Points Hotel, Mt. Arlington, NJ 3,932 6,553 6,058 - (1,562) 6,553 4,496 537 1984 8/3/1998 40 Ramada Inn Mahwah, NJ - 1,117 8,994 (312) (2,385) 805 6,609 801 1972 8/3/1998 40 Ramada Plaza Meriden, CT - 1,247 10,057 - (53) 1,247 10,004 864 1985 8/3/1998 40 Ramada Plaza Shelton, CT 4,416 2,040 16,235 - 41 2,040 16,276 1,395 1989 8/3/1998 40 Sheraton Crossroads Mahwah, NJ - 3,258 26,185 - 309 3,258 26,494 2,320 1986 8/3/1998 40 St. Tropez, Las Vegas, NV - 3,027 24,429 - 42 3,027 24,471 2,096 1986 8/3/1998 40 Doral Forrestal, Princeton, NJ - 9,578 57,555 - 8,551 9,578 66,106 5,364 1981 8/11/1998 40 South Seas Resort, Captiva, FL 543 3,084 83,573 - 8,623 3,084 92,196 7,187 1975 10/1/1998 40 Radisson Suites Beach Resort, Marco Island, FL - 7,120 35,300 - 2,253 7,120 37,553 2,983 1983 10/1/1998 40 Best Western Sanibel Island, FL - 3,868 3,984 17 338 3,885 4,322 260 1967 10/1/1998 40 The Dunes Golf & Tennis Club, Sanibel Island, FL - 7,705 3,043 9 31 7,714 3,074 252 1964 10/1/1998 40 Sanibel Inn, Sanibel Island, FL - 8,482 12,045 - 167 8,482 12,212 979 1964 10/1/1998 40 Seaside Inn, Sanibel Island, FL - 1,702 6,416 22 80 1,724 6,496 525 1964 10/1/1998 40 Song of the Sea, Sanibel Island, FL - 339 3,223 19 70 358 3,293 266 1964 10/1/1998 40 Sundial Beach Resort, Sanibel Island, FL - 320 12,009 - 1,974 320 13,983 1,043 1975 10/1/1998 40 Holiday Inn Madison, WI - 4,143 6,692 - 526 4,143 7,218 516 1965 1/11/1999 40 Safety Harbor Resort and Spa, Safety Harbor, FL - 732 19,618 - 1,639 732 21,257 934 1926 5/31/2000 40 -------- ---------- ------- --------- -------- ---------- -------- $315,515 $2,199,762 $(4,594) $273,889 $310,921 $2,473,651 $233,612 ======== ========== ======= ========= ======== ========== ========
(1) These properties secure the Secured Facility which, as of December 31, 2001, had an outstanding balance of $319,788. The components of our hotel property and equipment are as follows:
Property and Accumulated Equipment Depreciation ------------------- ------------------- Land $ 310,921 $ - Building and Improvements 2,473,651 233,612 Furniture and equipment 354,392 163,768 Construction in progress 44,713 - ------------------ ------------------ Total property and equipment $3,183,677 $ 397,380 ================== ==================
A reconciliation of our investment in hotel property and equipment and related accumulated depreciation is as follows:
------------------- ------------------- ------------------- 2001 2000 1999 ------------------- ------------------- ------------------- Hotel property and equipment Balance, beginning of period $3,193,730 $3,118,723 $ 2,957,543 Acquisitions during period - 19,618 12,081 Improvements and construction -in-progress 47,467 78,911 160,294 Loss on asset impairment (43,582) Cost of real estate sold (13,938) (23,522) (11,195) ------------------ ------------------ ------------------ Balance, end of period 3,183,677 3,193,730 3,118,723 ------------------ ------------------ ------------------ Accumulated depreciation Balance, beginning of period 287,229 182,430 83,797 Additions-depreciation expense 112,465 107,363 99,297 Cost of real estate sold (2,314) (2,564) (664) ------------------ ------------------ ------------------ Balance, end of period 397,380 287,229 182,430 ------------------ ------------------ ------------------ Net hotel property and equipment, end of period $2,786,297 $2,906,501 $ 2,936,293 ================== ================== ==================
63 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 405 of Regulation S-K with respect to Directors and Executive Officers of the Company is incorporated herein by reference to the sections entitled "Management" and "Principal Stockholders" in our 2002 Annual Stockholder Meeting proxy statement. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the sections entitled "Executive Compensation," "Compensation of Directors" and "Stock Option Grants" in our 2002 Annual Stockholder Meeting proxy statement. 64 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated herein by reference to the section entitled "Principal Stockholders" in our 2002 Annual Stockholder Meeting proxy statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated herein by reference to the section entitled "Certain Relationships and Related Transactions" in our 2002 Annual Stockholder Meeting proxy statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a). Index to Financial Statements and Financial Statement Schedules 1. Financial Statements The Financial Statements included in the Annual Report on Form 10-K are listed in Item 8. 2. Reports on Form 8-K Current report on Form 8-K dated and filed on August 16, 2001, regarding the first amendment to the merger agreement with FelCor Lodging Trust Incorporated. Current report on Form 8-K dated and filed on September 21, 2001, regarding the termination of the merger agreement with FelCor Lodging Trust Incorporated. (b). Financial Statement Schedules The Financial Statement Schedules included in the Annual Report on Form 10-K are listed in Item 8. 65 (b). Exhibits All Exhibits listed below are filed with this Annual Report on Form 10-K unless specifically stated to be incorporated by reference to other documents previously filed with the Commission. Exhibit No. Description of Document - ----------- ----------------------- 3.1 Second Articles of Amendment and Restatement of Incorporation of the Registrant (incorporated by reference to Exhibit 3.4 to our Registration Statement No. 333-4568). 3.1.1 Articles of Amendment of Second Articles of Amendment and Restatement of Incorporation dated August 11, 2000. 3.1.2 Articles of Amendment of Second Articles of Amendment and Restatement of Incorporation dated June 30, 2001. 3.2 Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 on our Form S-3 (Registration Statement No. 333-66229) filed with the Securities and Exchange Commission on October 28, 1998). 4.1 Form of Share Certificate (incorporated by reference to Exhibit 4.1 on our Registration Statement No. 333-4568). 4.2 Indenture, dated as of August 19, 1997 (the "August 1997 Indenture"), between CapStar Hotel Company and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to Exhibit 4.4 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000). 4.2.1 Specimen Subordinated Note to August 1997 Indenture (incorporated by reference to Exhibit 4.2 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000). 4.2.2 First Supplemental Indenture to the August 1997 Indenture. 4.2.3 Second Supplemental Indenture to the August 1997 Indenture (incorporated by reference to Exhibit 4.5 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000). 4.2.4 Third Supplemental Indenture to the August 1997 Indenture (incorporated by reference to Exhibit 4.15 to our Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission on March 6, 2001). 4.2.5 Fourth Supplemental Indenture to the August 1997 Indenture. 4.2.6 Fifth Supplemental Indenture to the August 1997 Indenture. 4.3 Indenture (the "Convertible Notes Indenture"), dated as of October 16, 1997, between CapStar Hotel Company and First Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.6 to our Form 10-K filed with the Securities and Exchange Commission on March 15, 2000). 4.3.1 Specimen Convertible Note to the Convertible Notes Indenture (incorporated by reference to Exhibit 4.7 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000). 4.3.2 First Supplemental Indenture to the Convertible Notes Indenture (incorporated by reference to Exhibit 4.8 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000) 4.4 Indenture (the "March 1999 Indenture"), dated as of March 18, 1999, between MeriStar Hospitality Corporation and IBJ Whitehall Bank & Trust Company, as Trustee (incorporated by reference to Exhibit B to our Form S-4 (Registration Statement No. 333-78163) filed with the Securities and Exchange Commission on May 10, 1999). 4.4.1 Specimen Subordinated Note to March 1999 Indenture (incorporated by reference to Exhibit A to our Form S-4 (Registration Statement No. 333-78163) filed with the Securities and Exchange Commission on May 10, 1999). 4.4.1 First Supplemental Indenture to the March 1999 Indenture (incorporated by reference to Exhibit 4.13 to our Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission on March 6, 2001). 4.4.2 Second Supplemental Indenture to the March 1999 Indenture. 4.4.3 Third Supplemental Indenture to the March 1999 Indenture. 4.5 Indenture (the "January 2001 Indenture"), dated January 26, 2001, between MeriStar Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp., MeriStar Hospitality Corporation, and U.S. Bank Trust National Association (incorporated by reference to Exhibit 4.14 to our Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission on March 6, 2001). 4.5.1 Specimen Senior Note to the January 2001 Indenture 4.5.2 First Supplemental Indenture to the January 2001 Indenture. 4.5.3 Second Supplemental Indenture to the January 2001 Indenture. 4.6 Indenture (the "December 2001 Indenture"), dated December 19, 2001, between MeriStar Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp., MeriStar Hospitality Corporation, and U.S. Bank Trust National Association. 4.6.1 Specimen Senior Note to the December 2001 Indenture. 4.6.2 Registration Rights Agreement, dated December 19, 2001, between MeriStar Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp. II, MeriStar Hospitality Corporation, and certain subsidiaries of MeriStar Hospitality Operating Partnership, L.P. and Lehman Brothers Inc., SG Cowen Securities Corporation and certain other parties. 4.6.3 First Supplemental Indenture to the December 2001 Indenture. 4.7 Indenture (the "February 2002 Indenture"), dated February 7, 2002, between MeriStar Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp., MeriStar Hospitality Corporation, and U.S. Bank Trust National Association. 4.7.1 Specimen Senior Note to the February 2002 Indenture. 4.7.2 Registration Rights Agreement, dated February 7, 2002, between MeriStar Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp. II, MeriStar Hospitality Corporation, and certain subsidiaries of MeriStar Hospitality Operating Partnership, L.P. and Lehman Brothers Inc., SG Cowen Securities Corporation and certain other parties. 10.1 Second Amended and Restated Agreement of Limited Partnership of MeriStar Hospitality Operating Partnership, L.P. dated as of August 3, 1998 (incorporated by reference to Exhibit 10.3 to our Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission filed on March 2, 1999). 10.2 Second Amended and Restated Senior Secured Credit Agreement dated as of August 3, 1998 (the "Senior Credit Agreement" (incorporated by reference to Exhibit 10.4 to our Form 10-K filed with the Securities and Exchange Commission filed on March 2, 1999). 10.2.1 First Amendment to the Second Amended and Restated Senior Secured Credit Agreement. 10.2.2 Second Amendment to the Second Amended and Restated Senior Secured Credit Agreement. 10.2.3 Third Amendment to the Second Amended and Restated Senior Secured Credit Agreement. 10.2.4 Fourth Amendment to the Second Amended and Restated Senior Secured Credit Agreement. 10.2.5 Fifth Amendment to the Second Amended and Restated Senior Secured Credit Agreement. 10.3 Loan Agreement, dated as of August 12, 1999, between MeriStar Hospitality Operating Partnership, L.P. and Lehman Brothers Holdings Inc. D/B/A Lehman Capital, a division of Lehman Brothers Holdings Inc. (incorporated by reference to Exhibit 10.13 to our Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 15, 2000) 10.4 Intercompany Agreement between MeriStar Hospitality Corporation, MeriStar Hospitality Operating Partnership, L.P., MeriStar Hotels & Resorts, Inc. and MeriStar H&R Operating Company L.P. ("Intercompany Agreement") 10.4.1 Amendment to the Intercompany Agreement (incorporated by reference to Exhibit 10.15 to our Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission on March 6, 2001). 10.5 Revolving Credit Agreement (the "MeriStar Hotels Revolving Credit Agreement"), dated as of August 3, 1998, by and between MeriStar H&R Operating Company, L.P. and MeriStar Hospitality Operating Partnership, L.P. 10.5.1 Amendment to MeriStar Hotels Revolving Credit Agreement 10.5.2 Second Amendment to MeriStar Hotels Revolving Credit Agreement 10.6 Term Note by MeriStar H&R Operating Company, L.P. to MeriStar Hospitality Operating Partnership, L.P. 10.7 MeriStar Hospitality Corporation Incentive Plan (the "Incentive Plan") (incorporated by reference to Exhibit 10.1 to our Form S-4/A (Registration Statement No. 333-49611) filed with the Securities and Exchange Commission on June 22, 1998). 10.7.1 Amendment to the Incentive Plan. 10.8 MeriStar Hospitality Corporation Non-Employee Directors' Incentive Plan (the "Directors' Plan") (incorporated by reference to Exhibit 10.2 to our Form S-4/A (Registration Statement No. 333-49611) filed with the Securities and Exchange Commission on June 22, 1998). 10.8.1 Amendment to the Directors' Plan. 66 10.9 Profits-Only Operating Partnership Units Plan (incorporated by reference to Exhibit 10.14 to our Form 10-Q for the quarter ended March 31, 2000 filed with the Securities and Exchange Commission on May 12, 2000). 10.10 MeriStar Hospitality Corporation Employee Stock Purchase Plan. 10.11 Employment Agreement between MeriStar Hospitality Corporation and Paul W. Whetsell (incorporated by reference to Exhibit 10.6 to our Form 10-Q for the quarter ended September 30, 2000 filed with the Securities and Exchange Commission on November 13, 2000). 10.12 Employment Agreement between MeriStar Hospitality Corporation and Steven D. Jorns (incorporated by reference to Exhibit 10.4 to our Form S-4/A (Registration Statement No. 333-49611) filed with the Securities and Exchange Commission on June 22, 1998).. 10.13 Employment Agreement between MeriStar Hospitality Corporation and Bruce G. Wiles (incorporated by reference to Exhibit 10.10 to our Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission on March 2, 1999) . 10.14 Employment Agreement between MeriStar Hospitality Corporation and John Emery (incorporated by reference to Exhibit 10.9 to our Form 10-Q for the quarter ended September 30, 2000 filed with the Securities and Exchange Commission on November 13, 2000). 12 Schedule Regarding the Computation of Ratios. 21 Subsidiaries of the Company. 23 Consent of KPMG LLP. 24 Power of Attorney (see signature page). 67 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, MeriStar Hospitality Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MERISTAR HOSPITALITY CORPORATION BY: /s/ Paul W. Whetsell ------------------------------ Paul W. Whetsell Chief Executive Officer and Chairman of the Board Dated: March 5, 2002 KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Paul W. Whetsell, Bruce G. Wiles and John Emery, such person's true and lawful attorneys-in-fact and agents, with full power of substitution and revocation, for such person and in such person's name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this report filed pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, and to file the same with all exhibits thereto, and the other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and things requisite and necessary to be done, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report and the foregoing Power of Attorney have been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Paul W. Whetsell Chief Executive Officer and Chairman of the March 5, 2002 -------------------- Board of Directors (Principal Executive Officer) Paul W. Whetsell /s/ Steven D. Jorns Vice Chairman of the Board of Directors March 5, 2002 ------------------- Steven D. Jorns /s/ Bruce G. Wiles Chief Investment Officer and Director March 5, 2002 ------------------ Bruce G. Wiles /s/ John Emery President, Chief Operating Officer and Director March 5, 2002 -------------- John Emery
68 /s/ James A. Calder Chief Accounting Officer March 5, 2002 ------------------- James A. Calder /s/ J. Taylor Crandall Director March 5, 2002 ---------------------- J. Taylor Crandall /s/ James F. Dannhauser Director March 5, 2002 ----------------------- James F. Dannhauser /s/ William S. Janes Director March 5, 2002 -------------------- William S. Janes /s/ H. Cabot Lodge III Director March 5, 2002 ---------------------- H. Cabot Lodge III /s/ James R. Worms Director March 5, 2002 ------------------ James R. Worms ____________________ Director March ___, 2002 D. Ellen Shuman 69 EX-3.1.1 3 dex311.txt EXHIBIT 3.1.1 Exhibit 3.1.1 ARTICLES OF AMENDMENT OF SECOND ARTICLES OF AMENDMENT AND RESTATEMENT OF MERISTAR HOSPITALITY CORPORATION MeriStar Hospitality Corporation, a Maryland corporation, having its principal office in the State of Maryland (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Section I of Article V of the Corporation's Second Articles of Amendment and Restatement (as amended, the "Charter") is hereby deleted in its entirety and substituted in lieu thereof with the following section: SECTION 1: AUTHORIZED SHARES OF STOCK Authorized Shares. The total number of shares of stock of all classes that the Corporation has authority to issue is 200,000,000 shares, consisting of (a) 100,000,000 shares of common stock, par value $0.01 per share, and (b) 100,000,000 shares of preferred stock, par value $0.01 per share, to be issued from time to time with such rights, preferences and priorities as the Board of Directors shall designate; provided that such preferred stock shall not be used for anti-takeover purposes and shall not have super-majority voting rights. SECOND: These Articles of Amendment of the Charter as herein above set forth have been duly advised by the Corporation's board of directors and authorized and approved by the stockholders of the Corporation. THIRD: The information required by subsection (b)(2)(i) of ss.2-607 of the Corporations and Associations Article of the Annotated Code of Maryland has not been changed by these Articles of Amendment to the Charter. FOURTH: (a) The total number of shares of stock of all classes which the Corporation had authority to issue immediately prior to this amendment was 100,000,000 shares, consisting of 100,000,000 shares of Common Stock, $0.01 par value per share. The aggregate par value of all authorized shares of stock having par value was $1,000,000. (b) The total number of shares of all classes of stock which the Corporation has authority to issue pursuant to the foregoing amendment of the Charter is 100,000,000 shares of Common Stock, $0.01 par value per share and 100,000,000 shares of Preferred Stock, $0.01 par value per share. The aggregate par value of all authorized shares of stock having par value is $2,000,000. IN WITNESS WHEREOF, MeriStar Hospitality Corporation has caused these Articles of Amendment of the Second Articles of Amendment and Restatement to be signed in its name and on its behalf by the Chairman of the Board and Chief Executive Officer and attested to by its Secretary on this _____ day of July, 2000, and its Chairman of the Board and Chief Executive Officer acknowledges that these Articles of Amendment of the Second Articles of Amendment and Restatement are the corporate act and deed of the Corporation and, under the penalties for perjury, that the matters and facts set forth herein are true in all material respects to the best of his knowledge, information and belief. ATTEST: MERISTAR HOSPITALITY CORPORATION By:___________________________ By:__________________________________ John Emery, Secretary Paul W. Whetsell, Chairman of the Board and Chief Executive Officer 2 EX-3.1.2 4 dex312.txt EXHIBIT 3.1.2 EXHIBIT 3.1.2 ARTICLES OF AMENDMENT OF SECOND ARTICLES OF AMENDMENT AND RESTATEMENT OF MERISTAR HOSPITALITY CORPORATION MeriStar Hospitality Corporation, a Maryland corporation, having its principal office in the State of Maryland (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Section 2 of Article V of the Corporation's Second Articles of Amendment and Restatement (as amended, the "Charter") is hereby deleted in its entirety and substituted in lieu thereof with the following section: SECTION 2. REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK The Corporation shall seek to elect and maintain status as a REIT under the Code. Until such time as Article V shall have been amended in accordance with Section 2(E) of this Article V in order to terminate the REIT status of the Corporation, it shall be the duty of the Board of Directors to use commercially reasonable efforts to ensure that the Corporation satisfies the requirements for qualification as a REIT under the Code, including, but not limited to, the ownership of its outstanding stock, the nature of its assets, the sources of its income, and the amount and timing of its distributions to the Corporation's stockholders (the "Stockholders"). A. Restrictions on Transfer. ------------------------ 1. Definitions. For purposes of this Article V, the following terms ----------- shall have the following meanings set forth below: "Beneficial Ownership" shall mean ownership of shares of Equity Stock by a Person who would be treated as an owner of such shares of Equity Stock either directly or indirectly through the application of section 544 of the Code, as modified by section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns," "Beneficially Own," and "Beneficially Owned" shall have correlative meanings. "Beneficiary" shall mean, with respect to any Trust, one or more organizations described in each of section 170(b)(1)(A) (other than clauses (vii) or (viii) thereof) and section 170(c)(2) of the Code that are named by the Corporation as the beneficiary or beneficiaries of such Trust, in accordance with the provisions of Section 2(B)(1) of Article V hereof. "Board of Directors" shall mean the Board of Directors of the Corporation. 2 "Constructive Ownership" shall mean ownership of shares of Equity Stock or Manager Shares, as applicable, by a Person who would be treated as an owner of such shares of Equity Stock or Manager Shares either directly or indirectly through the application of section 318 of the Code, as modified by section 856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns," "Constructively Own," and "Constructively Owned" shall have correlative meanings. "Covered Person" shall mean (i) a Person, who or which (ii) Constructively Owns both outstanding shares of Equity Stock and Manager Shares; provided that (A) during such time as the Equity Stock is regularly traded, within the meaning of section 856(d)(3) of the Code, on the New York Stock Exchange, clause (ii) of this definition shall be applied in the case of Equity Stock by including only Persons who Constructively Own outstanding shares of Equity Stock in excess of 5% of the total outstanding shares of Equity Stock and (B) during such time as any class of Manager Shares of a Manager Entity that is a corporation are regularly traded, within the meaning of section 856(d)(3) of the Code, on the New York Stock Exchange or any other established securities market (within the meaning of section 856(d)(3) of the Code), clause (ii) of this definition shall be applied in the case of such class of Manager Shares by including only Persons who Constructively Own outstanding shares of such class of Manager Shares in excess of 5% of the total outstanding shares of such class of Manager Shares. A Person shall also be treated as a Covered Person if such Person does not Constructively Own any shares of Equity Stock, but a Transfer or attempted Transfer of shares of Equity Stock to such Person would have been prohibited by this Article V if such Person had already owned any shares of Equity Stock. "Equity Stock" shall mean Common Stock of the Corporation. The term "Equity Stock" shall include all shares of Common Stock of the Corporation that are held as Shares-in-Trust in accordance with the provisions of Section 2(B) of Article V hereof. "Initial Public Offering" means the sale of shares of Common Stock pursuant to the Corporation's first effective registration statement for such shares of Common Stock filed under the Securities Act of 1933, as amended. "Look-Through Entity" shall mean an entity (i) that is looked through for purposes of the "closely held" test in section 856(h) of the Code and (ii) each beneficial owner of which would satisfy the Ownership Limit if such beneficial owner owned directly its proportionate share of the shares of Equity Stock that are held by the Look-Through Entity, which, by way of example, could include (i) a pension trust that qualifies for look-through treatment under section 856(h)(3) of the Code, (ii) an entity that qualifies as a regulated investment company under section 851 of the Code, or (iii) a corporation. "Look-Through Ownership Limit" shall mean 15% of the number of outstanding shares of any class of Equity Stock. 3 "Manager Entity" shall mean any of (i) Doral International, Inc. or its successor, (ii) MeriStar Hotels & Resorts, Inc. or its successor or (iii) any other Person that has in effect any management agreement or similar service contract pursuant to which such Person manages or operates any lodging or related facility of the Corporation or any of its affiliates or subsidiaries. "Manager Ownership Limit" shall mean 34.9% of the total outstanding shares of Equity Stock. "Manager Share Percentage" shall mean (i) with respect to each Manager Entity that is a corporation, 35% of either (A) the total combined voting power of all Manager Shares entitled to vote or (B) the total outstanding Manager Shares and (ii) with respect to each Manager Entity that is not a corporation, 35% of the total interests in the assets or net profits of such Person. "Manager Shares" shall mean (i) outstanding shares of stock of any Manager Entity that is a corporation, including, without limitation, any such shares that are held in trust in accordance with such corporation's certificate of incorporation and (ii) interests in the assets or net profits of any Manager Entity that is not a corporation. "Market Price" on any date shall mean the average of the Closing Price for the five consecutive Trading Days ending on such date. The "Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Equity Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Equity Stock are listed or admitted to trading or, if the shares of Equity Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the shares of Equity Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the shares of Equity Stock selected by the Board of Directors. "MeriStar Hospitality Operating Partnership Agreement" shall mean the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as it may be amended or restated from time to time. "Non-Transfer Event" shall mean an event, other than a purported Transfer, that would cause any Person or one or more Covered Persons, as applicable, to Beneficially Own or Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit, the Ownership Limit or the Look-Through Ownership Limit, as 4 applicable, including, but not limited to, the granting of any option or entering into any agreement for the sale, transfer or other disposition of shares of Equity Stock or the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for shares of Equity Stock. "Operating Partnership" shall mean MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership. "Ownership Limit" shall mean 9.8% of the number of outstanding shares of any class of Equity Stock. "Permitted Transferee" shall mean any Person designated as a Permitted Transferee in accordance with the provisions of Section 2(B)(5) of Article V hereof. "Person" shall mean an individual, corporation, partnership, estate, trust, a portion of a trust permanently set aside for or to be used exclusively for the purposes described in section 642(c) of the Code, association, private foundation within the meaning of section 509(a) of the Code, joint stock company or other entity and also includes a "group" as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. "Prohibited Owner" shall mean, with respect to any purported Transfer or Non-Transfer Event, any Person who, but for the provisions of Section 2(A)(3) of Article V hereof, would own record title to shares of Equity Stock. "Restriction Termination Date" shall mean the first day after the date of the Initial Public Offering on which this Article V has been amended in accordance with Section 2(E) of this Article V in order to terminate the REIT status of the Corporation. "Shares-in-Trust" shall mean any shares of Equity Stock designated Shares-in-Trust pursuant to Section 2(A)(3) of Article V hereof. "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Equity Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Equity Stock are not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" (as a noun) shall mean any sale, transfer, gift, assignment, devise or other disposition of shares of Equity Stock, whether voluntary or involuntary, whether of record, constructively or beneficially and whether by operation of law or otherwise. "Transfer" (as a verb) shall have the correlative meaning. "Trust" shall mean any separate trust created pursuant to Section 2(A)(3) of Article V hereof and administered in accordance with the terms of Section 2(B) of Article V hereof, for the exclusive benefit of any Beneficiary. 5 "Trustee" shall mean any Person or entity unaffiliated with both the Corporation and any Prohibited Owner, such Trustee to be designated by the Corporation to act as trustee of any Trust, or any successor trustee thereof. 2. Restriction on Transfers. ------------------------ (a) Subject to Section 2(A)(8) of Article V hereof, and except as provided in Section 2(A)(7) of Article V hereof, from the date of the Initial Public Offering and prior to the Restriction Termination Date, (i) no Person shall Beneficially Own or Constructively Own outstanding shares of Equity Stock in excess of the Ownership Limit; provided, however, a Look-Through Entity may Beneficially Own or Constructively Own outstanding shares of Equity Stock in an amount not to exceed the Look-Through Ownership Limit, and (ii) any Transfer that, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Equity Stock in excess of the Ownership Limit or the Look-Through Ownership Limit, as applicable, shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would be otherwise Beneficially Owned or Constructively Owned by such Person in excess of the Ownership Limit or the Look-Through Ownership Limit, as applicable, and the intended transferee shall acquire no rights in such excess shares of Equity Stock. (b) Subject to Section 2(A)(8) of Article V hereof, and except as provided in Section 2(A)(7) of Article V hereof, from the date of the Initial Public Offering and prior to the Restriction Termination Date, any Transfer that, if effective, would result in shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of that number of shares which would be otherwise beneficially owned (determined without reference to any rules of attribution) by the transferee, and the intended transferee shall acquire no rights in such shares of Equity Stock. (c) From the date of the Initial Public Offering and prior to the Restriction Termination Date, any Transfer of shares of Equity Stock that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Code, and the intended transferee shall acquire no rights in such shares of Equity Stock. (d) From the date of the Initial Public Offering and prior to the Restriction Termination Date, any Transfer of shares of Equity Stock that, if effective, would cause the Corporation to Constructively Own 9.9% or more of the ownership interests in a tenant of the real property of the Corporation, the Operating Partnership or any direct or indirect subsidiary (including, without limitation, partnerships and limited liability companies) of the Corporation or the Operating Partnership (a "Subsidiary"), within the meaning of Section 856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would cause the Corporation to Constructively Own 9.9% or more of the ownership interests in a tenant of the Corporation's, the Operating Partnership's or a Subsidiary's real property, within the 6 meaning of Section 856(d)(2)(B) of the Code, and the intended transferee shall acquire no rights in such excess shares of Equity Stock. (e) Subject to Section 2(A)(8) of Article V hereof, and except as provided in Section 2(A)(7) of Article V hereof, on any date prior to the Restriction Termination Date, (i) one or more Covered Persons who or which Constructively Own Manager Shares in excess of the Manager Share Percentage may not Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit and (ii) any Transfer that, if effective, would result in one or more Covered Persons, who or which Constructively Own Manager Shares in excess of the Manager Share Percentage, Constructively Owning shares of Equity Stock in excess of the Manager Ownership Limit shall be void ab initio as to the Transfer of such shares of Equity Stock that would otherwise be Constructively Owned by any Covered Person or Persons as a result of such Transfer and would result in one or more Covered Persons Owning shares of Equity Stock in excess of the Manager Ownership Limit and the intended transferee or transferees shall acquire no rights in such shares of Equity Stock. (f) Subject to Section 2(A)(8) of Article V hereof, on any date prior to the Restriction Termination Date, (i) no Manager Entity shall Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit and (ii) any Transfer that, if effective, would result in any Manager Entity Constructively Owning shares of Equity Stock in excess of the Manager Ownership Limit shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would be otherwise Constructively Owned by such Person in excess of the Manager Ownership Limit and the intended transferee shall acquire no rights in such excess shares of Equity Stock. 3. Transfer to Trust. ----------------- (a) If, notwithstanding the other provisions contained in this Section 2(A) of Article V, at any time after the Initial Public Offering and prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event such that any Person would either Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit (or, in the case of a Look-Through Entity, either Beneficially Own or Constructively Own shares of Equity Stock in excess of the Look-Through Ownership Limit), then, (i) except as otherwise provided in Section 2(A)(7) of Article V hereof, the purported transferee shall acquire no right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the shares of Equity Stock Beneficially Owned or Constructively Owned by such Beneficial Owner or Constructive Owner, shall cease to own any right or interest) in such number of shares of Equity Stock which would cause such Beneficial Owner or Constructive Owner to Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit or the Look-Through Ownership Limit, as applicable, (ii) such number of shares of Equity Stock in excess of the Ownership Limit or the Look-Through Ownership Limit, as applicable (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of Section 2(B) of Article V hereof, transferred automatically and by operation of law to the Trust to be held in accordance with that Section 2(B) of Article V, and (iii) the Prohibited Owner shall 7 submit such number of shares of Equity Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be. (b) If, notwithstanding the other provisions contained in this Section 2(A) of Article V, at any time after the Initial Public Offering and prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event that, if effective, would (i) result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (ii) result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or (iii) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's, the Operating Partnership's or a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Code, then (x) the purported transferee shall not acquire any right or interest (or, in the case of a Non-Transfer Event, the Person holding record title of the shares of Equity Stock with respect to which such Non-Transfer Event occurred, shall cease to own any right or interest) in such number of shares of Equity Stock, the ownership of which by such purported transferee or record holder would (A) result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (B) result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or (C) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation's, the Operating Partnership's or a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Code, (y) such number of shares of Equity Stock (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of Section 2(B) of Article V hereof, transferred automatically and by operation of law to the Trust to be held in accordance with that Section 2(B) of Article V, and (z) the Prohibited Owner shall submit such number of shares of Equity Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be. (c) If, notwithstanding the other provisions contained in this Section 2(A) of this Article V, at any time prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event such that (i) one or more Covered Persons, who or which Constructively Own Manager Shares in excess of the Manager Share Percentage, would Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit, or (ii) any Manager Entity would Constructively Own shares of Equity Stock in 8 excess of the Manager Ownership Limit then, (x) except as otherwise provided in Section 2(A)(7) of Article V hereof, the purported transferee or transferees shall acquire no right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the shares of Equity Stock Constructively Owned by such Constructive Owner, shall cease to own any right or interest) in such number of shares of Equity Stock which would cause such Covered Person or Covered Persons to Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit or would cause such Manager Entity to Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit, as applicable, (y) such number of shares of Equity Stock in excess of the Manager Ownership Limit (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of Section 2(B) of Article V hereof, transferred automatically and by operation of law to the Trust to be held in accordance with that Section 2(B) of Article V, and (z) the Prohibited Owner or Prohibited Owners shall submit such number of shares of Equity Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be. 4. Remedies For Breach. If the Corporation, or its designees, shall ------------------- at any time determine in good faith that a Transfer has taken place in violation of Section 2(A)(2) of Article V hereof or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Equity Stock in violation of Section 2(A)(2) of Article V hereof, the Corporation shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or acquisition, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or acquisition. 5. Notice of Restricted Transfer. Any Person who acquires or ----------------------------- attempts to acquire shares of Equity Stock in violation of Section 2(A)(2) of Article V hereof, or any Person who owned shares of Equity Stock that were transferred to the Trust pursuant to the provisions of Section 2(A)(3) of Article V hereof, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or Non-Transfer Event, as the case may be, on the Corporation's status as a REIT. 6. Owners Required to Provide Information. From the date of the -------------------------------------- Initial Public Offering and prior to the Restriction Termination Date: (a) Every Beneficial Owner or Constructive Owner of more than 5%, or such lower percentages as required pursuant to regulations under the Code (currently Regulation (S)1.857-8(d)), of the outstanding shares of all classes of stock of the Corporation shall, within 30 days after January 1 of each year, provide to the Corporation a written statement or affidavit stating the name and address of such Beneficial Owner or Constructive Owner, the number of shares of Equity Stock Beneficially Owned or Constructively Owned, and a description of how such shares are held. Each such Beneficial Owner or Constructive Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership or Constructive Ownership on the Corporation's status as a REIT and to ensure compliance with the Manager Ownership Limit, the Ownership Limit or the Look-Through Ownership Limit, as applicable. 9 (b) Each Person who is a Beneficial Owner or Constructive Owner of shares of Equity Stock and each Person (including the stockholder of record) who is holding shares of Equity Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation a written statement or affidavit stating such information as the Corporation may request in order to determine the Corporation's status as a REIT and to ensure compliance with the Manager Ownership Limit, the Ownership Limit or the Look-Through Ownership Limit, as applicable. 7. Exception. The Ownership Limit or the Look-Through Ownership --------- Limit, as applicable, shall not apply to the acquisition of shares of Equity Stock by an underwriter that participates in a public offering of such shares for a period of 90 days following the purchase by such underwriter of such shares provided that the restrictions contained in Section 2(A)(2) of Article V hereof will not be violated following the distribution by such underwriter of such shares. The Manager Ownership Limit shall not apply to the acquisition of shares of Equity Stock or rights, options or warrants for, or securities convertible into, shares of Equity Stock, by an underwriter that participates in a public offering of such shares, rights, options, warrants or convertible securities for a period of 90 days following the purchase by such underwriter of such shares, rights, options, warrants or convertible securities provided that the underwriter, alone or in combination with one or more other Covered Persons, does not Constructively Own shares of Equity Stock in excess of the Manager Ownership Limit. In addition, the Board of Directors, in its sole discretion and upon receipt of a ruling from the Internal Revenue Service or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors as it may deem necessary or desirable in order to maintain the Corporation's status as a REIT, may exempt a Person from the Ownership Limit or the Look-Through Ownership Limit, if (i) such Person is not (A) an individual for purposes of Code Section 542(a)(2), as modified by Code Section 856(h) or (B) treated as the owner of such stock for purposes of Code Section 542(a)(2), as modified by Code Section 856(h) and the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no Person's Beneficial or Constructive Ownership of such shares of Equity Stock will violate Section 2(A)(2)(b), 2(A)(2)(c), 2(A)(2)(d), 2(A)(2)(e) or 2(A)(2)(f) of Article V hereof, (ii) such Person does not and represents that it will not Constructively Own shares of Equity Stock to the extent that such Constructive Ownership of Equity Stock would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would result in the Corporation Constructively Owning an interest in a tenant of the Corporation (or a tenant of any entity owned or controlled by the Corporation) that would cause the Corporation, the Operating Partnership or a Subsidiary to Constructively Own more than a 9.9% interest in such tenant), and the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact, and (iii) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 2(A)(2) through 2(A)(6) of this Article V) will result in such shares of Equity Stock that are in excess of the Ownership Limit or Look-Through Ownership Limit, as the case may be, being designated as Shares-in-Trust in accordance with the provisions of Section 2(A)(3) of Article V hereof. 10 8. New York Stock Exchange Transactions. Notwithstanding any provision ------------------------------------ contained herein to the contrary, nothing in these Articles of Amendment and Restatement shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange, Inc. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article V and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article. B. Shares-in-Trust. --------------- 1. Trust. Any shares of Equity Stock transferred to a Trust and ----- designated Shares-in-Trust pursuant to Section 2(A)(3) of Article V hereof shall be held for the exclusive benefit of the Beneficiary. The Corporation shall name a Beneficiary for each Trust within five days after the establishment thereof. Any transfer to a Trust, and subsequent designation of shares of Equity Stock as Shares-in-Trust, pursuant to Section 2(A)(3) of Article V hereof shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event that results in the transfer to the Trust. Shares-in-Trust shall remain issued and outstanding shares of Equity Stock of the Corporation and shall be entitled to the same rights and privileges on identical terms and conditions as are all other issued and outstanding shares of Equity Stock of the same class and series. When transferred to a Permitted Transferee in accordance with the provisions of Section 2(B)(5) of Article V hereof, such Shares-in-Trust shall cease to be designated as Shares-in-Trust. 2. Dividend Rights. The Trust, as record holder of Shares-in-Trust, --------------- shall be entitled to receive all dividends and distributions as may be authorized by the Board of Directors on such shares of Equity Stock and shall hold such dividends or distributions in trust for the benefit of the Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to the Trust the amount of any dividends or distributions received by it that (i) are attributable to any shares of Equity Stock designated Shares-in-Trust and (ii) the record date of which was on or after the date that such shares became Shares-in-Trust. The Corporation shall take all measures that it determines reasonably necessary to recover the amount of any such dividend or distribution paid to a Prohibited Owner, including, if necessary, withholding any portion of future dividends or distributions payable on shares of Equity Stock Beneficially Owned or Constructively Owned by the Person who, but for the provisions of Section 2(A)(3) of Article V hereof, would Constructively Own or Beneficially Own the Shares-in-Trust; and, as soon as reasonably practicable following the Corporation's receipt or withholding thereof, paying over to the Trust for the benefit of the Beneficiary the dividends so received or withheld, as the case may be. 3. Rights Upon Liquidation. In the event of any voluntary or ----------------------- involuntary liquidation, dissolution or winding-up of, or any distribution of the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled to receive, ratably with each other holder of shares of Equity Stock of the same class or series, that portion of the assets of the Corporation which is available for distribution to the holders of such class or series of shares of Equity Stock. The Trust shall distribute to the Prohibited Owner the 11 amounts received upon such liquidation, dissolution, or winding-up, or distribution; provided, however, that the Prohibited Owner shall not be entitled to receive amounts pursuant to this Section 2(B)(3) of Article V in excess of, in the case of a purported Transfer in which the Prohibited Owner gave value for shares of Equity Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the shares of Equity Stock and, in the case of a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be distributed to the Beneficiary. 4. Voting Rights. The Trustee shall be entitled to vote all ------------- Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of Equity Stock prior to the discovery by the Corporation that the shares of Equity Stock are Shares-in-Trust shall, subject to applicable law, be rescinded and be void ab initio with respect to such Shares-in-Trust and be recast by the Trustee, in its sole and absolute discretion; provided, however, that if the Corporation has already taken irreversible corporate action based on such vote, then the Trustee shall not have the authority to rescind and recast such vote. The Prohibited Owner shall be deemed to have given, as of the close of business on the business day prior to the date of the purported Transfer or Non-Transfer Event that results in the transfer to the Trust of shares of Equity Stock under Section 2(A)(3) of Article V hereof, an irrevocable proxy to the Trustee to vote the Shares-in-Trust in the manner in which the Trustee, in its sole and absolute discretion, desires. 5. Designation of Permitted Transferee. The Trustee shall have the ----------------------------------- exclusive and absolute right to designate a Permitted Transferee of any and all Shares-in-Trust. In an orderly fashion so as not to materially adversely affect the Market Price of the Shares-in-Trust, the Trustee shall designate any Person as Permitted Transferee, provided, however, that (i) the Permitted Transferee so designated purchases for valuable consideration (whether in a public or private sale) the Shares-in-Trust and (ii) the Permitted Transferee so designated may acquire such Shares-in-Trust without such acquisition resulting in a transfer to a Trust and the redesignation of such shares of Equity Stock so acquired as Shares-in-Trust under Section 2(A)(3) of Article V hereof. Upon the designation by the Trustee of a Permitted Transferee in accordance with the provisions of this Section 2(B)(5) of Article V, the Trustee shall (i) cause to be transferred to the Permitted Transferee that number of Shares-in-Trust acquired by the Permitted Transferee, (ii) cause to be recorded on the books of the Corporation that the Permitted Transferee is the holder of record of such number of shares of Equity Stock, (iii) cause the Shares-in-Trust to be canceled, and (iv) distribute to the Beneficiary any and all amounts held with respect to the Shares-in-Trust after making the payment to the Prohibited Owner pursuant to Section 2(B)(6) of Article V hereof. 6. Compensation to Record Holder of Shares of Equity Stock that Become ------------------------------------------------------------------- Shares-in-Trust. Any Prohibited Owner shall be entitled (following discovery of - --------------- the Shares-in-Trust and subsequent designation of the Permitted Transferee in accordance with Section 2(B)(5) of Article V hereof or following the acceptance of the offer to 12 purchase such shares in accordance with Section 2(B)(7) of Article V hereof) to receive from the Trustee following the sale or other disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a purported Transfer in which the Prohibited Owner gave value for shares of Equity Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the shares of Equity Stock, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer, and (ii) the price per share received by the Trustee from the sale or other disposition of such Shares-in-Trust in accordance with Section 2(B)(5) or 2(B)(6) of Article V hereof. Any amounts received by the Trustee in respect of such Shares-in-Trust and in excess of such amounts to be paid the Prohibited Owner pursuant to this Section 2(B)(6) shall be distributed to the Beneficiary in accordance with the provisions of Section 2(B)(5) of Article V hereof. Each Beneficiary and Prohibited Owner waive any and all claims that they may have against the Trustee and the Trust arising out of the disposition of Shares-in-Trust, except for claims arising out of the gross negligence or willful misconduct of, or any failure to make payments in accordance with this Section 2(B), by such Trustee or the Corporation. 7. Purchase Right in Shares-in-Trust. Shares-in-Trust shall be deemed --------------------------------- to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that created such Shares-in-Trust (or, in the case of devise, gift or Non-Transfer Event, the Market Price at the time of such devise, gift or Non-Transfer Event) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. Subject to Section 2(B)(6) of Article V hereof, the Corporation shall have the right to accept such offer for a period of ninety days after the later of (i) the date of the Non-Transfer Event or purported Transfer which resulted in such Shares-in-Trust and (ii) the date the Corporation determines in good faith that a Transfer or Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Corporation does not receive a notice of such Transfer or Non-Transfer Event pursuant to Section 2(A)(5) of Article V hereof. C. Remedies Not Limited. Subject to Section 2(A)(8) of Article V hereof, -------------------- nothing contained in this Article V shall limit the authority of the Corporation to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders by preservation of the Corporation's status as a REIT and to ensure compliance with the Manager Ownership Limit, the Ownership Limit or the Look-Through Ownership Limit, as applicable. D. Legend. Each certificate for shares of Equity Stock shall ------ substantially bear the following legend: "The shares of Common Stock represented by this certificate are subject to restrictions on transfer for the purpose of the Corporation's maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Code"). No Person may (i) Beneficially 13 Own or Constructively Own shares of Equity Stock in excess of 9.8% of the number of outstanding shares of any class of Equity Stock (or, in the case of a Look-Through Entity, in excess of 15% of the number of outstanding shares of any class of Equity Stock), (ii) beneficially own shares of Equity Stock that would result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (iii) Beneficially Own shares of Equity Stock that would result in the Corporation being "closely held" under Section 856(h) of the Code, or (iv) Constructively Own shares of Equity Stock that would cause the Corporation to Constructively Own 9.9% or more of the ownership interests in a tenant of the Corporation's, the Operating Partnership's or a Subsidiary's real property, within the meaning of Section 856(d)(2)(B) of the Code. In addition, one or more Covered Persons, who or which Constructively Own Manager Shares in excess of the Manager Share Percentage, may not Constructively Own shares of Equity Stock in excess of 34.9% of the total outstanding shares of Equity Stock and no Manager Entity may Constructively Own shares of Equity Stock in excess of 34.9% of the total outstanding shares of Equity Stock. Any Person who attempts to Beneficially Own or Constructively Own shares of Equity Stock in excess of the above limitations must immediately notify the Corporation in writing. If the restrictions above are violated, the shares of Equity Stock represented hereby will be transferred automatically and by operation of law to a Trust and shall be designated Shares-in-Trust. All capitalized terms in this legend have the meanings defined in the Corporation's charter, as the same may be further amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each Stockholder who so requests." Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability on request and without charge. E. Amendment. Notwithstanding any other provisions of the charter or the --------- Bylaws of the Corporation (and notwithstanding that some lesser percentage may be specified by law, the charter or the Bylaws of the Corporation), the provisions of this Article V shall not be amended, altered, changed or repealed without the affirmative vote of all of the Independent Directors and the holders of not less than two-thirds of the outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. SECOND: These Articles of Amendment of the Charter as hereinabove set forth have been duly advised by the Corporation's board of directors and authorized and approved by the stockholders of the Corporation. 14 IN WITNESS WHEREOF, MeriStar Hospitality Corporation has caused these Articles of Amendment of the Second Articles of Amendment and Restatement of the Corporation to be signed in its name and on its behalf by the Chairman of the Board and Chief Executive Officer and attested to by its Secretary on this 30th day of June, 2001, and its Chairman of the Board and Chief Executive Officer acknowledges that these Articles of Amendment of the Second Articles of Amendment and Restatement are the corporate act and deed of the Corporation and, under the penalties for perjury, that the matters and facts set forth herein are true in all material respects to the best of his knowledge, information and belief. ATTEST: MERISTAR HOSPITALITY CORPORATION By: By: -------------------------- ----------------------------------------- Christopher L. Bennett Paul W. Whetsell Secretary Chairman and Chief Executive Officer EX-4.2.2 5 dex422.txt EXHIBIT 4.2.2 EXHIBIT 4.2.2 ================================================================================ CAPSTAR HOTEL COMPANY TO IBJ SCHRODER BANK & TRUST COMPANY Trustee ---------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of March 20, 1998 ================================================================================ FIRST SUPPLEMENTAL INDENTURE, dated as of March 20, 1998 between CapStar Hotel Company, a Delaware corporation (herein called the "Company"), having its principal office at 1010 Wisconsin Avenue, N.W., Suite 650, Washington, D.C. 20007 and IBJ Schroder Bank & Trust Company, a banking corporation duly organized and existing under the laws of the State of New York, as Trustee under the Indenture referred to below (herein called the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company has heretofore executed and delivered to the Trustee a certain indenture, dated as of August 19, 1997 (herein called the "Indenture"), pursuant to which one series of senior subordinated notes of the Company (herein called the "Securities") were issued. All terms used in this First Supplemental Indenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture; WHEREAS, Section 9.2 of the Indenture provides that with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, the Company, when authorized by a resolution of its Board of Directors, and the Trustee may enter into an indenture supplemental to the Indenture; WHEREAS, the Company pursuant to the foregoing authority, proposes in and by this First Supplemental Indenture to amend the Indenture in certain respects with respect to the Securities of any series created before the date hereof; and WHEREAS, all things necessary to make this First Supplemental Indenture a valid agreement of the Company and the Trustee and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities as follows: 2 ARTICLE I PROVISIONS OF GENERAL APPLICATION Section 1.1 Definitions. The definition of "Senior Debt" in ----------- Section 1.1 of the Indenture is hereby amended by adding the following sentence at the end of such definition: For purposes of this definition, with respect to any person referred to in clause (v)(A) that is a lender to the Company under the Credit Agreement, "actual knowledge" shall mean only receipt by a lending officer of the Syndication Agent (as defined in the Credit Agreement) with significant responsibility for the Syndication Agent's loans under the Credit Agreement of written notice from a Responsible Officer (as defined in the Credit Agreement) of the Company stating or indicating through mathematical calculation that the incurrence of additional Indebtedness under the Credit Agreement is not permitted under this Indenture, which notice has not subsequently been withdrawn. ARTICLE II MISCELLANEOUS Section 2.1 Incorporation of Indenture. All the provisions of this -------------------------- First Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture; and the Indenture, as supplemented and amended by this First Supplemental Indenture, shall be read, taken and construed as one and the same instrument. Section 2.2 Application of First Supplemental Indenture. The ------------------------------------------- provisions and benefit of this First Supplemental Indenture shall be effective with respect to Securities outstanding prior to and after the execution hereof. Section 2.3 Headings. The headings of the Articles and Sections of -------- the First Supplemental Indenture are inserted for convenience of reference and shall not be deemed to be a part thereof. Section 2.4 Counterparts. This First Supplemental Indenture may be ------------ executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 3 Section 2.5 Conflict with Trust Indenture Act. If any provision --------------------------------- hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this First Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. Section 2.6 Successors and Assigns. All covenants and agreements ---------------------- in this First Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 2.7 Separability Clause. In case any provision in this ------------------- First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 2.8 Governing Law. The internal law of the State of New ------------- York shall govern and be used to construe this Supplemental Indenture. 4 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. CAPSTAR HOTEL COMPANY By: ________________________________ Name: Title: Attest: _______________________________ Title: IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By: ________________________________ Name: Title: Attest: _______________________________ Title: 5 STATE OF ) ) ss.: COUNTY OF ) On the day of 1998, before me personally came ,to me known, who, being by me duly sworn, did depose and say that he is of CAPSTAR HOTEL COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal is affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. ____________________________ Notary Public [NOTARIAL SEAL] My Commission Expires: STATE OF ) ) ss.: COUNTY OF ) On the day of 1998, before me personally came ,to me unknown, who, being by me duly sworn, did depose and say that he is of IBJ SCHRODER BANK & TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. ____________________________ Notary Public [NOTARIAL SEAL] My Commission Expires: EX-4.2.5 6 dex425.txt EXHIBIT 4.2.5 Exhibit 4.2.5 FOURTH SUPPLEMENTAL INDENTURE This "Supplemental Indenture," dated as of December 19, 2001, among each of the subsidiaries of MeriStar Hospitality Corporation, a Maryland corporation (the "Company"), indicated as signatories hereto (collectively, the "Guarantors" and each, a "Guarantor") and The Bank of New York (as successor to IBJ Schroder Bank & Trust Company), as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented, the "Indenture"), dated as of August 19, 1997 providing for the issuance of up to an aggregate principal amount of $200,000,000 of 8-3/4% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company is required to cause the Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantors shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantors hereby agree, jointly and severally with all other Guarantors, to guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture. The obligations of the Guarantors hereunder shall be junior and subordinated to the Senior Debt of such Guarantors in the manner and to the extent set forth in Article 11 of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantors, as such, shall have any liability for any obligations of the Company or any Guarantors under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. GUARANTORS: MERISTAR HOSPITALITY FINANCE CORP. II a Delaware corporation By: /s/ Christopher L. Bennett ----------------------------- Christopher L. Bennett Senior Vice President and General Counsel MT. ARLINGTON NEW JERSEY LLC a Delaware limited liability company By: AGH UPREIT LLC a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P. a Delaware limited partnership, its member By: MeriStar Hospitality Corporation a Maryland corporation, its general partner By: /s/ Christopher L. Bennett -------------------------- Christopher L. Bennett Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD. A Texas limited partnership By: AGH Secaucus LLC a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P. a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation a Maryland corporation, its general partner By: /s/ Christopher L. Bennett -------------------------------- Christopher L. Bennett Senior Vice President and General Counsel AGH SECAUCUS LLC a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P. a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation a Maryland corporation, its general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel TRUSTEE: THE BANK OF NEW YORK, as Trustee By: /s/ Ming J. Shiang --------------------- Name: Ming J. Shiang Title: Vice President EX-4.2.6 7 dex426.txt EXHIBIT 4.2.6 Exhibit 4.2.6 FIFTH SUPPLEMENTAL INDENTURE This "Supplemental Indenture," dated as of February 7, 2002, between the subsidiary of MeriStar Hospitality Corporation, a Maryland corporation (the "Company"), indicated as a signatory hereto (the "Guarantor") and The Bank of New York (as successor to IBJ Schroder Bank & Trust Company), as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented, the "Indenture"), dated as of August 19, 1997 providing for the issuance of up to an aggregate principal amount of $200,000,000 of 8-3/4% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company is required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other guarantors under the Indenture, to guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture. The obligations of the Guarantor hereunder shall be junior and subordinated to the Senior Debt of such Guarantor in the manner and to the extent set forth in Article 11 of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Company or any other guarantor under the Notes, any guarantees under the Indenture, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. GUARANTOR: MERISTAR HOSPITALITY FINANCE CORP. III a Delaware corporation By: /s/ Christopher L. Bennett -------------------------------- Christopher L. Bennett Senior Vice President and General Counsel TRUSTEE: THE BANK OF NEW YORK, as Trustee By: /s/ Ming J. Shiang ------------------------------ Name: Ming J. Shiang Title: Vice President EX-4.4.2 8 dex442.txt EXHIBIT 4.4.2 Exhibit 4.4.2 SECOND SUPPLEMENTAL INDENTURE This "Supplemental Indenture," dated as of December 19, 2001, among each of the subsidiaries of MeriStar Hospitality Corporation, a Maryland corporation (the "Company"), indicated as signatories hereto (collectively, the "Guarantors" and each, a "Guarantor") and The Bank of New York (as successor to IBJ Whitehall Bank & Trust Company), as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented, the "Indenture"), dated as of March 18, 1999 providing for the issuance of up to an aggregate principal amount of $55,000,000 of 8-3/4% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company is required to cause the Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantors shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantors hereby agree, jointly and severally with all other Guarantors, to guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture. The obligations of the Guarantors hereunder shall be junior and subordinated to the Senior Debt of such Guarantors in the manner and to the extent set forth in Article 11 of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantors, as such, shall have any liability for any obligations of the Company or any Guarantors under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. GUARANTORS: MERISTAR HOSPITALITY FINANCE CORP. II, a Delaware corporation By: /s/ Christopher L. Bennett ------------------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By: /s/ Christopher L. Bennett -------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD., A Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By: /s/ Christopher L. Bennett ----------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel TRUSTEE: THE BANK OF NEW YORK, as Trustee By: /s/ Ming J. Shiang ----------------------------------------------- Name: Ming J. Shiang Title: Vice President EX-4.4.3 9 dex443.txt EXHIBIT 4.4.3 Exhibit 4.4.3 THIRD SUPPLEMENTAL INDENTURE This "Supplemental Indenture," dated as of February 7, 2002, between the subsidiary of MeriStar Hospitality Corporation, a Maryland corporation (the "Company"), indicated as a signatory hereto (the "Guarantor") and The Bank of New York (as successor to IBJ Whitehall Bank & Trust Company), as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented, the "Indenture"), dated as of March 18, 1999 providing for the issuance of up to an aggregate principal amount of $55,000,000 of 8-3/4% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company is required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other guarantors under the Indenture, to guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture. The obligations of the Guarantor hereunder shall be junior and subordinated to the Senior Debt of such Guarantor in the manner and to the extent set forth in Article 11 of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Company or any other guarantor under the Notes, any guarantees under the Indenture, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. GUARANTOR: MERISTAR HOSPITALITY FINANCE CORP. III, a Delaware corporation By: /s/ Christopher L. Bennett ----------------------------- Christopher L. Bennett Senior Vice President and General Counsel TRUSTEE: THE BANK OF NEW YORK, as Trustee By: /s/ Ming J. Shiang ---------------------------- Name: Ming J. Shiang Title: Vice President EX-4.5.1 10 dex451.txt EXHIBIT 4.5.1 Exhibit 4.5.1 (Face of Note) 9% [Series A] [Series B] Senior Notes due 2008 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. promise to pay to ___________________________, or registered assigns, the principal sum of ________________________________ Dollars on January 15, 2008. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: __________________________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: _____________________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. By: ____________________________ Name: Title: Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory (Back of Note) 9% [Series A] [Series B] Senior Notes due 2008 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) under the Securities Act or any successor provisions thereunder) after THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company") and MeriStar Hospitality Finance Corp., a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 9% [Series A] [Series B] Senior Note due 2008 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreements referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each January 15 and July 15 commencing July 15, 2001 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of this Note. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 and July 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. INDENTURE. The Company issued the Notes under an Indenture dated as of January 26, 2001 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. OPTIONAL REDEMPTION. Prior to January 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. SECURITY. The Notes will be senior, unsecured obligations of the Issuers. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. [SERIES A NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's Social Security or tax I.D. No.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _____________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _____________________________ Your Signature: (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* _______________ ____________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [_] Section 4.10 [_] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:______________ Your Signature:__________________________________ (Sign exactly as your name appears on the Note) Tax Identification No:___________________________ Signature Guarantee:*/___________________________ __________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) January 26, 2001, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or ___ pursuant to and in compliance with Rule 144A under the Securities Act; or ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or ___ pursuant to an effective registration statement under the Securities Act; or ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: ___________ Signed:_______________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:________________________________________ TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________________ Signed:_________________________ NOTICE: To be executed by an executive officer SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made:
Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of Amount of this decrease Trustee or Note Exchange this Global Note Global Note (or increase) Custodian -------- ---------------- ----------- ----------- ---------
(Face of Note) 9 1/8% [Series C] [Series D] Senior Notes due 2011 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. promise to pay to _____________________________, or registered assigns, the principal sum of __________________________________ Dollars on January 15, 2011. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: ________________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: ____________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. By: ____________________________ Name: Title: Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory (Back of Note) 9 1/8% [Series C] [Series D] Senior Notes due 2011 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company") and MeriStar Hospitality Finance Corp., a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 9 1/8% [Series C] [Series D] Senior Note due 2011 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreements referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each January 15 and July 15 commencing July 15, 2001 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of this Note. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 and July 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. INDENTURE. The Company issued the Notes under an Indenture dated as of January 26, 2001 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. OPTIONAL REDEMPTION. Prior to January 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109 1/8% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. SECURITY. The Notes will be senior, unsecured obligations of the Issuers. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. [SERIES C NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's Social Security or tax I.D. No.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: ____________________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* ______________ ________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:___________ Your Signature:_________________________________ (Sign exactly as your name appears on the Note) Tax Identification No:__________________________ Signature Guarantee:*/__________________________ _______________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) January 26, 2001, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or ___ pursuant to and in compliance with Rule 144A under the Securities Act; or ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or ___ pursuant to an effective registration statement under the Securities Act; or ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: ___________ Signed:______________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:_____________________________________ TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ Signed:_________________________ NOTICE: To be executed by an executive officer SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made: Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of Amount of this decrease Trustee or Note Exchange this Global Note Global Note (or increase) Custodian -------- ---------------- ----------- ------------- --------- EX-4.5.2 11 dex452.txt EXHIBIT 4.5.2 Exhibit 4.5.2 FIRST SUPPLEMENTAL INDENTURE This "Supplemental Indenture", dated as of December 19, 2001, among MeriStar Hospitality Operating Partnership (the "Company"), MeriStar Hospitality Finance Corp. ("MeriStar Finance," and together with the Company, the "Issuers"), MeriStar Hospitality Corporation (the "Parent"), the Subsidiary Guarantors who are parties to the indenture referred to below, each of the subsidiaries of the Company, indicated as New Guarantors on the signature pages hereto (collectively, the "Guarantors" and each a "Guarantor") and U.S. Bank Trust National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Issuers, the Parent and the Subsidiary Guarantors parties thereto, have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of January 26, 2001, providing for the issuance of up to an aggregate principal amount of $300,000,000 of 9% Senior Notes due 2008 (the "2008 Notes") and up to an aggregate principal amount of $200,000,000 of 9-1/8% Senior Notes due 2011 (the "2011 Notes" and, together with the 2008 Notes, the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company and the Parent are required to cause the Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantors shall unconditionally guarantee all of the Issuers' Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; WHEREAS, the Issuers intend to add Covenants to the Indenture to provide additional rights and benefits to the Holders of the Notes; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AMENDMENTS TO THE INDENTURE. 2.1 Section 1.1 of the Indenture is hereby amended by adding the following definition after the definition of "Credit Agreement": "Credit Agreement - 4.12A and 4.18A" means the Second Amended and Restated Credit Agreement, dated as of August 3, 1998 and subsequently amended, 2 entered into between and among the Company and the lenders party thereto, and any other senior debt facilities or commercial paper facilities with banks or other institutional lenders providing for borrowings, receivables financings (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case as amended, modified, supplemented, restructured, renewed, restated or extended, from time to time on one or more occasions; provided that the term "Credit Agreement - 4.12 and 4.18" shall not include Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities." 2.2 Article 4 of the Indenture is amended by adding the following Sections 4.12A and 4.18A after Section 4.12 and 4.18, respectively: 4.12A. LIMITATION ON LIENS. (a) Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, secure any Indebtedness under any Credit Agreement - 4.12A and 4.18A or any other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 by a Lien (other than a Stock Pledge) unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with the Indebtedness under such Credit Agreement - 4.12A and 4.18A or any such other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 (and any other senior Indebtedness outstanding with similar provisions requiring the Company to equally and ratably secure such Indebtedness) for so long as the Indebtedness under any such Credit Agreement - 4.12A and 4.18A or any other such Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 is secured by such Lien; provided, however, that the Company, the Parent or any of their respective Restricted Subsidiaries may secure with one or more Liens up to $300 million aggregate principal amount of Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities," without making provision to equally and ratably secure the Notes. (b) Notwithstanding anything to the contrary, (i) the provisions of this section shall not be applicable in the event, and only for so long as, the Notes are rated Investment Grade and no Default or Event of Default has occurred and is continuing and (ii) the provisions of this section shall not be applicable in the event Section 4.12 becomes effective. (c) If a Covenant Defeasance or a Legal Defeasance occurs pursuant to Article VIII, the Issuers and Guarantors shall be released from all obligations, if any, contained in this Section 4.12A. 3 4.18A. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company, the Parent and their respective Restricted Subsidiaries shall maintain Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of the Company's, the Parent's and their respective Restricted Subsidiaries' senior Unsecured Indebtedness (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the second paragraph of Section 4.9 or otherwise); provided, however, that this Section 4.18A shall not prohibit the incurrence of Secured Indebtedness under the Credit Agreement - 4.12A and 4.18A; and provided further, however, that, to the extent that the Notes are secured by any assets equally and ratably with any other Indebtedness pursuant to Section 4.12 or Section 4.12A hereof, the related Lien or Liens on such assets securing the Notes and such other Indebtedness shall be ignored when determining the amount of Total Unencumbered Assets and senior Unsecured Indebtedness for purposes of this Section 4.18A. (b) Notwithstanding anything to the contrary, the provisions of this section shall not be applicable in the event Section 4.18 becomes effective. (c) If a Covenant Defeasance or a Legal Defeasance occurs pursuant to Article VIII, the Issuers and Guarantors shall be released from all obligations, if any, contained in this Section 4.18A. 3. AGREEMENT TO GUARANTEE. The Guarantors hereby agrees, jointly and severally with all other Guarantors, to guarantee the Issuers' obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture. 4. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 5. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 4 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Issuers: ------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: MeriStar Hospitality Corporation, as general partner By: /s/ Christopher L. Bennett --------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR HOSPITALITY FINANCE CORP., a Delaware corporation By: /s/ Christopher L. Bennett --------------------------- Christopher L. Bennett Senior Vice President and General Counsel Parent: ------ MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Christopher L. Bennett -------------------------- Christopher L. Bennett Senior Vice President and General Counsel 5 Subsidiary Guarantors: ---------------------- MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------- Christopher L. Bennett Senior Vice President and General Counsel AGH PSS I, INC., a Delaware corporation By: /s/ Christopher L. Bennett -------------------------- Christopher L. Bennett Senior Vice President and General Counsel AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, member By: /s/ Christopher L. Bennett ----------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 6 CAPSTAR HOUSTON SW PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR MEDALLION DALLAS PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 7 CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR MIDLAND PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR DALLAS PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 8 CAPSTAR MOCKINGBIRD PARTNERS, L.P. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR SCHAUMBURG COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR BELLEVUE COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR CLEVELAND COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 9 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR LATHAM COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR VIRGINIA COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR BALLSTON COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner 10 By: /s/ Christopher L. Bennett ----------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR SALT LAKE COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR ATLANTA GP COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel EQUISTAR ATLANTA LP COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel 11 CAPSTAR WASHINGTON COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR CS COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR SAN PEDRO COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 12 CAPSTAR LOUISVILLE COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR LEXINGTON COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 13 CAPSTAR CHERRY HILL COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR FRAZER COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR KC COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 14 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR GEORGETOWN COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR JEKYLL COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 15 CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR TUCSON COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR MESA COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR MORRISTOWN COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 16 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR INDIANAPOLIS COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR CHICAGO COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel 17 CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR HARTFORD COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR CROSS KEYS COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR COLUMBIA COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 18 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR ROLAND PARK COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Christopher L. Bennett Senior Vice President and General Counsel CAPSTAR FORRESTAL COMPANY, L.L.C. By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 19 MERISTAR SANIBEL INN COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR SUNDIAL BEACH COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR SAFETY HARBOR COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR SEASIDE INN COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 20 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR PLANTATION SHOPPING CENTER COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR SONG OF THE SEA COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 21 MERISTAR SHIRLEY'S PARCEL COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR SANIBEL GOLF COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR MARCO ISLAND COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR S.S. PLANTATION COMPANY, LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 22 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR HOTEL (CALGARY AIRPORT) LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR HOTEL (VANCOUVER) LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 23 MERISTAR HOTEL (SURREY) LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR HOTEL (BURNABY) LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel AGH 75 ARLINGTON HEIGHTS LLC By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 24 MERISTAR SANTA BARBARA, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR CATHEDRAL CITY, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR LAJV, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 25 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 26 MDV LIMITED PARTNERSHIP, a Texas limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 27 LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------- Christopher L. Bennett Senior Vice President and General Counsel COCOA BEACH HOTELS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 28 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel MERISTAR LP, INC., a Nevada corporation By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member 29 By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Christopher L. Bennett Senior Vice President and General Counsel MERISTAR HOTEL LESSEE, INC. By: /s/ Christopher L. Bennett ------------------------------- Christopher L. Bennett Senior Vice President and General Counsel New Guarantors: -------------- MERISTAR HOSPITALITY FINANCE CORP. II, a Delaware corporation By: /s/ Christopher L. Bennett ------------------------------- Christopher L. Bennett Senior Vice President and General Counsel MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its member 30 By: MeriStar Hospitality Corporation, a Maryland corporation, its General partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD., A Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its General partner By: /s/ Christopher L. Bennett ---------------------------- Christopher L. Bennett Senior Vice President and General Counsel AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, its managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By: /s/ Christopher L. Bennett --------------------------------- Christopher L. Bennett Senior Vice President and General Counsel 31 Trustee: ------- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ Adam Berman ------------------- Adam Berman Trust Officer EX-4.5.3 12 dex453.txt EXHIBIT 4.5.3 Exhibit 4.5.3 SECOND SUPPLEMENTAL INDENTURE This "Supplemental Indenture", dated as of February 7, 2002, between the subsidiary of MeriStar Hospitality Operating Partnership, a Delaware limited partnership, (the "Company"), indicated as the New Guarantor on the signature pages hereto (the "Guarantor") and U.S. Bank Trust National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company, MeriStar Hospitality Finance Corp. ("MeriStar Finance," and together with the Company, the "Issuers"), MeriStar Hospitality Corporation (the "Parent"), the Subsidiary Guarantors who are parties to the indenture referred to below, have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of January 26, 2001, providing for the issuance of up to an aggregate principal amount of $300,000,000 of 9% Senior Notes due 2008 (the "2008 Notes") and up to an aggregate principal amount of $200,000,000 of 9-1/8% Senior Notes due 2011 (the "2011 Notes" and, together with the 2008 Notes, the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company and the Parent are required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Issuers' Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other guarantors under the Indenture, to guarantee the Issuers' obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of any Issuer or any other guarantor under the Notes, any guarantees under the Indenture, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their 2 creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. New Guarantor: ------------- MERISTAR HOSPITALITY FINANCE CORP. III, a Delaware corporation By: /s/ Christopher L. Bennett ----------------------------------------- Christopher L. Bennett Senior Vice President and General Counsel Trustee: ------- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ Adam Berman ----------------------------------------- Name: Adam Berman Title: Trust Officer EX-4.6 13 dex46.txt EXHIBIT 4.6 Exhibit 4.6 EXECUTION COPY - -------------------------------------------------------------------------------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II, MERISTAR HOSPITALITY CORPORATION and SUBSIDIARY GUARANTORS $250,000,000 10 1/2% SENIOR NOTES DUE 2009 SERIES A AND SERIES B INDENTURE Dated as of December 19, 2001 U.S. BANK TRUST NATIONAL ASSOCIATION Trustee - -------------------------------------------------------------------------------- Table of Contents
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1 SECTION 1.1. DEFINITIONS .............................................. 1 SECTION 1.2. OTHER DEFINITIONS ........................................ 16 SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT ........ 17 SECTION 1.4. RULES OF CONSTRUCTION .................................... 17 SECTION 1.5. ONE CLASS OF SECURITIES .................................. 18 ARTICLE 2 THE NOTES ....................................................... 18 SECTION 2.1. FORM AND DATING .......................................... 18 SECTION 2.2. EXECUTION AND AUTHENTICATION ............................. 19 SECTION 2.3. REGISTRAR AND PAYING AGENT ............................... 20 SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST ...................... 20 SECTION 2.5. HOLDERS LISTS ............................................ 21 SECTION 2.6. TRANSFER AND EXCHANGE .................................... 21 SECTION 2.7. REPLACEMENT NOTES ........................................ 22 SECTION 2.8. OUTSTANDING NOTES ........................................ 22 SECTION 2.9. TREASURY NOTES ........................................... 22 SECTION 2.10. TEMPORARY NOTES ......................................... 22 SECTION 2.11. CANCELLATION ............................................ 23 SECTION 2.12. DEFAULTED INTEREST ...................................... 23 SECTION 2.13. RECORD DATE ............................................. 23 SECTION 2.14. CUSIP NUMBER ............................................ 23 SECTION 2.15. RESTRICTIVE LEGENDS ..................................... 24 SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY ............... 26 SECTION 2.17. SPECIAL TRANSFER PROVISIONS ............................. 27 ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE .............................. 29 SECTION 3.1. NOTICES TO TRUSTEE ....................................... 29 SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED ........... 30 SECTION 3.3. NOTICE OF REDEMPTION ..................................... 30 SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION ........................... 31 SECTION 3.5. DEPOSIT OF REDEMPTION PRICE .............................. 31 SECTION 3.6. NOTES REDEEMED IN PART ................................... 32 SECTION 3.7. OPTIONAL REDEMPTION ...................................... 32 SECTION 3.8. MANDATORY REDEMPTION ..................................... 33 SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS ...... 33
ARTICLE 4 COVENANTS ................................................................................ 35 SECTION 4.1. PAYMENT OF NOTES ................................................................. 35 SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY .................................................. 35 SECTION 4.3. SEC REPORTS ...................................................................... 36 SECTION 4.4. COMPLIANCE CERTIFICATE ........................................................... 36 SECTION 4.5. TAXES ............................................................................ 37 SECTION 4.6. STAY, EXTENSION AND USURY LAWS ................................................... 37 SECTION 4.7. LIMITATION ON RESTRICTED PAYMENTS ................................................ 37 SECTION 4.8. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES ................................................ 41 SECTION 4.9. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF CERTAIN CAPITAL STOCK ............................................................ 42 SECTION 4.10. LIMITATION ON SALE OF ASSETS ..................................................... 44 SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES ....................................... 46 SECTION 4.12. LIMITATION ON LIENS .............................................................. 47 SECTION 4.13. CORPORATE EXISTENCE .............................................................. 47 SECTION 4.14. CHANGE OF CONTROL ................................................................ 47 SECTION 4.15. SUBSIDIARY GUARANTEES ............................................................ 48 SECTION 4.16. LINE OF BUSINESS ................................................................. 49 SECTION 4.17. PAYMENTS FOR CONSENT ............................................................. 49 SECTION 4.18. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS ........................................................................... 49 SECTION 4.19. [intentionally left blank] ....................................................... 49 SECTION 4.20. CERTAIN COVENANTS OF MERISTAR FINANCE ............................................ 49 SECTION 4.21. COVENANTS UPON ATTAINMENT AND MAINTENANCE OF AN INVESTMENT GRADE RATING ..................................................................... 49 ARTICLE 5 SUCCESSORS ............................................................................... 50 SECTION 5.1 WHEN THE COMPANY MAY MERGE, ETC .................................................. 50 SECTION 5.2. SUCCESSOR SUBSTITUTED ............................................................ 51 ARTICLE 6 DEFAULTS AND REMEDIES .................................................................... 51 SECTION 6.1. EVENTS OF DEFAULT ................................................................ 51 SECTION 6.2. ACCELERATION ..................................................................... 53 SECTION 6.3. OTHER REMEDIES ................................................................... 53 SECTION 6.4. WAIVER OF PAST DEFAULTS .......................................................... 54 SECTION 6.5. CONTROL BY MAJORITY .............................................................. 54 SECTION 6.6. LIMITATION ON SUITS .............................................................. 54 SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT ............................................. 55 SECTION 6.8. COLLECTION SUIT BY TRUSTEE ....................................................... 55 SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM ................................................. 55 SECTION 6.10. PRIORITIES ....................................................................... 56 SECTION 6.11. UNDERTAKING FOR COSTS ............................................................ 56
ARTICLE 7 TRUSTEE .............................................................. 56 SECTION 7.1. DUTIES OF TRUSTEE ................................................. 56 SECTION 7.2. RIGHTS OF TRUSTEE ................................................. 57 SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE ...................................... 58 SECTION 7.4. TRUSTEE'S DISCLAIMER .............................................. 59 SECTION 7.5. NOTICE OF DEFAULTS ................................................ 59 SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS ..................................... 59 SECTION 7.7. COMPENSATION AND INDEMNITY ........................................ 59 SECTION 7.8. REPLACEMENT OF TRUSTEE ............................................ 60 SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC .................................. 61 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION .................................... 61 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY ................ 62 ARTICLE 8 DISCHARGE OF INDENTURE ............................................... 62 SECTION 8.1. DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE NOTES .......... 62 SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE .................................... 63 SECTION 8.3. COVENANT DEFEASANCE ............................................... 63 SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE ........................ 64 SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS .................................... 66 SECTION 8.6. REPAYMENT TO THE ISSUERS .......................................... 66 SECTION 8.7. REINSTATEMENT ..................................................... 67 ARTICLE 9 AMENDMENTS ........................................................... 67 SECTION 9.1. WITHOUT CONSENT OF HOLDERS ........................................ 67 SECTION 9.2. WITH CONSENT OF HOLDERS ........................................... 68 SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT ............................... 69 SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS ................................. 69 SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES .................................. 70 SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC ................................... 70 ARTICLE 10 GUARANTEES .......................................................... 70 SECTION 10.1. GUARANTEES ....................................................... 70 SECTION 10.2. WHEN A SUBSIDIARY GUARANTOR MAY MERGE, ETC ....................... 71 SECTION 10.3. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY ................... 72 SECTION 10.4. RELEASE OF A GUARANTOR ........................................... 73 ARTICLE 11 MISCELLANEOUS ....................................................... 73 SECTION 11.1. TRUST INDENTURE ACT CONTROLS ..................................... 73
SECTION 11.2. NOTICES....................................................... 73 SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS................... 75 SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............ 75 SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION................. 75 SECTION 11.6. RULES BY TRUSTEE AND AGENTS................................... 76 SECTION 11.7. LEGAL HOLIDAYS................................................ 76 SECTION 11.8. RECOURSE AGAINST OTHERS....................................... 76 SECTION 11.9. DUPLICATE ORIGINALS........................................... 76 SECTION 11.10. GOVERNING LAW................................................. 76 SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS................. 77 SECTION 11.12. SUCCESSORS.................................................... 77 SECTION 11.13. SEVERABILITY.................................................. 77 SECTION 11.14. COUNTERPART ORIGINALS......................................... 77 SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC.............................. 77
EXHIBITS Exhibit A Form of Note Exhibit B Form of Supplemental Indenture Exhibit C Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S INDENTURE dated as of December 19, 2001 among MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership (the "Company"), MeriStar Hospitality Finance Corp. II, a Delaware corporation ("MeriStar Finance"; and collectively with the Company, the "Issuers"), MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors (as defined herein) and U.S. Bank Trust National Association, as trustee (the "Trustee"). Each of the parties hereto agrees as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 10 1/2 % Series A Senior Notes due 2009 of the Issuers (the "Initial Notes"), and the 10 1/2% Series B Senior Notes due 2009 of the Issuers if and when issued in the Exchange Offer (the "Exchange Notes," and, together with the Initial Notes, the "Notes"). ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "Adjusted Consolidated Net Tangible Assets" means the total amount of the assets of the Parent, the Company and their respective Restricted Subsidiaries on a consolidated basis (less applicable depreciation, amortization and other valuation reserves), except to the extent resulting from write-ups of capital assets (excluding write-ups in connection with accounting for acquisitions in conformity with GAAP), after deducting from the total amount of assets: (1) all of the current liabilities of the Parent, the Company and their respective Restricted Subsidiaries on a consolidated basis, excluding intercompany items, and (2) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the most recent quarterly or annual consolidated balance sheet of the Parent, the Company and their respective Restricted Subsidiaries, prepared in conformity with GAAP and filed with the SEC or otherwise provided to the Trustee. "Adjusted Total Assets" means, for any Person, the Total Assets for such Person and its Restricted Subsidiaries as of any Transaction Date, as adjusted to reflect the application of the proceeds of the incurrence of Indebtedness and issuance of Disqualified Stock on such Transaction Date. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. 2 "Agent" means any Registrar, Paying Agent or co-Registrar or agent for service of notices and demands. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease (other than operating leases in respect of facilities which are ancillary to the operation of the Company's, the Parent's or a Restricted Subsidiary's Hospitality-Related Business properties or assets), conveyance or other disposition of any property or assets of the Company, the Parent or any Restricted Subsidiary (including by way of a sale and leaseback transaction), (ii) the issuance or sale of Equity Interests of any of the Company's or the Parent's Restricted Subsidiaries or (iii) any Event of Loss, other than, with respect to clauses (i), (ii) and (iii) above, the following: (1) the sale or disposition of personal property held for sale in the ordinary course of business, (2) the sale or disposal of damaged, worn out or other obsolete property in the ordinary course of business as long as such property is no longer necessary for the proper conduct of the business of the Company, the Parent or such Restricted Subsidiary, as applicable, (3) the transfer of assets by the Company or the Parent to one of its respective Restricted Subsidiaries or by a Restricted Subsidiary of the Company or the Parent to the Company or the Parent or to another Restricted Subsidiary of the Company or the Parent, (4) (A) the exchange of one or more lodging facilities and related assets held by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent for one or more lodging facilities and related assets of any person or entity, provided that if any other assets are received by the Company, the Parent or such Restricted Subsidiary in such exchange, such other consideration is in cash or Cash Equivalents; provided, further, that such cash or Cash Equivalent consideration shall be deemed to be cash proceeds of an Asset Sale for the purposes of calculating "Net Proceeds" and applying Net Proceeds, if any, as described in Section 4.10 hereof, or (B) the issuance of OP Units or Preferred OP Units as full or partial consideration for the acquisition of lodging facilities and related assets, provided that the Board of Directors of the Parent has determined that the terms of any exchange or acquisition are fair and reasonable and that the fair market value of the assets received by the Company, the Parent or such Restricted Subsidiary, as set forth in an opinion of a Qualified Appraiser, are equal to or greater than the fair market value of the assets exchanged, sold or issued by the Company, the Parent or such Restricted Subsidiary of the Company or the Parent, (5) any Restricted Payment, permitted under Section 4.7 hereof, (6) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or the Parent in compliance with the provisions of Section 4.14 and Article V hereof, (7) the conversion of or foreclosure or any mortgage or note, provided that the Company, the Parent or a Restricted Subsidiary of the Company or the Parent receives the real property underlying any such mortgage or note or (8) any transaction or series of related transactions that would otherwise be an Asset Sale where the fair market value of the assets, sold, leased, conveyed or otherwise disposed of was less than $5.0 million or an Event of Loss or related series of Events of Loss pursuant to which the aggregate value of property or assets involved in such Event of Loss or Events of Loss is less than $5.0 million. "Assumed Indebtedness" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Subsidiary of such specified Person and (ii) Indebtedness encumbering any asset 3 acquired by such specified Person, in each case excluding Indebtedness incurred in connection with, or in contemplation of such other Person merging with or into or becoming a Subsidiary of, such specified Person. "Board of Directors" means the Board of Directors of the Parent or any authorized committee of the Board of Directors. "Business Day" means any day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York or the city in which the Corporate Trust Office is located are authorized or obliged by law or executive order to close. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. "Cash Equivalents" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (ii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers acceptances with maturities not exceeding six months from the date of acquisition and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i) and (ii) entered into with any financial institution meeting the qualifications specified in clause (ii) above, (iv) commercial paper or commercial paper master notes having a rating of at least P-2 or the equivalent thereof by Moody's Investors Service, Inc. or at least A-2 or the equivalent thereof by Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition, (v) money market mutual funds that provide daily purchase and redemption features, and (vi) corporate debt with maturities of not greater than six months and with a rating of at least A or the equivalent thereof by Standard & Poor's Corporation and a rating of at least A2 or the equivalent thereof by Moody's Investors Service, Inc. "Change of Control" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the Company's or the Parent's assets to any person or group (as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company or the Parent, (iii) the acquisition by any person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of a direct or indirect interest in more than 50% of the ownership of the Parent or, other than by the Parent, of the Company, or the voting power of the voting stock of the Parent or, other than by the Parent, the Company's general partner interest, by way of purchase, merger or consolidation or otherwise (other than a creation of a holding 4 company that does not involve a change in the beneficial ownership of the Company or the Parent as a result of such transaction), (iv) the merger or consolidation of the Company or the Parent with or into another Person or the merger of another Person into the Company or the Parent with the effect that immediately after such transaction the stockholders of the Company or the Parent immediately prior to such transaction hold, directly or indirectly, less than 50% of the total voting power of all securities generally entitled to vote in the election of directors, managers, or trustees, or no longer hold the general partner interest, of the Person surviving such merger or consolidation or (v) the first day on which a majority of the members of the Board of Directors of the Parent are not Continuing Directors. "Clearstream" means Clearstream Banking, S.A. or its successor. "Company" means MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: (a) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing Consolidated Net Income, plus (b) provisions for taxes based on income or profits of such Person for such period, to the extent such provision for taxes was included in computing Consolidated Net Income, plus (c) Consolidated Interest Expense of such Person for such period to the extent such expense was deducted in computing Consolidated Net Income, plus (d) Consolidated Depreciation and Amortization Expense of such Person for such period, to the extent deducted in computing Consolidated Net Income less (e) noncash items increasing such Consolidated Net Income for such period in each case, on a consolidated basis for such Person and its Restricted Subsidiaries and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, the depreciation and amortization of and the interest expense of, a Restricted Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. Any calculation of the Consolidated Cash Flow of an individual hotel property shall be calculated in a manner consistent with the foregoing. "Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the Parent, the Company and their respective Restricted Subsidiaries, determined on a consolidated basis, which may properly be classified as current liabilities (including taxes payable as accrued), on a consolidated basis, after eliminating (i) all intercompany items between the Parent, the Company and any of their respective Restricted Subsidiaries and (ii) all current maturities of long-term Indebtedness, all as determined in accordance with GAAP consistently applied. 5 "Consolidated Depreciation and Amortization Expense" means, with respect to any Person for any period, the total amount of depreciation and amortization expense (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and the total amount of non-cash charges (other than non-cash charges that represent an accrual or reserve for cash charges in future periods or which involved a cash expenditure in a prior period) of such Person and its Restricted Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, without duplication, the sum of (a) interest expense, whether paid or accrued, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the interest component of Capital Lease Obligations, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of deferred financing fees), (b) commissions, discounts and other fees and charges paid or accrued with respect to letters of credit and bankers acceptance financing and (c) interest for which such Person or its Restricted Subsidiaries is liable, whether or not actually paid, pursuant to Indebtedness or under a Guarantee of Indebtedness of any other Person, in each case, calculated for such Person and its Restricted Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (it being understood that the net income of Restricted Subsidiaries shall be consolidated with that of a Person only to the extent of the proportionate interest of such Person in such Restricted Subsidiaries), provided that: (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be excluded, whether or not distributed to such Person or one of its Restricted Subsidiaries, (ii) the Net Income of any Person that is a Restricted Subsidiary and that is restricted from declaring or paying dividends or other distributions, directly or indirectly, by operation of the terms of its charter, any applicable agreement, instrument, judgment, decree, order, statute, rule or governmental regulation or otherwise shall be included only to the extent of the amount of dividends or distributions paid to the referent Person or a Restricted Subsidiary, (iii) the Net Income of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of changes in accounting principles shall be excluded. "Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less accumulated depreciation and amortization, allowances for doubtful receivables, other applicable reserves and other similar items properly deducted in determining net assets) which would appear on a consolidated balance sheet of the Parent, the Company and their respective Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, and after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of: (i) minority interests in consolidated Subsidiaries held by Persons other than the Parent, the Company or one of their respective Subsidiaries; (ii) excess of cost over fair value of assets of businesses acquired, as determined in good faith by the Board of Directors; (iii) any revaluation or other write-up in book value of assets subsequent to the date of this Indenture as a result of a 6 change in the method of valuation in accordance with GAAP consistently applied; (iv) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items; (v) treasury stock; and (vi) cash set apart and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Parent who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the affirmative vote of at least a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office" shall be at the address of the Trustee specified in Section 11.2 or such other address as the Trustee may give notice to the Issuers. "Credit Agreement" means the Second Amended and Restated Credit Agreement, dated as of August 3, 1998 and subsequently amended, entered into between and among the Company and the lenders party thereto, and any other senior debt facilities or commercial paper facilities with banks or other institutional lenders providing for borrowings, receivables financings (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case as amended, modified, supplemented, restructured, renewed, restated or extended, from time to time on one or more occasions; provided that the term "Credit Agreement" shall not include Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities." "Credit Facilities" means, with respect to the Company or the Parent, one or more Credit Agreements, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including without limitation with Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized-mortgage backed securities") in whole or in part from time to time. "Default" with respect to the Notes means any event that is or with the passage of time or the giving of notice or both would be an Event of Default with respect to the Notes. "Disqualified Stock" means any Capital Stock (other than OP Units and Preferred OP Units) which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the date on which the Notes mature. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for Capital Stock). 7 "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system, or its successor. "Event of Loss" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (A) any loss, destruction or damage of such property or asset or (B) any actual condemnation, seizure or taking by the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means Indebtedness of the Parent, the Company and their respective Restricted Subsidiaries in existence on the date of this Indenture (after giving effect to the use of proceeds of the Notes issued hereunder), excluding, for this purpose, amounts outstanding under the Credit Agreement and other Indebtedness outstanding pursuant to clause (b) of the second paragraph of Section 4.9 as in effect on the date of this Indenture. "Existing Preferred OP Units" means Preferred OP Units issued and outstanding on the date of this Indenture. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company, the Parent or any of their respective Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings that provide working capital in the ordinary course of business) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Company, the Parent or any of their respective Restricted Subsidiaries, including all mergers, consolidations and dispositions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. "Fixed Charges" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, to the extent such expense was deducted in computing Consolidated 8 Net Income and (b) the product of (i) all cash dividend or distribution payments on any series of Preferred Stock of such Person or its Restricted Subsidiaries (other than Preferred Stock owned by such Person or its Restricted Subsidiaries), times (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then-current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; provided, however, that if the cash dividend or distribution on such Preferred Stock is deductible for federal tax purposes, then the fraction shall be equal to one. "Funds From Operations" for any period means the Consolidated Net Income of the Parent for such period excluding gains or losses from debt restructurings and sales of depreciable operating property, plus depreciation on real estate assets and amortization related to real estate assets and other non-cash charges related to real estate assets, after adjustments for unconsolidated partnerships and joint ventures plus minority interests, if applicable (it being understood that the accounts of such Person's Restricted Subsidiaries shall be consolidated only to the extent of such Person's proportionate interest therein). "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which were in effect as of January 26, 2001. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which obligations or guarantee the full faith and credit of the United States of America is pledged. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business) or otherwise incurring, assuming or becoming liable for the payment of any principal, premium or interest, direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligation (including agreements to keep-well and to purchase assets, goods, securities or services). "Guarantor" means (a) the Parent and (b) any Subsidiary Guarantor, and in each case its successor, if any. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" means the Person in whose name a Note is registered on the Registrar's books. "Hospitality-Related Business" means the lodging business and other businesses necessary for, incident to, in support of, connected with, complementary to or arising out of the 9 lodging business, including, without limitation, (i) developing, managing, operating, improving or acquiring lodging facilities, restaurants and other food-service facilities and convention or meeting facilities, and marketing services related thereto, (ii) acquiring, developing, operating, managing or improving any real estate taken in foreclosure (or similar settlement) by the Company, the Parent or any of their respective Restricted Subsidiaries, or any real estate ancillary or connected to any lodging owned, managed or operated by the Company, the Parent or any of their respective Restricted Subsidiaries, (iii) owning and managing mortgages in, or other Indebtedness secured by Liens on, lodging and real estate related or ancillary to lodging or (iv) other related activities thereto. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, and also includes, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. "Indenture" means this Indenture, as amended or supplemented from time to time. "Investment Grade" means a rating of the Notes by both S&P and Moody's, each such rating being in one of such agency's four highest generic rating categories that signifies investment grade (i.e., currently BBB- (or the equivalent) or higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided in each case such ratings are publicly available; provided, further, that in the event Moody's or S&P is no longer in existence for purposes of determining whether the Notes are rated "Investment Grade," such organization may be replaced by a nationally recognized statistical rating organization (as defined in rule 436 under the Securities Act) designated by the Company, notice of which shall be given to the Trustee. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company, the Parent or any Restricted Subsidiary of the Company or the Parent sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company or the Parent such that, after giving effect to any such sale or disposition, the Company or the Parent, as the case may be, no longer owns, directly or indirectly, greater than 50% of the outstanding common stock of such Restricted Subsidiary, the Company or the Parent, as the case may be, shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the investments in such Restricted Subsidiary not sold or disposed of. 10 "Issuance Date" means the date of this Indenture. "Issuers" means each of the Company and MeriStar Finance, until a successor replaces either such party in accordance with the applicable provisions of this Indenture, and thereafter, means, with respect to such replaced party, such successor. "Lien" means, with respect to any asset, or income or profits therefrom, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" has the meaning assigned to such term in the Registration Rights Agreement. "MeriStar Finance" means MeriStar Hospitality Finance Corp. II, a Delaware corporation, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with any Asset Sale, and excluding any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company, the Parent or any of their respective Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "Non-Recourse Indebtedness" means Indebtedness (a) as to which none of the Company, the Parent or any of their respective Restricted Subsidiaries (i) provides credit support (other than in the form of a Lien on an asset serving as security for Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries) pursuant to any undertaking, agreement or instrument that would constitute Indebtedness, (ii) is directly or indirectly liable (other than in the form of a Lien on an asset serving as security for Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries) or (iii) constitutes the lender and (b) no default with respect to which (including 11 any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Notes" means the Notes issued under this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officers" means the Chairman of the Board, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller, Secretary, any Assistant Secretary or any Vice President of the Company or the Company's general partner, the Parent or MeriStar Finance, as applicable. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, the President, the Chief Operating Officer, or a Vice President and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary, as applicable, of each of the Company's general partner, the Parent and MeriStar Finance, as applicable, except with respect to certificates required to be furnished by the Issuers and the Parent to the Trustee pursuant to Section 4.4 hereof, in which event "Officers' Certificate" means a certificate signed by the principal executive officer or principal financial officer of each of the Company's general partner, the Parent or MeriStar Finance, as applicable. "OP Units" means limited partnership interests in the Company or any successor operating partnership that require the issuer thereof to pay dividends or distributions which are tied to dividends paid on the Parent's common stock and which by their terms may be converted into, or exercised or redeemed for, cash or the Parent's common stock. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee complying with the requirements of this Indenture. "Parent" means MeriStar Hospitality Corporation, a Maryland corporation, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Clearstream). "Permitted Investments" means any (a) Investments in the Company or the Parent, (b) Investments in any Restricted Subsidiary of the Company or the Parent, (c) Investments in Cash Equivalents, (d) Investments by the Company, the Parent or any Restricted Subsidiary of the Company or the Parent in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or the Parent or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is 12 liquidated into, the Company, the Parent or a Restricted Subsidiary of the Company or the Parent, (e) Investments in Unrestricted Subsidiaries or Permitted Joint Ventures, provided that such Investments are in entities solely or principally engaged in Hospitality-Related Businesses and that the aggregate of such Investments does not exceed the greater of (i) $50.0 million or (ii) 5% of Consolidated Net Tangible Assets collectively, (f) Investments in MeriStar Investment Partners, L.P. in an aggregate amount not to exceed $10.0 million collectively and (g) loans to MeriStar Hotels & Resorts Inc. in an aggregate amount not to exceed $25.0 million at any time outstanding. "Permitted Joint Venture" means any corporation, partnership, limited liability company or partnership or other similar entity formed to hold lodging properties in which the Company or the Parent, directly or indirectly, owns less than a 50.1% interest. "Permitted Refinancing" means Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, to the extent (a) the principal amount of Refinancing Indebtedness or the liquidation preference amount of Refinancing Disqualified Stock, as the case may be, does not exceed the principal amount of Indebtedness or the liquidation preference amount of Disqualified Stock, as the case may be, so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of premiums and reasonable expenses incurred in connection therewith); (b) such Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, is scheduled to mature or is redeemable at the option of the holder, as the case may be, no earlier than the Indebtedness or Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded; (c) in the case of Refinancing Indebtedness, the Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (d) in the case of Refinancing Disqualified Stock, the Disqualified Stock has a Weighted Average Life to Mandatory Redemption equal to or greater than the Weighted Average Life to Mandatory Redemption of the Disqualified Stock being extended, refinanced, renewed, replaced, defeased or refunded; (e) if the Indebtedness or the Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded is subordinated or junior in right of payment to the Notes, the Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, is subordinated or junior in right of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness or the Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded and (f) such Refinancing Indebtedness or Refinancing Disqualified Stock is incurred or issued either by the Parent, by the Company or by a Restricted Subsidiary who is the obligor on the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Physical Securities" means permanent certificated Notes in registered form, in substantially the form set forth in Exhibit A. 13 "Preferred OP Units" means limited partnership interests in the Company or any successor operating partnership that require the issuer thereof to pay regularly scheduled fixed distributions thereon, which are not related to dividends on the Parent's common stock, and which by their terms may be converted into, or exercised or redeemed for, cash or the Parent's common stock. "Preferred Stock" means (i) any Equity Interest with a preferential right in the payment of dividends or distributions or upon liquidation, and (ii) any Disqualified Stock. "Refinancing Disqualified Stock" means Disqualified Stock issued in exchange for, or the proceeds of which are used, to extend, refinance, renew, replace, defease or refund Disqualified Stock or Indebtedness permitted to be issued pursuant to the tests set forth in the first paragraph of Section 4.9 hereof or Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the second paragraph of Section 4.9 hereof. "Refinancing Indebtedness" means Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness permitted to be incurred pursuant to the tests set forth in the first paragraph of Section 4.9 hereof or Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the second paragraph of Section 4.9 hereof. "Registration Rights Agreement" means that certain Registration Rights Agreement dated as of the Issuance Date among the Issuers, the Parent, the Subsidiary Guarantors and Lehman Brothers Inc., Deutsche Banc Alex. Brown Inc., SG Cowen Securities Corporation, Banc of America Securities LLC, Banc One Capital Markets, Inc., CIBC World Markets Corp., Dresdner Kleinwort Wasserstein - Grantchester, Inc., Fleet Securities, Inc., Salomon Smith Barney Inc., Scotia Capital (USA) Inc. and Wells Fargo Brokerage Services, LLC (the "Initial Purchasers") setting forth certain registration rights with respect to the Notes. "Restricted Investments" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Security" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "S&P" means Standard & Poor's Ratings Services and its successors. "Secured Indebtedness" means any Indebtedness or Disqualified Stock secured by a Lien upon property of the Company, the Parent or any of their respective Restricted Subsidiaries, other than Indebtedness under a Credit Facility secured only by a Stock Pledge. 14 "Securities Act" means the Securities Act of 1933, as amended. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stock Pledge" means a first priority security interest in the equity interests of Subsidiaries of the Company or Subsidiaries of the Parent. "Subsidiary" means, with respect to any Person, (1) any corporation, association or other business entity of which more than 50% of the voting power of the outstanding voting stock is owned, directly or indirectly, by such Person, by such Person and one or more subsidiaries of such Person or by one or more subsidiaries of such Person, or the accounts of which would be consolidated with those of such Person in its consolidated financial statements in accordance with GAAP, if such statements were prepared as of such date; and (2) any partnership: (a) in which such Person or one or more subsidiaries of such Person is, at the time, a general partner and owns alone or together with the Company a majority of the partnership interest; or (b) in which such Person or one or more subsidiaries of such Person is, at the time, a general partner and which is controlled by such Person in a manner sufficient to permit its financial statements to be consolidated with the financial statements of such Person in conformity with GAAP and the financial statements of which are so consolidated. "Subsidiary Debt" means, without duplication, all Unsecured Indebtedness (including Guarantees other than Guarantees by Restricted Subsidiaries of Secured Indebtedness) of which a Restricted Subsidiary of the Company or the Parent (other than the Company) other than a Guarantor is the obligor. A release of the Subsidiary Guarantee of a Guarantor which remains a Restricted Subsidiary of the Company or the Parent shall be deemed to be an incurrence of Subsidiary Debt in an amount equal to the proportionate interest of the Company or the Parent in the Unsecured Indebtedness of such Guarantor. "Subsidiary Guarantor" means (a) each of the Company's Subsidiaries that guarantees the Credit Agreement on the date of this Indenture and (b) any Restricted Subsidiary that becomes a guarantor of the Notes pursuant to the terms of this Indenture, and in each case, its successor, if any. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Total Assets" means the sum of: (a) Undepreciated Real Estate Assets; and (b) all other assets (excluding intangibles) of the Parent, the Company and their respective Restricted Subsidiaries determined on a consolidated basis. "Total Unencumbered Assets" as of any date means the sum of: (a) those Undepreciated Real Estate Assets not securing any portion of Secured Indebtedness; and (b) all other assets (but excluding intangibles) of the Parent, the Company and their respective Restricted Subsidiaries not securing any portion of Secured Indebtedness determined on a consolidated basis in accordance with GAAP. 15 "Transaction Date" means, with respect to the incurrence of any Indebtedness or issuance of Disqualified Stock by the Company, the Parent or any their respective Restricted Subsidiaries, the date such Indebtedness is to be incurred or such Disqualified Stock is to be issued and, with respect to any Restricted Payment, the date such Restricted Payment is to be made. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Trust Officer" means any officer in the Corporate Trust Office of the Trustee. "Undepreciated Real Estate Assets" means, as of any date, the cost (being the original cost to the Company, the Parent or any their respective Restricted Subsidiaries plus capital improvements) of real estate assets of the Company, the Parent and their respective Restricted Subsidiaries on such date, before depreciation and amortization of such real estate assets, determined on a consolidated basis. "Unrestricted Subsidiary" means (i) any Subsidiary that is (or has been under this Indenture) designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a board resolution, but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Indebtedness; (b) is not party to any agreement, contract, arrangement or understanding with the Company, the Parent or any Restricted Subsidiary of the Company or the Parent unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company, the Parent or such Restricted Subsidiary than those that might be obtained at the same time from Persons who are not affiliates of the Company; (c) is a Person with respect to which none of the Company, the Parent or any of their respective Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results (other than pursuant to agreements relating to the management of hotels entered into between Restricted Subsidiaries and Unrestricted Subsidiaries in the ordinary course of such Subsidiaries' business, consistent with past practice); and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries. Any such designation by the Board of Directors made after the Issuance Date shall be evidenced to the Trustee by filing with the Trustee a certified copy of the board resolution giving effect to such designation and an officer's certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.7 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company or the Parent as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.9 hereof, the Company and the Parent shall be in default of such covenant). The Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary, provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company or the Parent of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation shall only be 16 permitted if (i) such Indebtedness is permitted under Section 4.9 hereof and (ii) no Default or Event of Default would be in existence following such designation. MeriStar Finance shall not under any circumstances be designated as an Unrestricted Subsidiary. "Unsecured Indebtedness" means any Indebtedness or Disqualified Stock of the Company, the Parent or any of their respective Restricted Subsidiaries that is not Secured Indebtedness. "Weighted Average Life to Mandatory Redemption" means, when applied to any Disqualified Stock at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding liquidation preference amount of such Disqualified Stock. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. SECTION 1.2. OTHER DEFINITIONS. Defined in Term Section - ---- ------- "Affiliate Transaction" 4.11 "Agent Members" 2.16 "Asset Sale Offer" 4.10 "Asset Sale Offer Price" 4.10 "Bankruptcy Law" 6.1 "Change of Control Offer" 4.14 "Change of Control Payment" 4.14 "Change of Control Payment Date" 4.14 "Covenant Defeasance" 8.3 "Custodian" 6.1 "defeasance trust" 8.4 "Depositary" 2.1 "Event of Default" 7.1 "Excess Proceeds" 4.10 "Exchange Global Note" 2.1 "Global Notes" 2.1 "incur" 4.9 "incurrence" 4.9 17 Defined in Term Section - ---- ------- "insolvent" 10.3 "Legal Defeasance" 8.2 "Legal Holiday" 11.7 "Paying Agent" 2.3 "Payment Blockage Notice" 10.3 "Private Placement Legend" 2.15 "Public Equity Offering" 3.7 "Registrar" 2.3 "Regulation S" 2.1 "Regulation S Global Note" 2.1 "Regulation S Permanent Global Note" 2.1 "Regulation S Temporary Global Note" 2.1 "Restricted Payments" 4.7 "Rule 144A" 2.1 "Rule 144A Global Note" 2.1 SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means any Issuer, any Guarantor and any successor obligor. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires: (a) a term has the meaning assigned to it; 18 (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions. SECTION 1.5. ONE CLASS OF SECURITIES. The Initial Notes and the Exchange Notes shall vote and consent together on all matters as one class and none of the Initial Notes or the Exchange Notes shall have the right to vote or consent as a separate class on any matter. ARTICLE 2 THE NOTES SECTION 2.1. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part of this Indenture. Subject to Section 2.7 hereof, the Notes shall be issued at any time, or from time to time, in an aggregate principal amount not to exceed $250,000,000. The Notes may have notations, legends or endorsements required by law, stock exchange rule or agreements to which any Issuer or any Guarantor is subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued initially in denominations of $1,000 and integral multiples thereof. Notes offered and sold in reliance on Rule 144A under the Securities Act ("Rule 144A") shall be issued initially in the form of one or more permanent global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (each, a "Rule 144A Global Note"), deposited with the Trustee, as custodian for The Depository Trust Company (the "Depositary"), duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. Notes offered and sold in reliance on Regulation S under the Securities Act ("Regulation S") shall be issued initially in the form of one or more temporary global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (each, a "Regulation S Temporary Global Note"), which shall be deposited with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Restricted Period for the Notes shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 19 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by Section 2.17 hereof), and (ii) an Officers' Certificate from the Issuers. Following the termination of the Restricted Period, beneficial interests in a Regulation S Temporary Global Note shall be exchanged for beneficial interests in one or more permanent global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (a "Regulation S Permanent Global Note," and collectively with the Regulation S Temporary Global Note, the "Regulation S Global Notes") pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Notes. The aggregate principal amount of the Regulation S Temporary Global Notes and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. Exchange Notes exchanged for interests in the Rule 144A Global Notes, the Regulation S Global Notes or any Physical Securities will be issued in the form of one or more permanent global notes in registered form without interest coupons, substantially in the form of Exhibit A (an "Exchange Global Note"), deposited with the Trustee, as custodian for the Depositary, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Notes, the Regulation S Temporary Global Notes, the Regulation S Permanent Global Notes and the Exchange Global Notes are collectively referred to herein as the "Global Notes." The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Notes and the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream. SECTION 2.2. EXECUTION AND AUTHENTICATION. An Officer of each of Issuer shall sign the Notes for the Issuers by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture. The form of Trustee's certificate of authentication to be borne by the Notes shall be substantially as set forth in Exhibit A hereto. 20 The Trustee shall, upon a written order of the Issuers signed by two Officers of each of the Issuers, authenticate Notes for original issue up to an aggregate principal amount stated in Section 2.1 hereof. The aggregate principal amount of Notes outstanding at any time may not exceed the amount set forth herein, except as provided in Section 2.7. The Trustee may appoint an authenticating agent to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuers or an Affiliate of the Issuers. SECTION 2.3. REGISTRAR AND PAYING AGENT. The Issuers shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the "Registrar") and (ii) an office or agency where Notes may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. Either Issuer or any of its Subsidiaries may act as Paying Agent or Registrar. The Issuers shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall incorporate the provisions of the TIA. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuers shall notify the Trustee of the name and address of any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.7 hereof. The Issuers initially appoint the Trustee as Registrar, Paying Agent and agent for service of notices and demands in connection with the Notes. SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders of Notes or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, or interest or Liquidated Damages (as defined in the Registration Rights Agreement), if any, on the Notes, and will notify the Trustee of any default by the Issuers or Guarantors, if any, in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than an Issuer) shall have no further liability for the money delivered to the Trustee. If either Issuer or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. 21 SECTION 2.5. HOLDERS LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of Notes and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven (7) Business Days before each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, including the aggregate principal amount thereof, and the Issuers and the Guarantors shall otherwise comply with TIA Section 312(a). SECTION 2.6. TRANSFER AND EXCHANGE. (a) Where Notes are presented to the Registrar with a request to register the transfer thereof or exchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met; provided, however, that any Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Issuers shall issue and the Trustee shall authenticate Notes at the Registrar's request, subject to such rules as the Trustee may reasonably require. (b) The Issuers and the Registrar shall not be required (i) to issue, to register the transfer of, or to exchange Notes during a period beginning at the opening of business on a Business Day fifteen (15) days before the day of any selection of Notes for redemption or purchase under Section 3.2 and ending at the close of business on the day of selection, or (ii) to register the transfer of or exchange any Note so selected for redemption or purchase in whole or in part, except the unredeemed or unpurchased portion of any Note being redeemed or purchased in part. (c) No service charge shall be made for any registration of a transfer or exchange (except as otherwise expressly permitted herein), but the Issuers may require payment by the Holder of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Section 2.10, 3.6 or 9.5). (d) Prior to due presentment for registration of transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and neither the Trustee, any Agent, nor any Issuer shall be affected by notice to the contrary. (e) Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book 22 entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry. SECTION 2.7. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or either the Issuers or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon the written order of the Issuers signed by two Officers of each Issuer, shall authenticate a replacement Note if an indemnity bond is supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Issuers, the Trustee, each Agent and each authenticating agent from any loss which any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge for its expenses in replacing a Note. Every replacement Note is an additional Obligation of the Issuers. SECTION 2.8. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in interest in a Global Note effected by the Trustee in accordance with the provision hereof, and those described in this Section as not outstanding. If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue. Subject to Section 2.9 hereof, a Note does not cease to be outstanding because an Issuer or an Affiliate of an Issuer holds the Note. SECTION 2.9. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by any Issuer, any Guarantor, or any Affiliate of any Issuer or any Guarantor, shall be considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer knows to be so owned shall be so considered. The Issuers agree to notify the Trustee of the existence of any Notes owned by any Issuer, by any Guarantor or by any Affiliate of any Issuer or any Guarantor. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Issuers may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuers and the Trustee consider appropriate 23 for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of the written order of the Issuers signed by two Officers of each Issuer, shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Issuers at any time may deliver Notes to the Trustee for cancellation along with written instructions to cancel such Notes. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act) unless an Issuer directs them to be returned to them. The Issuers may not issue new Notes to replace Notes that have been redeemed or paid or that have been delivered to the Trustee for cancellation. All cancelled Notes held by the Trustee shall be destroyed and certification of their destruction delivered to the Issuers unless by a written order, signed by an Officer of each of the Issuers, the Issuers shall direct that cancelled Notes be returned to them. SECTION 2.12. DEFAULTED INTEREST. If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders of the Notes on a subsequent special record date, which date shall be at the earliest practicable date but in all events at least five (5) Business Days prior to the payment date, in each case at the rate provided in the Notes and in Section 4.1 hereof. The Issuers shall, with the consent of the Trustee, fix or cause to be fixed each such special record date and payment date. At least fifteen (15) days before the special record date, the Issuers (or the Trustee, in the name of and at the expense of the Issuers) shall mail to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. SECTION 2.13. RECORD DATE. The record date for purposes of determining the identity of Holders of Notes entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA Section 316(c). SECTION 2.14. CUSIP NUMBER. The Issuers in issuing the Notes may use a "CUSIP" number, and if they do so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that 24 reliance may be placed only on the other identification numbers printed on the Notes. The Issuers will promptly notify the Trustee in writing of any change in the CUSIP number. SECTION 2.15. RESTRICTIVE LEGENDS. Each 144A Global Note and Physical Security that constitutes a Restricted Security shall bear the following legend (the "Private Placement Legend") unless otherwise agreed by the Issuers and the Holder thereof: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT 25 OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES. Each Temporary Regulation S Global Note shall bear the following legend on the face thereof: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENTS RELATING TO ALL THE SECURITIES. Each Global Note shall also bear the following legend on the face thereof: 26 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY, OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY. (a) The Global Notes initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear the appropriate legends as set forth in Section 2.15. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Note, and the Depositary may be treated by the Issuers, the Trustee and any agent of an Issuer or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of any Global Note shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. Except as provided below, 27 owners of beneficial interests in Global Notes will not be entitled to receive Physical Securities. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Physical Securities in exchange for their beneficial interests in a Global Note upon written request in accordance with the Depositary's and the Registrar's procedures. In addition, Physical Securities shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (i) the Depositary notifies the Issuers that it is unwilling or unable to continue as depositary for such Global Note or the Depositary ceases to be a clearing agency registered under the Exchange Act, at a time when the Depositary is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Issuers within 90 days of such notice or, (b) the Issuers execute and deliver to the Trustee and Registrar an Officers' Certificate stating that such Global Note shall be so exchangeable or (c) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depositary to issue Physical Securities; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Issuers for Physical Securities prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. (c) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b) above, the Registrar shall (if one or more Physical Securities are to be issued) reflect on its books and records the date and a decrease in the principal amount of the beneficial interest in such Global Note to be transferred, and the Issuers shall execute, and the Trustee shall authenticate and deliver, one or more Physical Securities of like tenor and amount. (d) In connection with the transfer of an entire Global Note to beneficial owners pursuant to paragraph (b) above, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Issuers shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Physical Securities of authorized denominations. (e) Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Note pursuant to paragraph (b) or (c) above shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.17, bear the legend regarding transfer restrictions applicable to the Physical Securities set forth in Section 2.15. (f) The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.17. SPECIAL TRANSFER PROVISIONS. (a) Transfers to Non-U.S. Persons. The following provisions ----------------------------- shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to any Non-U.S. Person: 28 (i) the Registrar shall register the transfer of any Note constituting a Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after December 19, 2003, or (y) the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit C hereto; and (ii) if the proposed transferee is an Agent Member and the Notes to be transferred consist of Physical Securities which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Securities so transferred. (b) Transfers to QIBs. The following provisions shall apply ---------------- with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): (i) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Issuers and the Registrar in writing, that the sale has been effected in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Issuers and the Registrar in writing, that it is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and that any such account is a QIB within the meaning of Rule 144A, and it is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (ii) if the proposed transferee is an Agent Member and the Notes to be transferred consist of Physical Securities which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Securities so transferred. (c) Private Placement Legend. Upon the registration of the ------------------------ transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the registration of the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement legend unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section 2.17 exists or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such 29 legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (d) General. By its acceptance of any Note bearing the Private ------- Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. (e) Notwithstanding anything to the contrary contained herein, (i) prior to the expiration of the Restricted Period, transfers of beneficial interests in a Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than the Initial Purchasers), and (ii) a beneficial interest in a Regulation S Temporary Global Note may not be exchanged for a Physical Security or transferred to a Person who takes delivery thereof in the form of a Physical Security prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. The Registrar shall retain for at least two years copies of all letters, notices and other written communications received pursuant to Section 2.16 hereof or this Section 2.17. The Issuers shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE SECTION 3.1. NOTICES TO TRUSTEE. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.7 hereof, they shall furnish to the Trustee, at least 45 days but not more than 90 days before a redemption date (unless a shorter notice period shall be satisfactory to the Trustee), an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. If the Company is required to make an offer to purchase Notes pursuant to the provisions of Sections 4.10 or 4.14, it shall furnish to the Trustee, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase price, (iv) the principal amount of the Notes to be purchased and (v) a statement to the effect that (a) the Company, the Parent or one of their respective Restricted Subsidiaries has made an Asset Sale and that the conditions set forth in Sections 3.9 and 4.10 have been satisfied or (b) a Change of Control has occurred and the conditions set forth in Section 4.14 have been satisfied, as applicable. 30 SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED. In the event that less than all of the Notes are to be purchased in an Asset Sale Offer or redeemed at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements). The Issuers shall give written notice to the Trustee of such requirements of any securities exchange not less than forty-five (45) nor more than ninety (90) days prior to the date on which notice of such redemption or purchase is to be given. In the event a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes of the applicable series or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as practicable (subject to procedures of the Depositary), unless such method is otherwise prohibited. In the event of partial redemption, other than pro rata, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes of such series not previously called for redemption. In the event that less than all of the Notes of a series properly tendered in an Asset Sale Offer are to be purchased, the particular Notes of such series to be purchased shall be selected promptly upon the expiration of such Asset Sale Offer. The Trustee shall promptly notify the Issuers in writing of the Notes of any series selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of them selected shall be in principal amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of any series of a Holder are to be redeemed or purchased, the entire outstanding principal amount of Notes of such series held by such Holder shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. In the event the Company is required to make an Asset Sale Offer pursuant to Section 3.9 and Section 4.10 hereof, and the amount of Excess Proceeds to be applied to such purchase would result in the purchase of a principal amount of Notes which is not evenly divisible by $1,000, the Trustee shall promptly refund to the Company the portion of such Excess Proceeds that is not necessary to purchase the immediately lesser principal amount of Notes that is so divisible. SECTION 3.3. NOTICE OF REDEMPTION. At least thirty (30) days but not more than sixty (60) days before a redemption date, the Issuers shall mail, or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the CUSIP number of the Notes, if any, and the Notes to be redeemed and shall state: 31 (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note in principal amount equal to the unredeemed portion will be issued; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Issuers default in making such redemption payment, interest and Liquidated Damages, if any, on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at their expense. SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.3 hereof, Notes called for redemption become due and payable on the redemption date at the redemption price. On and after the redemption date, unless the Issuers default in the payment of the redemption price, interest and Liquidated Damages, if any, will cease to accrue on the Notes or portions of them called for redemption and all rights of Holders of such Notes will terminate except for the right to receive the redemption price. Upon surrender to the Paying Agent, the Holders of such Notes shall be paid the redemption price plus accrued interest and Liquidated Damages, if any, to the redemption date, but interest installments and unpaid Liquidated Damages, if any, whose maturity is on or prior to the redemption date will be payable to the Holder of record at the close of business on the relevant record dates referred to in the Notes. A notice of redemption may not be conditional. SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. At least one Business Day before the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money in immediately available funds sufficient to pay the redemption price of and, if applicable, accrued interest and Liquidated Damages, if any, on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly, and in any event within two Business Days after the redemption date, return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary 32 to pay the redemption price of and, if applicable, accrued interest and Liquidated Damages, if any, on all Notes to be redeemed. If the Issuers comply with the provisions of the preceding paragraph, interest and Liquidated Damages, if any, on the Notes or the portions of Notes to be redeemed will cease to accrue on the applicable redemption date, whether or not such Notes are presented for payment. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, from the redemption date until such unpaid interest is paid, in each case at the rate provided in the Notes and in Section 4.1 hereof. SECTION 3.6. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Issuers shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered; provided, however, that no Note of $1,000 or less in principal amount shall be purchased or redeemed in part. SECTION 3.7. OPTIONAL REDEMPTION. (a) Prior to December 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 110.500% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remains outstanding immediately after each such redemption. (b) Except as set forth in clause (a) of this Section 3.7, the Issuers shall not have the option to redeem the Notes prior to December 15, 2005. On or after December 15, 2005, the Issuers may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the 12-month period beginning on December 15 of the years indicated below: Year Percentage - ---- ---------- 2005 ............................................................... 105.250% 2006 ............................................................... 102.625% 2007 and thereafter ................................................ 100.000% If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, shall be paid to the Person 33 in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Issuers. SECTION 3.8. MANDATORY REDEMPTION. Subject to the Company's obligation to make an offer to purchase Notes pursuant to Section 4.10 and Section 4.14, the Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. Within 30 days after the date that Excess Proceeds exceed $10.0 million and an Asset Sale Offer is required under Section 4.10 hereof, the Company shall mail or cause the Trustee to mail (in the Company's name and at its expense and pursuant to an Officers Certificate) an offer to purchase to each Holder of Notes pursuant to the terms of this Section 3.9 and to holders of other Indebtedness that ranks by its terms pari passu in right of payment with the Notes and the terms of which contain substantially similar requirements with respect to the application of net proceeds from asset sales as are contained herein. The Asset Sale Offer (as defined in Section 4.10) with respect to the Notes shall be mailed by the Company (or the Trustee) to Holders of Notes of each series at their last registered address with a copy to the Trustee and the Paying Agent and shall set forth (a) notice that an Asset Sale has occurred, that the Company is making an Asset Sale Offer, pursuant to this Section 3.9, and that each Holder of Notes of each series then outstanding has the right to require the Company to repurchase, for cash, such Holder's Notes at the Asset Sale Offer Price, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the payment date; (b) the purchase price per $1,000 of principal amount and the payment date of the Asset Sale Offer, (c) the maximum amount of Excess Proceeds, required to be applied to such Asset Sale Offer with respect to the Notes; (d) that any Notes properly tendered pursuant to the Asset Sale Offer will be accepted for payment (subject to reduction as provided in this Section 3.9) on the payment date of the Asset Sale Offer and any Notes not properly tendered will remain outstanding and continue to accrue interest and Liquidated Damages, if applicable; (e) that unless the Company defaults in the payment of the Asset Sale Offer Price, all Notes accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest and Liquidated Damages after the payment date of the Asset Sale Offer; (f) that Holders electing to have any Notes purchased pursuant to an Asset Sale Offer will be required to surrender the Notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the Notes completed, or transfer by book-entry transfer, to the Issuers, the Depository or the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the payment date of the Asset Sale Offer; (g) that Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase the Notes provided that the Paying Agent receives, not later than the close of business on the second Business Day preceding the payment date of the Asset Sale Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount and series of Notes tendered for purchase, and a statement that such Holder is withdrawing such Holder's tendered Notes and such Holder's election to have 34 such Notes purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the amount of the Asset Sale Offer, the Company shall select the Notes of each series to be purchased by lot on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased or otherwise in accordance with this Indenture); and (i) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). If the payment date of the Asset Sale Offer is on or after an interest payment record date and on or before the related interest payment date, any accrued interest and Liquidated Damages will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender a Note pursuant to the Asset Sale Offer. The Company shall fix the payment date of the Asset Sale Offer for such purchase no earlier than 30 but no more than 60 days after the Asset Sale Offer is mailed as set forth above, except as may otherwise be required by applicable law. The Company shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to this Section 3.9. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 3.9, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue thereof. On the payment date of the Asset Sale Offer, the Company shall, to the extent permitted by law, (x) accept for payment Notes or portions thereof properly tendered pursuant to the Asset Sale Offer, (y) deposit with the Paying Agent the amount of money, in immediately available funds, equal to the maximum Excess Proceeds required under Section 4.10 to be applied to such Asset Sale Offer with respect to such Notes and (z) deliver or cause to be delivered to the Trustee, Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof tendered to the Company. If the aggregate purchase price of all Notes of any series properly tendered exceeds the maximum amount of Excess Proceeds required to be applied to such Asset Sale Offer with respect to such Notes, as applicable, the Notes or portions thereof to be purchased shall be selected pursuant to Section 3.2 hereof. The Paying Agent shall promptly mail to each Holder of Notes so accepted for payment a check in an amount equal to the aggregate purchase price of the Notes purchased by the Company from such Holder and the Trustee shall promptly authenticate and mail to each Holder a new Note of the same series equal in principal amount to any unpurchased portion of any Note surrendered, if any, or return any unpurchased Note to such Holder; provided, however, that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce in a newspaper of national circulation or in a press release provided to a nationally recognized financial wire service the results of the Asset Sale Offer on the payment date. Other than as specifically provided in this Section 3.9, each purchase pursuant to this Section 3.9 shall be made pursuant to the provisions of Sections 3.1, 3.2, 3.5 and 3.6 hereof. 35 ARTICLE 4 COVENANTS SECTION 4.1. PAYMENT OF NOTES. The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes on the dates and in the manner provided in this Indenture and the Notes. Principal, premium, if any, and interest and Liquidated Damages, if any, shall be considered paid on the due date if the Paying Agent, if other than an Issuer or a Subsidiary of an Issuer, holds as of 9:00 a.m. Eastern Time on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest and Liquidated Damages, if any, then due. Such Paying Agent shall return to the Issuers promptly, and in any event, no later than five days following the date of payment, any money (including accrued interest) that exceeds such amount of principal, premium, if any, and interest paid on the Notes. The Issuers shall pay all Liquidated Damages, if any, in the same manner and on the same dates as set forth above and in the amounts set forth in the Registration Rights Agreement. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the interest rate then applicable to the Notes to the extent lawful. In addition, the Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY. The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of their obligations to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.3. 36 SECTION 4.3. SEC REPORTS. (a) The Issuers and the Parent shall, whether or not required by the rules and regulations of the SEC, submit to the SEC for public availability (unless the SEC will not accept such a submission) and provide to the Trustee and the Holders of outstanding Notes copies of all quarterly and annual reports and other information, documents and reports specified in Sections 13 and 15(d) of the Exchange Act for so long as the Notes are outstanding (which shall include, without limitation, a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by its certified independent accountants). The Issuers and the Parent shall make such information available to investors and securities analysts who request it in writing. Such information may be combined into one or two reports if permitted by the rules and regulations of the SEC. (b) If an Issuer, the Parent or a Subsidiary Guarantor is required to furnish annual or quarterly reports to its stockholders pursuant to the Exchange Act, the Issuers and the Parent shall cause such annual report or quarterly or other financial report furnished to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Notes maintained by the Registrar. (c) The Issuers, the Parent and the Subsidiary Guarantors shall deliver all reports and other documents and information to the Holders under this Section 4.3. The Trustee shall, if requested to by the Issuers, deliver such reports, other documents and information to the Holders, but at the sole expense of the Issuers. (d) The Issuers and the Parent, for so long as the Notes are outstanding, will continue to provide to Holders and to prospective purchasers of Notes the information required by Rule 144A(d)(4). (e) Notwithstanding anything contrary herein, the Trustee shall have no duty to review such documents for purposes of determining compliance with any provision of this Indenture. SECTION 4.4. COMPLIANCE CERTIFICATE. (a) Each of the Issuers and the Parent shall deliver to the Trustee, within sixty (60) days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Parent, the Issuers and their respective Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether each of the Parent, the Issuers and their respective Subsidiaries has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of the Parent, each Issuer and their respective Subsidiaries has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action each of the Parent, each Issuer and their respective Subsidiaries is taking or propose to take with respect thereto) and that to the best of his or her knowledge no 37 event has occurred and remains in existence by reason of which payments on account of the principal of or interest or Liquidated Damages, if any, on the Notes are prohibited (or if such event has occurred, a description of the event and what action each is taking or proposes to take with respect thereto). (b) Each of the Issuers and the Parent shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of (i) any Default or Event of Default or (ii) any event of default under any other mortgage, indenture or instrument which with the passage of time or giving of notice would be a Default or an Event of Default under Section 6.1 hereof, an Officers' Certificate specifying such Default or Event of Default and what action the Issuers or the Parent are taking or propose to take with respect thereto. SECTION 4.5. TAXES. Each of the Issuers and the Parent shall, and shall cause each of their respective Subsidiaries to pay prior to delinquency, all material taxes, assessments, and governmental levies except as contested in good faith and by appropriate proceedings. SECTION 4.6. STAY, EXTENSION AND USURY LAWS. Each of the Issuers, the Parent and the Subsidiary Guarantors covenant, and the Company and the Parent shall cause any future Guarantors to covenant (to the extent they may lawfully do so), that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture. Each of the Issuers, the Parent and the Subsidiary Guarantors (to the extent it may lawfully do so) hereby expressly waives, and the Company and the Parent will cause any future Guarantor (to the extent it may lawfully do so) expressly to waive, all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.7. LIMITATION ON RESTRICTED PAYMENTS. The Company and the Parent shall not, and shall not permit any of their respective Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's, the Parent's or any of their respective Restricted Subsidiaries' Equity Interests, other than: (1) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or the Parent; (2) dividends or distributions by a Restricted Subsidiary of the Company or the Parent (other than the Company), provided that to the extent that a portion of such dividend or distribution is paid to a holder of Equity Interests of a Restricted Subsidiary other than the Company, the Parent or a Restricted Subsidiary of the Company or the Parent, such portion of such dividend or distribution is not greater than such holder's pro rata aggregate common equity interest in such Restricted Subsidiary; and (3) dividends or distributions payable on Existing Preferred OP Units and Preferred OP Units issued in compliance with Section 4.9 hereof; (ii) purchase, redeem or 38 otherwise acquire or retire for value any Equity Interests of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent or other Affiliate of the Company or the Parent, other than (A) any Equity Interests owned by the Company, the Parent or any Restricted Subsidiary of the Company or the Parent; (B) any Existing Preferred OP Units and (C) any Preferred OP Units issued in compliance with Section 4.9 hereof; (iii) purchase, redeem or otherwise acquire or retire for value any Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of payment, by its terms, to the Notes or any Guarantee thereof prior to the scheduled final maturity or sinking fund payment dates for payment of principal and interest in accordance with the original documentation for such subordinated or junior Indebtedness; or (iv) make any Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) the Company and the Parent would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the tests set forth in the first paragraph of Section 4.9 hereof; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company, the Parent and their respective Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v) and (vii)(X) of the second next succeeding paragraph) is less than the sum, without duplication, of (i) 95% of the aggregate amount of the Funds From Operations (or, if the Funds From Operations is a loss, minus 100% of the amount of such loss) (determined by excluding income resulting from transfers of assets by the Company, the Parent or any of their respective Restricted Subsidiaries to an Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following January 26, 2001 to the end of the Parent's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, plus (ii) 100% of the aggregate net proceeds (including the fair market value of non-cash proceeds as determined in good faith by the Board of Directors) received by the Company or the Parent from the issue or sale, in either case, since January 26, 2001 of either (A) Equity Interests of the Company or the Parent or of (B) debt securities of the Company or the Parent that have been converted or exchanged into such Equity Interests (other than Equity Interests (or convertible or exchangeable debt securities) sold to a Restricted Subsidiary of the Company or the Parent and other than Disqualified Stock or debt securities that have been converted or exchanged into Disqualified Stock), plus (iii) in case, after January 26, 2001, any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary pursuant to the terms of this Indenture or has been merged, consolidated or amalgamated with or into, or transfers or conveys assets to, or is liquidated into, the Company, the Parent or a Restricted Subsidiary of the Company or the Parent and, provided that no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof, the lesser of (A) the book value (determined in accordance with GAAP) at the date of 39 such redesignation, combination or transfer of the aggregate Investments made by the Company, the Parent and their respective Restricted Subsidiaries in such Unrestricted Subsidiary (or of the assets transferred or conveyed, as applicable) and (B) the fair market value of such Investments in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), in each case as determined in good faith by the Board of Directors of the Parent, whose determination shall be conclusive and evidenced by a resolution of such Board and, in each case, after deducting any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or with the assets so transferred or conveyed, plus (iv) 100% of any dividends, distributions or interest actually received in cash by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent after January 26, 2001 from (A) a Restricted Subsidiary the Net Income of which has been excluded from the computation of Funds From Operations, (B) an Unrestricted Subsidiary, (C) a Person that is not a Subsidiary or (D) a Person that is accounted for on the equity method (except in the case of each of clauses (B), (C) and (D), to the extent any such amounts are included in the calculation of Funds From Operations). Notwithstanding the foregoing, the Company or the Parent may declare or pay any dividend or make any distribution that is necessary to maintain the Parent's status as a REIT under the Internal Revenue Code if: (a) the aggregate principal amount of all of the outstanding Indebtedness of the Company, the Parent and their respective Restricted Subsidiaries on a consolidated basis at such time is less than 80% of the Parent's Adjusted Total Assets; and (b) no Default or Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the provisions of this Section 4.7 will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) (X) the redemption, purchase, retirement or other acquisition of any OP Unit or Preferred OP Unit in exchange for Equity Interests of the Parent (other than Disqualified Stock) and (Y) the redemption, purchase, retirement or other acquisition of any Equity Interests of the Company, the Parent or a Restricted Subsidiary of the Company or the Parent (other than OP Units or Preferred OP Units) in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company or the Parent) of other Equity Interests of the Company or the Parent (other than any Disqualified Stock); provided that in the case of (X) and (Y) the amount of any proceeds that is utilized for such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the first paragraph of this Section 4.7; (iii) the defeasance, redemption, repayment or purchase of Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of payment, by its terms, to the Notes or any Guarantee thereof in a Permitted Refinancing; (iv) the defeasance, redemption, repayment or purchase of Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of 40 payment, by its terms, to the Notes or any Guarantee thereof with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or the Parent) of Equity Interests (other than Disqualified Stock) of the Company or the Parent; provided that the amount of any proceeds that is utilized for such defeasance, redemption, repayment or purchase shall be excluded from clause (c)(ii) of the first paragraph of this Section 4.7; (v) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or the Parent pursuant to any management equity subscription agreement, stock option agreement or stock award; provided, however, that the aggregate price paid for all such purchased, redeemed, acquired or retired Equity Interests shall not exceed $3,000,000 in any 12 month period; (vi) payments or distributions to dissenting stockholders pursuant to applicable law pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of this Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property or assets of the Company or the Parent; (vii) (X) the making of any Permitted Investment described in clauses (a), (b), (c), (d), (f) or (g) of the definition thereof and (Y) the making of any Permitted Investment described in clause (e) thereof; and (viii) payments that would otherwise be Restricted Payments, in an aggregate amount not to exceed $35 million collectively, provided that at the time of, and after giving effect to, the proposed payment, the Company and the Parent could have incurred at least $1.00 of additional Indebtedness under the first paragraph of Section 4.9; provided, however, that, in the case of clauses (ii)(Y), (iii), (iv), (v), (vi), (vii)(Y) and (viii), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof. In determining whether any Restricted Payment is permitted by this Section 4.7, the Company or the Parent may allocate or reallocate all or any portion of such Restricted Payment among the clauses (i) through (viii) of the preceding paragraph or among such clauses and the first paragraph of this Section 4.7 including clauses (a), (b) and (c); provided that at the time of such allocation or reallocation, all such Restricted Payments, or allocated portions thereof, would be permitted under the various provisions of this Section 4.7. The amount of all Restricted Payments (other than cash) shall be the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers Certificate delivered to the Trustee) on the date of the Restricted Payment of the asset(s) proposed to be transferred by the Company, the Parent or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than (i) the end of any calendar quarter in which any Restricted Payment is made or (ii) the making of a Restricted Payment which, when added to the sum of all previous Restricted Payments made in a calendar quarter, would cause the aggregate of all Restricted Payments made in such quarter to exceed $5.0 million, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.7 were computed, which calculations may be based upon the Parent's latest available financial statements. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default or Event of Default. For purposes of making the determination as to whether such designation would cause a Default or 41 Event of Default, all outstanding Investments by the Company, the Parent and their Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.7. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the greatest of (x) the net book value of such Investments at the time of such designation, (y) the fair market value of such Investments at the time of such designation and (z) the original fair market value of such Investments at the time they were made. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Parent giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. SECTION 4.8. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall not permit any of their respective Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any other distributions to the Company, the Parent or any of their respective Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company, the Parent or any of their respective Restricted Subsidiaries, (b) make loans or advances or capital contributions to the Company, the Parent or any of their respective Restricted Subsidiaries, or (c) sell, lease or transfer any of its properties or assets to the Company, the Parent or any of their respective Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reasons of (i) Existing Indebtedness as in effect on the date of this Indenture, (ii) any Credit Facility, provided that the encumbrances or restrictions contained in such facility as amended, modified, supplemented, restructured, renewed, restated, refunded, replaced or refinanced or extended from time to time on one or more occasions are no more restrictive than those contained in the Credit Agreement as in effect on the date of this Indenture, (iii) this Indenture and the Notes, (iv) applicable law, (v) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company, the Parent or any of their respective Restricted Subsidiaries or of any Person that becomes a Restricted Subsidiary as in effect at the time of such acquisition or such Person becoming a Restricted Subsidiary (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition or such Person becoming a Restricted Subsidiary), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that the Consolidated Cash Flow of such Person is not taken into account (to the extent of such restriction) in determining whether such acquisition was permitted by the terms of this Indenture, (vi) restrictions of the nature described in clause (c) above by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent 42 with past practices, (vii) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in this clause (c) above on the property so acquired, (viii) Permitted Refinancings, provided that the encumbrances or restrictions contained in the agreements governing such Permitted Refinancings are no more restrictive than those contained in the agreements governing the Indebtedness or Disqualified Stock being refinanced, or (ix) customary restrictions in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements and mortgages. SECTION 4.9. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF CERTAIN CAPITAL STOCK. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness (including Assumed Indebtedness), neither the Company nor the Parent shall issue, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to issue, any shares of Disqualified Stock, and neither the Company nor the Parent shall permit any of its Restricted Subsidiaries (other than the Company) to issue any Preferred Stock; provided, however, that the Company or any Guarantor may incur Indebtedness or issue shares of Disqualified Stock if (i) the aggregate principal amount of all outstanding Indebtedness and Disqualified Stock of the Company, the Parent and their respective Restricted Subsidiaries (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the next paragraph or otherwise) determined on a consolidated basis is less than or equal to 65% of the Parent's Adjusted Total Assets, after giving effect to, on a pro forma basis, such incurrence or issuance and the receipt and application of the proceeds thereof; and (ii) the Fixed Charge Coverage Ratio of the Parent for the Parent's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period; provided that the Company, the Parent or any of their respective Restricted Subsidiaries may not incur any Subsidiary Debt or any Secured Indebtedness if immediately after giving effect to, on a pro forma basis, such incurrence of such additional Subsidiary Debt or Secured Indebtedness and the application of the proceeds thereof, the aggregate principal amount of all outstanding Subsidiary Debt or Secured Indebtedness of the Company, the Parent and their respective Restricted Subsidiaries (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the next paragraph or otherwise) on a consolidated basis is greater than 45% of the Parent's Adjusted Total Assets. The foregoing provisions shall not apply to: (a) the incurrence by the Company's or the Parent's Unrestricted Subsidiaries of Non-Recourse Indebtedness; provided, however, that if any such Indebtedness ceases to be Non- 43 Recourse Indebtedness of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by one of the Company's or the Parent's Restricted Subsidiaries; (b) the incurrence by the Company, the Parent or their respective Restricted Subsidiaries of Indebtedness pursuant to the Credit Facilities in an aggregate principal amount not to exceed $700.0 million at any one time outstanding, minus any Net Proceeds that have been applied to permanently reduce the outstanding amount of such Indebtedness pursuant to clause (a) of the second paragraph of Section 4.10 hereof; (c) the incurrence by the Company, the Parent and their respective Restricted Subsidiaries of Existing Indebtedness; (d) the incurrence by the Company, the Parent or their respective Restricted Subsidiaries of Indebtedness under Hedging Obligations that do not increase the Indebtedness of the Company, the Parent or the Restricted Subsidiary, as the case may be, other than as a result of fluctuations in interest or foreign currency exchange rates provided that such Hedging Obligations are incurred for the purpose of providing interest rate protection with respect to Indebtedness permitted under this Indenture or to provide currency exchange protection in connection with revenues generated in currencies other than U.S. dollars; (e) the incurrence or the issuance by the Company or the Parent of Refinancing Indebtedness or Refinancing Disqualified Stock or the incurrence or issuance by a Restricted Subsidiary of Refinancing Indebtedness or Refinancing Disqualified Stock; provided, however, that such Refinancing Indebtedness or Refinancing Disqualified Stock is a Permitted Refinancing; (f) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of intercompany Indebtedness between or among the Company, the Parent and/or any of their respective Restricted Subsidiaries; provided, however, that (a) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than a Restricted Subsidiary and (b) any sale or other transfer of any such Indebtedness to a Person that is not either the Company, the Parent or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company, the Parent or such Restricted Subsidiary, as the case may be; (g) the incurrence of Indebtedness represented by the Notes and any Guarantee thereof; (h) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries, in the ordinary course of business and consistent with past practice, of surety, performance or appeal bonds; (i) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any other clause of this paragraph) in an aggregate principal amount at any time outstanding not to exceed $50.0 million collectively; 44 (j) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of Assumed Indebtedness; provided that, after giving effect to the incurrence thereof, the Company, the Parent and their respective Restricted Subsidiaries could incur at lease $1.00 of additional Indebtedness pursuant to the tests described in the preceding paragraph; (k) the issuance of Preferred OP Units by the Company or any of its Restricted Subsidiaries as full or partial consideration for the acquisition of lodging facilities and related assets, provided that, after giving effect to the issuance thereof, the Company, the Parent and their respective Restricted Subsidiaries could incur at least $1.00 of additional Indebtedness pursuant to the tests described in the preceding paragraph; and (j) the incurrence of Indebtedness by the Company, the Parent or any of their respective Restricted Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any of obligations of the Company, the Parent or any of their respective Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by the Company, the Parent and their respective Restricted Subsidiaries on a consolidated basis in connection with such disposition. SECTION 4.10. LIMITATION ON SALE OF ASSETS. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, conduct an Asset Sale, unless (x) the Company, the Parent or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) and (y) at least 75% of the consideration therefor received by the Company, the Parent or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided, however, that, with respect to the sale of one or more hotel properties, up to 75% of the consideration may consist of Indebtedness of the purchaser of those hotel properties if that Indebtedness is secured by a first priority Lien on the properties sold; provided, further, however, the principal amount of the following shall be deemed to be cash for purposes of this provision: (A) any liabilities (as shown on the Company's, the Parent's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company, the Parent or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Guarantee thereof) that are assumed by the transferee of any such assets and (B) any notes or other obligations received by the Company, the Parent or any such Restricted Subsidiary from such transferee that are converted by the Company, the Parent or such Restricted Subsidiary into cash within 90 days after the closing of such Asset Sale (to the extent of the cash received). Notwithstanding the foregoing, the restriction in clause (y) above will not apply with respect to mortgages, other notes receivable or other securities received by the Company, the Parent or any Restricted Subsidiary from a transferee of any assets to the extent 45 such mortgages, other notes receivable or other securities are Investments permitted to be made by the Company, the Parent or such Restricted Subsidiary under Section 4.7 hereof. In the event and to the extent that the Net Proceeds received by the Company, the Parent and their respective Restricted Subsidiaries collectively from one or more Asset Sales occurring on or after the Issuance Date in any period of 12 consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of the Company, the Parent and their respective Restricted Subsidiaries has been filed with the SEC or otherwise provided to the Trustee), then the Company or the Parent shall, or shall cause the relevant Restricted Subsidiary to, within 365 days after the date the Net Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible Assets: (a) apply the Net Proceeds from such Asset Sale to prepay any Indebtedness under any Credit Facility, in order to effect a permanent reduction in the amount of Indebtedness that may be incurred pursuant to clause (b) of the second paragraph of Section 4.9 hereof, or (b) invest the Net Proceeds from such Asset Sale in property or assets used in a Hospitality-Related Business, provided that the Company, the Parent or such Restricted Subsidiary will have complied with this clause (b) if, within 365 days of such Asset Sale, the Company, the Parent or such Restricted Subsidiary, as applicable, shall have commenced and not completed or abandoned an Investment in compliance with this clause (b) and shall have segregated such Net Proceeds from the general funds of the Company, the Parent and their respective Subsidiaries for that purpose and such Investment is substantially completed within 180 days after the first anniversary of such Asset Sale. Any Net Proceeds from an Asset Sale that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an offer, to all Holders of Notes and to holders of other Indebtedness that ranks by its terms pari passu in right of payment with the Notes and the terms of which contain substantially similar requirements with respect to the application of net proceeds from asset sales as are contained in this Indenture (an "Asset Sale Offer") to purchase on a pro rata basis the maximum principal amount of Notes of each series, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Asset Sale Offer Price"), in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes and other such Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds available for purchase thereof, the Trustee shall select the Notes to be purchased in the manner described under Section 3.3 hereof. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Pending the final application of any Net Proceeds from an Asset Sale pursuant to this paragraph, the Company or any Restricted Subsidiary may temporarily reduce Indebtedness of the Company or a Restricted Subsidiary that ranks by its terms senior to the Notes or otherwise invest such Net Proceeds in Cash Equivalents. Any offer to purchase the Notes pursuant to this Section 4.10 shall be made pursuant to the provisions of Section 3.9 hereof. Simultaneously with the notification of such offer to the Trustee, the Company shall provide the Trustee with an Officer's is Certificate 46 setting forth the calculations used in determining the amount of Excess Proceeds to be applied to the purchase of the Notes. The Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with any offer to purchase and the purchase of Notes as described above. To the extent that the provisions of any securities laws or regulations conflict with Section 3.9 and this Section 4.10, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the provisions of Section 3.9 and this Section 4.10 to make an Asset Sale Offer. SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms that are no less favorable to the Company, the Parent or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company, the Parent or such Restricted Subsidiary on an arm's length basis with an unrelated Person, (b) the Company delivers to the Trustee (i) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above and such Affiliate Transaction is approved by a majority of the disinterested members of the Board of Directors and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $10.0 million (other than an Affiliate Transaction involving the acquisition or disposition of a lodging facility by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent), an opinion as to the fairness to the Company, the Parent or such Restricted Subsidiary from a financial point of view issued, at the option of the Company, by an investment banking firm of national standing or a Qualified Appraiser and (c) the Company delivers to the Trustee in the case of an Affiliate Transaction involving the acquisition or disposition of a lodging facility by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent and (x) involving aggregate payments of more than $5.0 million and less than $25.0 million, an appraisal by a Qualified Appraiser to the effect that the transaction is being undertaken at fair market value or (y) involving aggregate payments of $25.0 million or more, an opinion as to the fairness of the transaction to the Company, the Parent or such Restricted Subsidiary from a financial point of view issued by an investment banking firm of national standing; provided, however, that the following shall not be deemed Affiliate Transactions: (A) any employment, deferred compensation, stock option, noncompetition, consulting or similar agreement entered into by the Company, the Parent or any of their respective Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company, the Parent or such Restricted Subsidiary, (B) transactions between or among the Company, the Parent and/or their respective Restricted Subsidiaries, (C) the incurrence of fees in connection with the provision of hotel management services, provided that such fees are paid in the ordinary course of business and are consistent with past practice and (D) Restricted Payments permitted by Section 4.7 hereof. 47 SECTION 4.12. LIMITATION ON LIENS. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, secure any Indebtedness under any Credit Agreement or any other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 by a Lien (other than a Stock Pledge) unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with the Indebtedness under such Credit Agreement or any such other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 (and any other senior Indebtedness outstanding with similar provisions requiring the Company to equally and ratably secure such Indebtedness) for so long as the Indebtedness under any such Credit Agreement or any other such Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 is secured by such Lien; provided, however, that the Company, the Parent or any of their respective Restricted Subsidiaries may secure with one or more Liens up to $300 million aggregate principal amount of Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities," without making provision to equally and ratably secure the Notes. SECTION 4.13. CORPORATE EXISTENCE. Subject to Section 4.14 and Article 5 hereof, each of the Issuers and the Parent shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate or limited partnership, as the case may be, existence and the corporate, limited partnership or limited liability company, as the case may be, existence of each of its Subsidiaries, in accordance with its respective organizational documents (as the same may be amended from time to time) and (ii) its (and its Subsidiaries') rights (charter and statutory), licenses and franchises; provided, however, that the Issuers and the Parent shall not be required to preserve any such right, license or franchise, or the corporate, limited partnership or limited liability company, existence of any of its Subsidiaries, if the Board of Directors of the Parent shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Parent, the Company and their respective Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. SECTION 4.14. CHANGE OF CONTROL. Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following the date upon which the Change of Control occurs, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a Note purchased pursuant to a Change of 48 Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Trustee or Paying Agent, if any, at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.14, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.14 to make a Change of Control Offer. On the Change of Control Payment Date, the Company will, to the extent permitted by law, (x) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (y) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (z) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so accepted the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail to each Holder a new Note of the same series equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, however, that each such new Note shall be in principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce in a newspaper of national circulation or in a press release provided to a nationally recognized financial wire service the results of the Change of Control Offer on the Change of Control Payment Date. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. SECTION 4.15. SUBSIDIARY GUARANTEES. Prior to guaranteeing any other Indebtedness of the Company or the Parent, a Restricted Subsidiary of the Company or the Parent that is also a Significant Subsidiary must execute and deliver to the Trustee a supplemental indenture in the form of Exhibit B hereto pursuant to which such Restricted Subsidiary shall Guarantee, on an unsecured senior basis, all of the Obligations of the Issuers with respect to the Notes together with an opinion of counsel (which counsel may be an employee of the Company) to the effect that the supplemental indenture has been duly executed and delivered by such Restricted Subsidiary and is in compliance in all material respects with the terms of this Indenture. 49 SECTION 4.16. LINE OF BUSINESS. For so long as any Notes are outstanding, neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, engage in any business or activity other than a Hospitality-Related Business. SECTION 4.17. PAYMENTS FOR CONSENT. None of the Parent, any Issuer or any of their respective Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.18. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company, the Parent and their respective Restricted Subsidiaries shall maintain Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of the Company's, the Parent's and their respective Restricted Subsidiaries' senior Unsecured Indebtedness (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the second paragraph of Section 4.9 or otherwise); provided, however, that this Section 4.18 shall not prohibit the incurrence of Secured Indebtedness under the Credit Agreement; and provided further, however, that, to the extent that the Notes are secured by any assets equally and ratably with any other Indebtedness pursuant to Section 4.12 hereof, the related Lien or Liens on such assets securing the Notes and such other Indebtedness shall be ignored when determining the amount of Total Unencumbered Assets and senior Unsecured Indebtedness for purposes of this Section 4.18. SECTION 4.19. [intentionally left blank] SECTION 4.20. CERTAIN COVENANTS OF MERISTAR FINANCE. Notwithstanding anything to the contrary contained herein, MeriStar Finance shall not (a) own any assets other than nominal equity capital, (b) incur any Indebtedness other than (i) the Notes and (ii) Guarantees of certain Indebtedness existing on the Issuance Date and (c) engage in any business other than the co-issuance of the Notes and the Guarantees of the Indebtedness described in clause (b)(ii). SECTION 4.21. COVENANTS UPON ATTAINMENT AND MAINTENANCE OF AN INVESTMENT GRADE RATING. 50 The provisions of Sections 4.7, 4.8, 4.11 and 4.12 shall not be applicable in the event, and only for so long as, the Notes are rated Investment Grade and no Default or Event of Default has occurred and is continuing. ARTICLE 5 SUCCESSORS SECTION 5.1. WHEN THE COMPANY MAY MERGE, ETC. Neither of the Issuers nor the Parent shall consolidate or merge with or into (whether or not such Issuer or the Parent, as the case may be, is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its respective properties or assets in one or more related transactions to, another corporation, Person or entity unless: (i) such Issuer or the Parent, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Issuer or the Parent, as the case may be) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than such Issuer or the Parent, as the case may be) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made assumes all of such Issuer's or the Parent's respective obligations, as the case may be, under the Notes or the Guarantee thereof, as the case may be, and this Indenture, pursuant to a supplemental indenture; (iii) at the time of such transaction and immediately after such transaction after giving pro forma effect thereto, no Default or Event of Default exists or would exist; (iv) such Issuer or the Parent, as the case may be, or any Person formed by or surviving such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made shall, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the tests set forth in the first paragraph of Section 4.9 hereof; and (v) the Issuers and the Parent shall have delivered to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate and an Opinion of Counsel to the combined effect that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, and, if applicable, any supplemental indenture executed in connection therewith, comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel. 51 SECTION 5.2. SUCCESSOR SUBSTITUTED. Upon any consolidation or merger or lease, sale, assignment, disposition, conveyance or transfer of all or substantially all of the assets of any Issuer or the Parent, as the case may be, in accordance with Section 5.1 hereof, the successor Person formed by such consolidation or into which such Issuer or the Parent, as the case may be, is merged or to which such sale, lease, conveyance, assignment, disposition or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, such Issuer or the Parent, as the case may be, under this Indenture and the Notes or the Guarantee thereof, as the case may be, with the same effect as if such successor had been named as such Issuer or the Parent, as the case may be, herein or therein and thereafter (except in the case of a lease) the predecessor Person shall be relieved of all further obligations and covenants under this Indenture and the Notes or the Guarantee, as the case may be. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.1. EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Indenture with respect to the Notes: (1) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (2) default in payment when due of principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (3) failure by any Issuer or the Parent to comply with Section 5.1 or the failure by any Subsidiary Guarantor to comply with Section 10.2; (4) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in this Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (5) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled 52 or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration); (6) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (7) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (8) except as permitted by this Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns) or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; (9) the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, pursuant to or within the meaning of the Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, (e) admits in writing its inability to pay its debts as they become due; and 53 (10) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief in an involuntary case against the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, (b) appoints a Custodian of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, or for all or substantially all of the property of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent, or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, or (c) orders the liquidation of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, and the order or decree remains unstayed and in effect for 60 consecutive days. The term "Bankruptcy Law" means, title 11, U.S. Code or any similar federal or state law for the relief of debtors, each as amended from time to time. The term Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. SECTION 6.2. ACCELERATION. If any Event of Default (other than an Event of Default specified in clauses (9) and (10) of Section 6.1 hereof) with respect to Notes occurs and is continuing, the Trustee by written notice to the Issuers, or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee, may declare all Notes to be due and payable immediately. Upon the effectiveness of such declaration, all amounts due and payable on the Notes, as determined in the succeeding paragraphs, shall be due and payable effective immediately. If an Event of Default specified in clause (9) or (10) of Section 6.1 hereof occurs, all outstanding Notes shall ipso facto become and be immediately due and payable immediately without further action or notice on the part of or by the Trustee or any Holder. In the event that the maturity of the Notes is accelerated pursuant to this Section 6.2, 100% of the principal amount thereof shall become due and payable plus premium, if any, and accrued and unpaid interest and Liquidated Damages, if any, to the date of payment. SECTION 6.3. OTHER REMEDIES. 54 If an Event of Default with respect to Notes occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.4. WAIVER OF PAST DEFAULTS. Subject to Section 9.2 hereof, Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences with respect to the Notes except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest or Liquidated Damages, if any, on any Note held by a non-consenting Holder. Upon any such waiver, such Default shall cease to exist with respect to the Notes, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture with respect to the Notes but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.5. CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to the Notes. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, or that the Trustee determines may be unduly prejudicial to the rights of other Holders or that may involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. SECTION 6.6. LIMITATION ON SUITS. A Holder may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default or the Trustee receives such notice from an Issuer or the Parent; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and 55 (5) during such 60-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest and Liquidated Damages, if any, on such Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. SECTION 6.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against any Issuer or any Guarantor for the whole amount of principal, premium, if any, and interest and Liquidated Damages, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.7 hereof) and the Holders allowed in any judicial proceedings relative to any Issuer or any Guarantor (or any other obligor upon the Notes), their creditors or their property and shall be entitled and empowered to collect, receive and distribute any money or securities or other property payable or deliverable on any such claims and to distribute the same, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders of the Notes may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any 56 Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects or receives any money or securities or other property pursuant to this Article with respect to the Notes, it shall pay out the money or securities or other property in the following order: First: to the Trustee, its agents and counsel for amounts due under Section 7.7 hereof with respect to such Notes, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest and Liquidated Damages, if any, ratably, without preference or priority of any kind (including defaulted interest), according to the amounts due and payable on the Notes for principal, premium, if any, and interest and Liquidated Damages, if any, respectively; Third: without duplication, to Holders for any other obligations owing to the Holders under the Notes or this Indenture; and Fourth: to the Issuers or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any such payment to Holders. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE SECTION 7.1. DUTIES OF TRUSTEE. (1) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of 57 care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (2) Except during the continuance of an Event of Default with respect to the Notes: (a) the duties of the Trustee with respect to the Notes shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (3) The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that: (a) this paragraph does not limit the effect of paragraph (2) of this Section 7.1; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action it takes or omits to take with respect to Notes in good faith in accordance with a direction received by it pursuant to Section 6.5. (4) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (1), (2) and (3) of this Section. (5) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (6) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.2. RIGHTS OF TRUSTEE. Subject to TIA Section 315: 58 (1) The Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (3) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture. (5) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuers shall be sufficient if signed by an Officer of each of the Issuers. (6) Without limiting the provisions of Section 7.1(5), the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Holders of a majority in aggregate principal amount of the then outstanding Notes pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (7) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (8) Except with respect to Section 4.1, the Trustee shall have no duty to inquire as to the performance of any Issuer's or the Parent's covenants in Article 4. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(1), 6.1(2) or 4.1 or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with any Issuer, the Parent, any Subsidiary of the Company or the Parent or any Affiliate of the foregoing with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 7.10 and 7.11 hereof. 59 SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers' use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers' direction under any provision hereof, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.5. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and subject to Section 7.2(8) if it is known by a Trust Officer of the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal or interest on any Note, the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interests of Holders. The Trustee shall comply with TIA Section 315(b). SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15 beginning with May 15, 2002, the Trustee shall mail to Holders a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to Holders shall be submitted to the SEC and each stock exchange, if any, on which the Notes are listed. The Issuers shall promptly notify the Trustee when the Notes are listed on or delisted by any stock exchange. SECTION 7.7. COMPENSATION AND INDEMNITY. The Issuers agree to pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers agree to reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Issuers agree to indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, except as set forth in the next paragraph. The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers of its obligations hereunder except to the extent the Issuers have been prejudiced thereby. The Issuers shall defend the claim and the Trustee shall 60 cooperate in the defense. The Trustee may have separate counsel and, if the Issuers or the Trustee shall have been advised by its respective counsel that representation of the Trustee and the Issuers by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed), the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The provisions of this paragraph shall survive the satisfaction and discharge of this Indenture. The Issuers need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through its own gross negligence or willful misconduct. The obligations of the Issuers under this Section 7.7 shall survive the satisfaction and discharge of this Indenture. To secure the Issuers' payment obligations in this Section, the Trustee shall have a Lien on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(9) or (10) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.8. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign at any time with respect to the Notes by so notifying the Issuers in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee for by so notifying the Trustee and the Issuers. The Issuers may remove the Trustee at its discretion or if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then 61 outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee for the Notes. Subject to the provision of TIA Section 315(e), if the Trustee after written request by any Holder who has been a bona fide holder of a Note or Notes for at least six months fails to comply with Section 7.10, such Holder, on behalf of himself and others similarly situated, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Issuers' obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee. In the case of an appointment hereunder of a separate or successor Trustee with respect to the Notes, the Issuers, the Parent, any retiring Trustee and each successor or separate Trustee with respect to the Notes shall execute and deliver an Indenture supplemental hereto (1) which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of any retiring Trustee with respect to the Notes as to which any such retiring Trustee is not retiring shall continue to be vested in such retiring Trustee and (2) that shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustee co-trustees of the same trust and that each such separate, retiring or successor Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any such other Trustee. SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any state thereof authorized under such laws to exercise corporate trustee powers, shall be subject to 62 supervision or examination by Federal or state authority and shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a). The Trustee is subject to TIA Section 310(b). The provisions of TIA Section 310 shall apply to the Issuers as the obligors of the Notes. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. The provisions of TIA Section 311 shall apply to the Issuers as the obligors of the Notes. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.1. DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE NOTES. (a) The Issuers may, at the option of the Board of Directors of the Parent, evidenced by a resolution set forth in an Officers' Certificate, at any time, with respect to the Notes, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. (b) The Issuers may terminate their obligations (and the obligations of any Guarantor in respect of the Guarantees with respect to the Notes) under the Notes and this Indenture with respect to the Notes (except those obligations referred to in the penultimate paragraph of this Section 8.1(b)) if all such Notes thereto authenticated and delivered (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment cash in United States dollars has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers, as provided in Section 8.6, or discharged from such trust) have been delivered to the Trustee for cancellation and the Issuers have paid all sums payable by it hereunder, or if (i) either (x) pursuant to Article 3, the Issuers shall have given notice to the Trustee and mailed a notice of redemption to each Holder of the redemption of all of the Notes under arrangements satisfactory to the Trustee for the giving of such notice or (y) all Notes have otherwise become due and payable hereunder, (ii) the Issuers shall have irrevocably deposited or caused to be deposited with the Trustee or a trustee satisfactory to the Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, cash in United States dollars in such amount as is sufficient without consideration of reinvestment of such interest, to pay principal of, premium, if any, interest and Liquidated Damages, if any, on the outstanding Notes to maturity or redemption; provided that the Trustee shall have been irrevocably instructed to apply such deposit to the payment of said principal, premium, if any, interest and Liquidated Damages, if any, with respect to the Notes; (iii) no Default or Event of 63 Default with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company, the Parent, any Guarantor or any or their respective Subsidiaries is a party or by which any of such parties is bound; (iv) the Issuers shall have paid all other sums payable by them hereunder; and (v) the Issuers shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge of this Indenture have been complied with. Such Opinion of Counsel shall also state that such satisfaction and discharge does not result in a default under the Credit Agreement (if then in effect) or any other agreement or instrument then known to such counsel that binds or affects the Issuers or any Guarantor. Notwithstanding the foregoing paragraph, each Issuer's (and any Guarantor's) obligations in Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.6 and 8.7 shall survive with respect to the Notes until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.8. After the Notes are not longer outstanding, the Issuers' obligations in Sections 7.7, 8.6 and 8.7 shall survive. After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Issuers' obligations (and the obligations of any Guarantors in respect of Guarantees of the Notes) under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE. Upon the Issuers' exercise under Section 8.1(a) hereof of the option applicable to this Section 8.2 with respect to the Notes, the Issuers and the Guarantors shall be deemed to have been discharged from their obligations with respect to all outstanding Notes and Guarantees with respect to the Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means that the Issuers shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be outstanding only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in clauses (i) and (ii) of this Section 8.2, and to have satisfied all their other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due, solely from amounts deposited with the Trustee, as provided in Section 8.4 hereof, (ii) the Issuers' and the Guarantors' obligations with respect to the Notes under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.10 and 4.2 hereof, (iii) the rights, powers, trusts, duties, indemnities and immunities of the Trustee and the Issuers' obligations in connection therewith and (iv) this Article 8. SECTION 8.3. COVENANT DEFEASANCE. 64 Upon the Issuers' exercise under Section 8.1(a) hereof of the option applicable to this Section 8.3 with respect to the Notes, the Issuers and the Guarantors, if any, shall be released from their obligations under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.18, 5.1 and 10.2 with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders of Notes (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Notes, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1(3) or 6.1(4) hereof but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Issuers' exercise under Section 8.1 hereof of the option applicable to this Section 8.3, any event described in Sections 6.1(3) through 6.1(8) hereof shall not constitute Events of Default. SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to application of either Section 8.2 or Section 8.3 hereof to the outstanding Notes: (a) the Issuers shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 hereof who shall agree to comply with the provisions of this Article 8 applicable to it), in trust (the "defeasance trust"), for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Notes, (a) cash in United States dollars in an amount, or (b) non-callable Government Securities which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, cash in United States dollars in an amount, or (c) a combination thereof, in such amounts as will be sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge the principal of, premium, if any, and interest (including defaulted interest) and Liquidated Damages, if any, on the outstanding Notes and any other obligations owing to the Holders of the Notes, under the Notes or this Indenture on the stated maturity or on the applicable redemption date, as the case may be, of such principal or installment of principal of, premium, if any, interest and Liquidated Damages, if any, on the outstanding Notes, provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such non-callable Government Securities to said payments with respect to the Notes; 65 (b) in the case of an election under Section 8.2 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that (A) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time, as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.3 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds applied to such deposit) or, insofar as Section 6.1(9) or 6.1(10) hereof is concerned, at any time in the period ending on the 123rd day after the date of such deposit (or greater period of time in which any such deposit of trust funds may remain subject to bankruptcy or insolvency laws insofar as those apply to the deposit by the Issuers) (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture with respect to the Notes) to which any Issuer, the Parent or any of their respective Subsidiaries is a party or by which the Company, the Parent or any of their respective Subsidiaries is bound; (f) in the case of an election under either Section 8.2 or 8.3 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion, (A) the trust funds will not be subject to any rights of holders of Indebtedness other than the Notes and (B) assuming no intervening bankruptcy of the Issuers or the Parent between the date of deposit and the 123rd day following the deposit and assuming no Holder of the Notes is an insider of the Issuer or the Parent, after the 123rd day following the deposit, as of the date of such opinion, the trust funds will not be subject to avoidance under Section 547 of the United States Bankruptcy Code (or any successor provision thereto) and related judicial decisions or any other applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any United States or state law; (g) in the case of an election under either Section 8.2 or 8.3 hereof, the Issuers shall have delivered to the Trustee an Officers' Certificate stating that the deposit made by the Issuers pursuant to its election under Section 8.2 or 8.3 hereof was not made by the Issuers with 66 the intent of preferring the Holders of Notes over other creditors of the Issuers or with the intent of defeating, hindering, delaying or defrauding creditors of the Issuers or others; and (h) the Issuers shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company), each stating that all conditions precedent provided for relating to either the Legal Defeasance under Section 8.2 hereof or the Covenant Defeasance under Section 8.3 hereof (as the case may be) have been complied with as contemplated by this Section 8.4. SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.1(b) or Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including an Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Issuers and the Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.1(b) or Section 8.4 hereof or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the Issuers' request any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.6. REPAYMENT TO THE ISSUERS. The Trustee shall promptly pay to the Issuers after request therefor any excess money held with respect to Notes at such time in excess of amounts required to pay any of the Issuers' Obligations then owing with respect to the Notes. Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for one year after such principal, premium, if any, or interest has become due and payable shall be paid to the Issuers on their request or (if then held by an Issuer) shall be 67 discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuers cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuers. SECTION 8.7. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any cash or non-callable Government Securities in accordance with Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof, as the case may be, with respect to the Notes by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Issuers and the Guarantors under this Indenture, the Notes and the Guarantee thereof shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof, as the case may be; provided, however, that, if any Issuer or any Guarantor makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, such Issuer or such Guarantor shall be subrogated to the rights of the Holders of such Note to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Issuers, any Guarantors and the Trustee, as applicable, may amend or supplement this Indenture, the Notes, and any Guarantee with respect to the Notes without the consent of any Holder: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to provide for the assumption of an Issuers' or the Parent's obligations to Holders of the Notes under this Indenture or any Guarantor's obligations under its Guarantee of the Notes in the case of a merger, consolidation or sale of assets involving such Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the 68 Notes and any supplemental indenture required pursuant to Section 4.15 hereof) or that does not adversely affect the legal rights under this Indenture of any such Holder; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; and (f) to release a Guarantor in accordance with Section 10.4 hereof. Upon the request of the Issuers, the Parent and any Guarantor, accompanied by a resolution of the Board of Directors of such Issuer, the Parent or such Guarantor, as applicable, authorizing the execution of any such amended or supplemental indenture and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Issuers, the Parent and any such Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture which adversely affects its own rights, duties or immunities under this Indenture, or otherwise. SECTION 9.2. WITH CONSENT OF HOLDERS. Except as provided below in this Section 9.2, the Issuers, the Parent, any Guarantors and the Trustee together may amend this Indenture, the Notes and any Guarantee of the Notes with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes affected by such amendment (including consents obtained in connection with a purchase of or a tender offer or exchange offer for Notes). Upon the request of the Issuers, accompanied by a resolution of the Board of Directors of each of the Issuers and the Parent, authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Issuers, the Parent and any Guarantors, as the case may be, in the execution of such supplemental indenture unless such supplemental indenture adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment or waiver under this Section 9.2 becomes effective, the Issuers shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in aggregate principal amount of the then-outstanding Notes affected thereby (including consents obtained in connection with a purchase of or a tender offer or exchange offer for Notes) may waive any 69 existing default or compliance in a particular instance by any Issuer or any Guarantor with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes; (c) reduce the rate of or change the time for payment of interest on any Note; (d) waive a Default or an Event of Default in the payment of principal of or premium, if any, or interest on any Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Note; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest or Liquidated Damages on the Notes; (g) waive a redemption payment with respect to any Note; (h) modify or change any provision of this Indenture or the related definitions affecting the ranking of the Notes or any Guarantee of the Notes in a manner which adversely affects the Holders in any material respect; (i) except pursuant to Article 8 or pursuant to Section 10.4, release any Guarantor from its obligations under a Guarantee of the Notes, or change any such Guarantee of the Notes in any manner that would adversely affect the Holders in any material respect; (j) make any change to Section 3.9, Section 4.10 or Section 4.14; or (k) make any change in the foregoing amendment and waiver provisions. SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Notes shall be set forth in an amendment or supplemental indenture that complies with the TIA as then in effect. SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS. Until an amendment or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his or her Note if the Trustee receives written notice of revocation before the date the waiver or amendment becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Issuers may fix a record date for determining which Holders must consent to such amendment or waiver. If the Issuers fix a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or (ii) such other date as the Issuers shall designate. SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment or waiver. SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Trustee shall be entitled to receive, and, subject to Section 7.1 hereof, shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Issuers, the Parent and the Guarantors in accordance with its terms. The Issuers, the Parent and any Guarantors may not sign an amendment or supplemental indenture until the Board of Directors of each Issuer, the Parent or any Guarantor, as applicable, approves it. ARTICLE 10 GUARANTEES SECTION 10.1. GUARANTEES. Each Guarantor, jointly and severally, unconditionally guarantees, on an unsecured senior basis, to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Issuers under this Indenture or the Notes, that: (i) the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption, offer to purchase or otherwise, and interest on the overdue principal of, premium, and interest and Liquidated Damages, if any, on the Notes and all other Obligations of the Issuers to the Holders or the Trustee under this Indenture or the Notes 71 will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Notes; (ii) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise; and (iii) any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under any Guarantee with respect to the Notes will be paid. Failing payment when due of any amount so guaranteed for whatever reason, any Guarantor will be obligated (subject to any grace periods allowed pursuant to Section 6.1 hereof) to pay the same whether or not such failure to pay has become an Event of Default which could cause acceleration pursuant to Section 6.2 hereof. An Event of Default under this Indenture or the Notes shall constitute an event of default under any Guarantee of the Notes, and shall entitle the Holders of Notes to accelerate the Obligations of any Guarantor hereunder in the same manner and to the same extent as the Obligations of the Issuers. Each Guarantor agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of any Guarantor. Any Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of either or both of the Issuers, protest, notice and all demands whatsoever and covenants that its Guarantee with respect to the Notes will not be discharged except by complete performance of its Obligations under the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to any Issuer, any Guarantor or any Custodian, Trustee, liquidator or other similar official acting in relation to either any Issuer or any Guarantor any amount paid by any such entity to the Trustee or such Holder, any Guarantee to the Notes, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holder in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purpose of such Guarantee of the Notes. A Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holder under its Guarantee of the Notes. Each Holder of a Note by its acceptance thereof agrees to and shall be bound by the provisions of this Section 10.1. SECTION 10.2. WHEN A SUBSIDIARY GUARANTOR MAY MERGE, ETC. 72 No Subsidiary Guarantor shall consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (a) the person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the Obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in the form of Exhibit B hereto and under the Notes and this Indenture; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) such Subsidiary Guarantor or any Person formed by or surviving any such consolidation or merger would be permitted by virtue of the tests set forth in the first paragraph of Section 4.9 hereof to incur, immediately after giving effect to such transaction, at least $1.00 of additional Indebtedness under those tests. The Subsidiary Guarantor shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel, covering clauses (a) and (b) (in the case of clause (b), to such counsel's knowledge), stating that the proposed transaction and such supplemental indenture comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel. Notwithstanding the foregoing, (A) a Subsidiary Guarantor may consolidate with or merge with or into the Company; provided, however, that the surviving Person (if other than the Company) shall expressly assume by supplemental indenture complying with the requirements of this Indenture, the due and punctual payment of the principal of, premium, if any, and interest and Liquidated Damages, if any, on all of the Notes, and the due and punctual performance and observance of all the covenants and conditions of this Indenture and the Notes to be performed by the Company; (B) a Subsidiary Guarantor may consolidate with or merge with or into any other Subsidiary Guarantor and (C) a Subsidiary Guarantor may consolidate with or merge with or into the Parent; provided, however, that the surviving Person (if other than the Parent) shall expressly assume by supplemental indenture complying with the requirements of this Indenture the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Parent. SECTION 10.3. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY. For purposes of this Article 10 and any Guarantee of the Notes by a Subsidiary Guarantor, each Subsidiary Guarantor's liability will be that amount from time to time equal to the aggregate liability of such Subsidiary Guarantor hereunder and thereunder, but shall be limited to the lesser of (i) the aggregate amount of the obligations of the Issuers under the Notes and this Indenture or (ii) the amount, if any, which would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term is defined in the federal Bankruptcy Code and in the Debtor and Creditor Law of the State of New York) or (B) left it with unreasonably small capital at the 73 time its Guarantee of the Notes was entered into, after giving effect to the incurrence of existing Indebtedness immediately prior to such time; provided that, it shall be a presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to the Guarantee of the Notes is the amount set forth in clause (i) above unless any creditor, or representative of creditors of such Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Subsidiary Guarantor is limited to the amount set forth in clause (ii). In making any determination as to the solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with the previous sentence, the right of such Subsidiary Guarantor to contribution from other Subsidiary Guarantors and any other rights such Subsidiary Guarantor may have, contractual or otherwise, shall be taken into account. SECTION 10.4. RELEASE OF A GUARANTOR. Concurrently with the payment in full of all of the Issuers' Obligations under the Notes and this Indenture (other than with respect to any indemnification obligations), each Guarantor shall be released from and relieved of its Obligations with respect to the Notes under this Article 10. In the event of a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, which sale or other disposition is otherwise in compliance with the terms of this Indenture, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) will be automatically and unconditionally released and relieved of any obligations under its Guarantee of the Notes. The Trustee shall deliver an appropriate instrument evidencing any such release under this Section 10.4 upon receipt of a request by the Issuers accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 10.4. The provisions of Section 10.2 shall not apply to any merger or consolidation pursuant to which a Subsidiary Guarantor is released from its Obligations under this 10.4. ARTICLE 11 MISCELLANEOUS SECTION 11.1. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of TIA Section 318(c), the imposed duties shall control. SECTION 11.2. NOTICES. Any notice or communication by the Issuers, the Parent or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first-class mail (registered or certified, return receipt requested), or sent by telex, telecopier or overnight air courier guaranteeing next Business Day delivery, to the other's address: If to any Issuer: 74 MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Richard S. Borisoff, Esq. Telecopier No.: (212) 757-3990 If to the Parent: MeriStar Hospitality Corporation 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Richard S. Borisoff, Esq. Telecopier No.: (212) 757-3990 If to the Trustee: U. S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, New York 10005 Attention: Corporate Trust Department Telecopier No.: (212) 809-5459 The Issuers, the Parent or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after 75 timely delivery to the courier, if sent by overnight air courier guaranteeing next Business Day delivery. Any notice or communication to a Holder shall be mailed by first-class mail to his address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed or given in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Issuers mail a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Issuers or the Parent to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.5) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.5) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.4 and TIA Section 314(a)(4)) shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; 76 (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificate of public officials. SECTION 11.6. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.7. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. SECTION 11.8. RECOURSE AGAINST OTHERS. No past, present or future director, officer, partner, employee, agent, manager, stockholder, incorporator or other Affiliate, as such of any Issuer or of any Guarantor shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, or this Indenture or a Guarantee of the Notes, if any, or for any claim based upon, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. SECTION 11.9. DUPLICATE ORIGINALS. The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture. SECTION 11.10. GOVERNING LAW. THIS INDENTURE, THE NOTES AND THE GUARANTEES OF THE NOTES AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND 77 THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, the LAWS OF THE STATE OF NEW YORK. SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of any Issuer, the Parent or any of their respective Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.12. SUCCESSORS. All agreements of the Issuers, the Parent and the Guarantors in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.13. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.14. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. 78 IN WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto by their respective duly authorized officers as of the date first written above. Issuers: ------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: MeriStar Hospitality Corporation, as general partner By: /s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOSPITALITY FINANCE CORP. II, a Delaware corporation By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel Parent: ------ MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Christopher L. Bennett --------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 79 Trustee: ------- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By:/s/ Adam Berman ---------------------------- Name: Adam Berman Title: Trust Officer Subsidiary Guarantors: --------------------- MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By:/s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel AGH PSS I, INC., a Delaware corporation By:/s/ Christopher L. Bennett ----------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 80 AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, a Maryland corporation, member By:/s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By:/s/ Christopher L. Bennett --------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MIDLAND PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. Each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By:/s/ Christopher L. Bennett --------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 81 EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR CS COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR INDIANAPOLIS COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 82 MERISTAR SANIBEL INN COMPANY, LLC MERISTAR SUNDIAL BEACH COMPANY, LLC MERISTAR SAFETY HARBOR COMPANY, LLC MERISTAR SEASIDE INN COMPANY, LLC MERISTAR PLANTATION SHOPPING CENTER COMPANY, LLC MERISTAR SONG OF THE SEA COMPANY, LLC MERISTAR SHIRLEY'S PARCEL COMPANY, LLC MERISTAR SANIBEL GOLF COMPANY, LLC MERISTAR MARCO ISLAND COMPANY, LLC MERISTAR S.S. PLANTATION COMPANY, LLC MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (VANCOUVER) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC AGH 75 ARLINGTON HEIGHTS LLC Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 83 MERISTAR SANTA BARBARA, L.P., a Delaware limited partnership MERISTAR CATHEDRAL CITY, L.P., a Delaware limited partnership MERISTAR LAJV, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 84 BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 85 MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 86 By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR LP, INC., a Nevada corporation By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 87 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOTEL LESSEE, INC. By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 88 MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD., a Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 89 AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel EXHIBIT A (Face of Note) 10 1/2% [Series A] [Series B] Senior Notes due 2009 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. II promise to pay to ___________________________, or registered assigns, the principal sum of ________________________________ Dollars on June 15, 2009. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 Dated: ___________________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: ______________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. II By:_______________________________ Name: Title: A-1 Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory A-2 (Back of Note) 10 1/2% [Series A] [Series B] Senior Notes due 2009 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. II [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM A-3 THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. A-4 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company") and MeriStar Hospitality Finance Corp. II, a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 10 1/2% [Series A] [Series B] Senior Note due 2009 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each June 15 and December 15 commencing June 15, 2002 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of this Note. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. (2) METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the June 1 and December 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the A-5 Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of December 19, 2001 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. (5) OPTIONAL REDEMPTION. (a) Prior to December 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 110.500% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. (b) Except as set forth in the previous paragraph, the Issuers shall not have the option to redeem the Notes prior to December 15, 2005. On or after December 15, 2005, the Issuers may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the 12-month period beginning on December 15 of the years indicated below: Year Percentage 2005......................................................... 105.250% 2006......................................................... 102.625% 2007 and thereafter.......................................... 100.000% If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Issuers. A-6 (6) OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. (7) NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (8) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. (9) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or A-7 maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. (11) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any A-8 group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. (12) GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. (13) SECURITY. The Notes will be senior, unsecured obligations of the Issuers. (14) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. (15) AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (16) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (17) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A-9 (18) [SERIES A NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 A-10 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ______________________________________________________________________________ (Insert assignee's Social Security or tax I.D. No.) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint __________________________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _____________________________ Your Signature: _______________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* _________________ ______________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-11 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [_] Section 4.10 [_] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:______________ Your Signature:_____________________________ (Sign exactly as your name appears on the Note) Tax Identification No:________________________ Signature Guarantee:*/________________________ __________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-12 Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) December 19, 2003, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or (2) ___ pursuant to and in compliance with Rule 144A under the Securities Act; or (3) ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or (4) ___ pursuant to an effective registration statement under the Securities Act; or (5) ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: _______ Signed:_________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:________________________________________ A-13 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________________ Signed:_________________________ NOTICE: To be executed by an executive officer A-14 SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made: Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Date Principal Principal following such officer of of Amount of Amount of this decrease Trustee or Note Exchange this Global Note Global Note (or increase) Custodian -------- ---------------- ----------- ------------- --------- A-15 EXHIBIT B FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE This "Supplemental Indenture", dated as of ________, between _________________ (the "Guarantor"), a subsidiary of [MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership] [MeriStar Hospitality Corporation, a Maryland corporation], and U.S. Bank Trust National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, MeriStar Hospitality Operating Partnership (the "Company"), MeriStar Hospitality Finance Corp. II ("MeriStar Finance," and together with the Company, the "Issuers"), MeriStar Hospitality Corporation (the "Parent") and the Subsidiary Guarantors parties thereto, have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of December 19, 2001, providing for the issuance of up to an aggregate principal amount of $250,000,000 of 10 1/2 % Senior Notes due 2009 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company and the Parent are required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Issuers' Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other Guarantors, to guarantee the Issuers' obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and B-1 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated:____________, ____ [Guarantor] By: ____________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: _____________________________ Name: Title: B-2 EXHIBIT C Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, New York 10005 Attention: Corporate Trust Department Re: MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp.II (the "Issuers") 10 1/2% Senior Notes due 2009 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of $ [ ___________ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: 1. the offer of the Notes was not made to a Person in the United States; 2. either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; 3. no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; 4. the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and 5. we have advised the transferee of the transfer restrictions applicable to the Notes. C-1 You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, By: ______________________ Authorized Signature C-2 EX-4.6.1 14 dex461.txt EXHIBIT 4.6.1 Exhibit 4.6.1 (Face of Note) 10 1/2% [Series A] [Series B] Senior Notes due 2009 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. II promise to pay to ___________________________, or registered assigns, the principal sum of ________________________________ Dollars on June 15, 2009. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 Dated: _______________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: __________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. II By: ____________________________ Name: Title: Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory (Back of Note) 10 1/2% [Series A] [Series B] Senior Notes due 2009 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. II [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. II OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company") and MeriStar Hospitality Finance Corp. II, a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 10 1/2% [Series A] [Series B] Senior Note due 2009 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each June 15 and December 15 commencing June 15, 2002 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of this Note. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. (2) METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the June 1 and December 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of December 19, 2001 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. (5) OPTIONAL REDEMPTION. (a) Prior to December 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 110.500% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. (b) Except as set forth in the previous paragraph, the Issuers shall not have the option to redeem the Notes prior to December 15, 2005. On or after December 15, 2005, the Issuers may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the 12-month period beginning on December 15 of the years indicated below: Year Percentage 2005 ............................................................. 105.250% 2006 ............................................................. 102.625% 2007 and thereafter .............................................. 100.000% If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Issuers. (6) OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. (7) NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (8) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. (9) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. (11) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. (12) GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. (13) SECURITY. The Notes will be senior, unsecured obligations of the Issuers. (14) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. (15) AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (16) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (17) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. (18) [SERIES A NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's Social Security or tax I.D. No.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ___________________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _____________________________ Your Signature: ____________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* _____________ ___________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [_] Section 4.10 [_] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:______________ Your Signature:_____________________________ (Sign exactly as your name appears on the Note) Tax Identification No:________________ Signature Guarantee:*/________________ _______________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) December 19, 2003, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or ___ pursuant to and in compliance with Rule 144A under the Securities Act; or ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or ___ pursuant to an effective registration statement under the Securities Act; or ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: ________________ Signed:_________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:_______________________________________________ TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________________ Signed:_________________________ NOTICE: To be executed by an executive officer SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made:
Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of Amount of this decrease Trustee or Note Exchange this Global Note Global Note (or increase) Custodian --------- ---------------- ------------ ------------- ---------
EX-4.6.2 15 dex462.txt EXHIBIT 4.6.2 Exhibit 4.6.2 ================================================================================ EXECUTION COPY REGISTRATION RIGHTS AGREEMENT Dated as of December 19, 2001 Among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. II as Issuers MERISTAR HOSPITALITY CORPORATION and Certain Subsidiaries of MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. as Guarantors and LEHMAN BROTHERS INC. DEUTSCHE BANC ALEX. BROWN INC. SG COWEN SECURITIES CORPORATION BANC OF AMERICA SECURITIES LLC BANC ONE CAPITAL MARKETS, INC. CIBC WORLD MARKETS CORP. DRESDNER KLEINWORT WASSERSTEIN - GRANTCHESTER, INC. FLEET SECURITIES, INC. SALOMON SMITH BARNEY INC. SCOTIA CAPITAL (USA) INC. WELLS FARGO BROKERAGE SERVICES, LLC as Initial Purchasers ================================================================================ Table of Contents Page 1. Definitions...........................................................3 2. Securities Subject to This Agreement..................................6 3. Registered Exchange Offer.............................................6 4. Shelf Registration....................................................8 5. Liquidated Damages....................................................9 6. Registration Procedures..............................................10 7. Registration Expenses................................................18 8. Indemnification and Contribution.....................................18 9. Rule 144A............................................................21 10. Participation in Underwritten Registrations..........................21 11. Selection of Underwriters............................................22 12. Miscellaneous........................................................22 This Registration Rights Agreement (this "Agreement") is made and entered into --------- as of December 19, 2001, by and among MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership (the "Company"), MeriStar ------- Hospitality Finance Corp. II, a Delaware corporation (the "Co-Issuer"; and, --------- together with the Company, the "Issuers"), MeriStar Hospitality Corporation, a ------- Maryland corporation (the "Parent"), the Subsidiary Guarantors listed on the ------ signature pages hereto (the "Subsidiary Guarantors"; and, together with the --------------------- Parent, the "Guarantors"; the Guarantors and the Issuers being collectively ---------- referred to herein as the "Issuing Parties") and Lehman Brothers Inc., Deutsche --------------- Banc Alex. Brown Inc., SG Cowen Securities Corporation, Banc of America Securities LLC, Banc One Capital Markets, Inc., CIBC World Markets Corp., Dresdner Kleinwort Wasserstein - Grantchester, Inc., Fleet Securities, Inc., Salomon Smith Barney Inc., Scotia Capital (USA) Inc. and Wells Fargo Brokerage Services, LLC (collectively, the "Initial Purchasers"). ------------------ This Agreement is entered into in connection with the Purchase Agreement, dated December 12, 2001, among the Issuing Parties and the Initial Purchasers (the "Purchase Agreement"), which provides for the sale by the ------------------ Issuers to the Initial Purchasers of the $227,000,000 principal amount of the Issuers' 10 1/2% Senior Notes due 2009 (the "Notes"). The Notes will be ----- guaranteed on a senior basis by guarantees (the "Guarantees") issued by the ---------- Guarantors. The Notes and the Guarantees are collectively referred to herein as the "Securities". Capitalized terms used but not specifically defined herein ---------- have the respective meanings ascribed thereto in the Purchase Agreement. As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to their obligations thereunder, the Issuing Parties agree with the Initial Purchasers, for the benefit of the holders of the Securities (including the Initial Purchasers), as follows: 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: Affiliate: As defined in Rule 405 under the Securities Act. --------- Broker-Dealer: Any broker or dealer registered under the ------------- Exchange Act. Business Day: As defined in the Indenture. ------------ Closing Date: The date on which the Securities were sold. ------------ Co-Issuer: As defined in the preamble hereto. --------- Commission: The Securities and Exchange Commission. ---------- Company: As defined in the preamble hereto. ------- Consummate: A Registered Exchange Offer shall be deemed ---------- "Consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration -3- Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuing Parties of the Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Transfer Restricted Securities that were validly tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Securities, each -------------------- Distribution Date until the earlier of (i) the date on which Liquidated Damages no longer are payable or (ii) maturity of the Securities. Distribution Date: Every June 15 and December 15 of each year, ----------------- beginning with June 15, 2002; provided, that if any such day is not a Business Day, the Distribution Date shall be the next succeeding Business Day. Effectiveness Target Date: As defined in Section 5 hereof. ------------------------- Exchange Act: The Securities Exchange Act of 1934, as amended. ------------ Exchange Offer: The registration by the Issuing Parties under -------------- the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Issuing Parties offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate amount equal to the aggregate amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: The Registration ------------------------------------- Statement relating to the Exchange Offer, including the Prospectus which forms a part thereof. Exchange Securities: The Securities to be issued pursuant to ------------------- the Indenture in the Exchange Offer. Guarantees: As defined in the preamble hereto. ---------- Guarantors: As defined in the preamble hereto. ---------- Holders: As defined in Section 2 hereof. ------- Indenture: The Indenture, dated as of December 19, 2001, among --------- the Issuing Parties and the Trustee, pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. ------------------ Issuers: As defined in the preamble hereto. ------- -4- Issuing Parties: As defined in the preamble hereto. --------------- Liquidated Damages: As defined in Section 5 hereof. ------------------ NASD: National Association of Securities Dealers, Inc. ---- Notes: As defined in the preamble hereto. ----- Participant: As defined in Section 8 hereof. ----------- Person: An individual, partnership, corporation, limited ------ liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration ---------- Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Purchase Agreement: As defined in the preamble hereto. ------------------ Registration Default: As defined in Section 5 hereof. -------------------- Registration Statement: Any registration statement of the ---------------------- Issuing Parties relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in either case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Securities: As defined in the preamble hereto. ---------- Securities Act: The Securities Act of 1933, as amended. -------------- Shelf Filing Deadline: As defined in Section 4 hereof. --------------------- Shelf Registration Statement: As defined in Section 4 hereof. ---------------------------- Subsidiary Guarantors: As defined in the preamble hereto. --------------------- TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa- --- 77bbbb), as amended. Transfer Restricted Securities: Each Security, until the ------------------------------ earliest to occur of (a) the date on which such Security has been exchanged by a person other than a Broker-Dealer for Exchange Securities in the Exchange Offer, (b) following the exchange by a Broker- -5- Dealer in the Exchange Offer of such Security for one or more Exchange Securities, the date on which such Exchange Securities are sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (c) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (d) the date on which such Security is eligible to be distributed to the public pursuant to Rule 144 under the Securities Act; Trustee: U.S. Bank Trust National Association, in its capacity ------- as trustee under the Indenture. Underwritten Registration or Underwritten Offering: A ------------------------- --------------------- registration in which securities of the Issuing Parties are sold to an underwriter for reoffering to the public. 2. Securities Subject to This Agreement. (a) Transfer Restricted Securities. The securities entitled ------------------------------ to the benefits of this Agreement are the TransferRestricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") ------ whenever such Person owns Transfer Restricted Securities. 3. Registered Exchange Offer. (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or one of the events set forth in Section 4(a)(ii) has occurred the Issuing Parties shall (i) cause to be filed with the Commission promptly after the Closing Date, but in no event later than 150 days after the Closing Date, a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use their best efforts to cause such Registration Statement to become effective no later than 210 days after the Closing Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Issuing Parties will commence the Exchange Offer and use their best efforts to issue on or prior to 30 business days after the date on which such Registration Statement was declared effective by the Commission, Exchange Securities in exchange for all Transfer Restricted Securities tendered prior thereto in the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Exchange Securities held by Broker-Dealers as contemplated by Section 3(c) below. The 150, 210 and 30 business day periods -6- referred to in (i), (ii) and (iv) of this Section 3(a) shall not include any period during which the Issuing Parties are pursuing a Commission ruling pursuant to Section 6(a)(i) below. (b) The Issuing Parties shall use their best efforts to cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days. The Issuing Parties shall cause the Exchange Offer to comply in all material respects with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. Each of the Issuing Parties shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter. (c) The Issuing Parties shall indicate in a "Plan of Distribution" section contained in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Issuing Parties), may exchange such Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Exchange Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy announced after the date of this Agreement. The Issuing Parties shall use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Exchange Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the date on which the Exchange Offer Registration Statement is declared effective. The Issuing Parties shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day period in order to facilitate such resales. -7- 4. Shelf Registration. (a) Shelf Registration. If (i) the Issuing Parties are not ------------------ required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities that is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) shall notify the Issuing Parties prior to the 20th day following the Consummation of the Exchange Offer (A) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) that such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds Securities acquired directly from an Issuing Party or one of its Affiliates, then the Issuing Parties shall in lieu of, or in the event of (ii) above, in addition to effecting the registration of the Exchange Securities pursuant to the Exchange Offer Registration Statement, use their best efforts to: (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration ------------------ Statement"), on or prior to the earlier to occur of (1) the 60th day after the - --------- date on which the Issuing Parties determine that they are not required to file the Exchange Offer Registration Statement or (2) the 60th day after the date on which the Issuing Parties receive notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above (such earlier date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for --------------------- resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) cause such Shelf Registration Statement to be declared effective by the Commission on or before the 120th day after the Shelf Filing Deadline. The Issuing Parties shall use their best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the second anniversary of the Closing Date. (b) Provision by Holders of Certain Information in ---------------------------------------------- Connection with the Shelf Registration Statement. No Holder of Transfer - ------------------------------------------------ Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Issuing Parties in writing, within 20 business days after receipt of a request therefor, such information as the Issuing Parties may reasonably request -8- for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Issuing Parties all information required to be disclosed in order to make the information previously furnished to the Issuing Parties by such Holder not materially misleading. 5. Liquidated Damages (a) If (a) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (b) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the ------------------------- Exchange Offer has not been Consummated within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within two business days by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (a) through (d), a "Registration Default"), the Issuing -------------------- Parties will jointly and severally be obligated to pay additional cash interest ("Liquidated Damages") to each Holder of the Securities commencing upon the ------------------ occurrence of such Registration Default in an amount equal to $.05 per week per $1,000 principal amount of Securities held by such Holder. The amount of Liquidated Damages will increase by an additional $.05 per week per $1,000 principal amount of Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Securities. All accrued Liquidated Damages shall be paid to Holders by the Issuing Parties in the same manner as interest is paid pursuant to the Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of Liquidated Damages with respect to such Transfer Restricted Securities will cease. All obligations of the Issuing Parties set forth in the preceding paragraph that have accrued and are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full. (b) The Issuing Parties shall notify the Trustee within one business day after each and every date on which an event occurs in respect of which Liquidated Damages are required to be paid (an "Event Date"). Liquidated ---------- Damages shall be paid by depositing Liquidated Damages with the Trustee, in trust, for the benefit of the Holders of the Securities, on or before the applicable Interest Payment Date (whether or not any payment other than Liquidated Damages is payable on such Securities), in immediately available funds in sums sufficient to pay the Liquidated Damages then due to such Holders. Each obligation to pay -9- Liquidated Damages shall be deemed to accrue from the applicable date of the occurrence of the Registration Default. 6. Registration Procedures. (a) Exchange Offer Registration Statement. In connection ------------------------------------- with the Exchange Offer, the Issuing Parties shall comply with all of the provisions of Section 6(c) below, shall use their best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If in the reasonable opinion of counsel to the Issuing Parties there is a question as to whether the Exchange Offer is permitted by applicable law, the Issuing Parties hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Issuing Parties to Consummate an Exchange Offer for such Securities. The Issuing Parties hereby agree to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Issuing Parties hereby agree, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Issuing Parties setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuing Parties, prior to the Consummation thereof, a written representation to the Issuing Parties (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of any of the Issuing Parties, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Issuing Parties' preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, ---------------------------- 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), ---------------------------------- as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including Brown & Wood LLP ---------------- (available February 7, 1997), and any no-action letter obtained pursuant to clause (i) above), and (2) -10- must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from the Issuing Parties. (iii) Prior to the effectiveness of the Exchange Offer Registration Statement, the Issuing Parties shall provide a supplemental letter to the Commission (A) stating that the Issuing Parties are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available ---------------------------------- May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991), ---------------------- Brown & Wood LLP (available February 7, 1997) and, if applicable, any ---------------- no-action letter obtained pursuant to clause (i) above and (B) including a representation that the Issuing Parties have not entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Exchange Offer and that, to the best of the Issuing Parties' information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Securities in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities received in the Exchange Offer. (b) Shelf Registration Statement. In connection with the ---------------------------- Shelf Registration Statement, the Issuing Parties shall comply with all the provisions of Section 6(c) below and shall use their best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Issuing Parties will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) General Provisions. In connection with any Registration ------------------ Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Securities by Broker-Dealers), the Issuing Parties shall: (i) use their best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuing Parties shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use their best efforts to cause such amendment to be declared effective and such Registration Statement and the related -11- Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) in the case of a Shelf Registration, advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Issuing Parties shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) in the case of a Shelf Registration, furnish to each of the selling or exchanging Holders and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review of such Holders -12- and underwriter(s), if any, for a period of at least five business days, and the Issuing Parties will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which selling Holders of a majority in Liquidation Amount of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object within five business days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission; (v) in the case of a Shelf Registration, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s), if any, make the Issuing Parties' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) in the case of a Shelf Registration, make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuing Parties and cause the Issuing Parties' officers, directors, managers and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; (vii) in the case of a Shelf Registration, if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted -------------------- Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Issuing Parties are notified of the matters to be incorporated in such Prospectus supplement or post- effective amendment; (viii) cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by -13- the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any; (ix) in the case of a Shelf Registration, furnish to each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) in the case of a Shelf Registration, deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Issuing Parties hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) in the case of a Shelf Registration, enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be requested by any Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and in connection with an Underwritten Registration, the Issuing Parties shall: (A) upon request, furnish to each selling Holder and each underwriter, if any, in such substance and scope as they may request and are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of the effectiveness of the Shelf Registration Statement, signed by (y) the Chairman of the Board, its President or a Vice President and (z) the Chief Financial Officer of the Issuing Parties, confirming, as of the date thereof, such matters as such parties may reasonably request; (2) an opinion, dated the date of the effectiveness of the Shelf Registration Statement, of counsel for the Issuing Parties, covering such matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuing Parties, representatives of the independent public accountants for the Issuing -14- Parties, the Initial Purchasers' representatives and the Initial Purchasers' counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Issuing Parties and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial and statistical data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of the effectiveness of the Shelf Registration Statement, from the Issuing Parties' independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary underwritten offerings. (B) set forth in full or incorporated by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuing Parties pursuant to this clause (xi), if any. If at any time the representations and warranties of the Issuing Parties contemplated in clause (A)(1) above cease to be true and correct, the Issuing Parties shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; -15- (xii) in the case of a Shelf Registration, prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s) may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that the Issuing Parties shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in the case of a Shelf Registration, shall issue, upon the request of any Holder of Securities covered by the Shelf Registration Statement, Exchange Securities in the same amount as the Securities surrendered to the Issuing Parties by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Exchange Securities, as the case may be; in return, the Securities held by such Holder shall be surrendered to the Issuing Parties for cancellation; (xiv) in the case of a Shelf Registration, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xv) use their best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xvi) if any fact or event contemplated by clause (c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; -16- (xvii) provide CUSIP numbers for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide certificates for the Transfer Restricted Securities; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD, and use their best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; provided, however, that no Issuing Party shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xix) otherwise use their best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to their security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the respective Issuing Party's first fiscal quarter commencing after the effective date of the Registration Statement; (xx) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their best efforts to cause the Trustee to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xxi) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuing Parties of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section -17- 6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the Issuing Parties that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuing Parties, each Holder will deliver to the Issuing Parties (at the Issuing Parties' expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Issuing Parties shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. 7. Registration Expenses. All expenses incident to the Issuing Parties' performance of or compliance with this Agreement will be borne, jointly and severally, by the Issuing Parties, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), and associated messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuing Parties; (v) all application and filing fees in connection with listing Securities on a national securities exchange or automated quotation system; and (vi) all fees and disbursements of independent certified public accountants of the Issuing Parties (including the expenses of any special audit and comfort letters required by or incident to such performance). Each Issuing Party will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by such Issuing Party. 8. Indemnification and Contribution. (a) In connection with a Shelf Registration Statement or in connection with any delivery of a Prospectus contained in an Exchange Offer Registration Statement by any participating Broker-Dealer or Initial Purchasers, as applicable, who seeks to sell Exchange Securities, each of the Issuing Parties, jointly and severally, shall indemnify and hold harmless each Holder of Transfer Restricted Securities included within any such Shelf Registration Statement and each participating Broker-Dealer or Initial Purchasers selling Exchange Securities, and each person, if any, who controls any such person within the meaning of Section 15 of the Securities Act (each, a "Participant") ----------- from and against any loss, claim, damage or liability, joint -18- or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Securities) to which such Participant or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each Participant promptly upon demand for any legal or other expenses reasonably incurred by such Participant in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that (i) no Issuing Party shall be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any such Registration Statement or any prospectus forming part thereof or in any such amendment or supplement in reliance upon and in conformity with written information furnished to such Issuing Party by or on behalf of any Participant specifically for inclusion therein; and provided further that as to any preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit of any such Participant or any controlling person of such Participant on account of any loss, claim, damage, liability or action arising from the sale of the Exchange Securities to any person by that Participant if (i) that Participant failed to send or give a copy of the Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act and (ii) the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary Prospectus was corrected in the Prospectus, unless, in each case, such failure resulted from non-compliance by any Issuing Party with Section 6(c). The foregoing indemnity agreement is in addition to any liability which any Issuing Party may otherwise have to any Participant or to any controlling person of that Participant. (b) Each Participant, severally and not jointly, shall indemnify and hold harmless each of the Issuing Parties, their respective directors, officers, employees or agents and each person, if any, who controls any Issuing Party within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which any Issuing Party or any such director, officer, employees or agents or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus, Registration Statement or Prospectus or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to such Issuing Party by or on behalf of that Participant specifically for inclusion herein, and shall reimburse such Issuing Party and any such director, officer, employees or agents or controlling person for any legal or other expenses reasonably incurred by such Issuing Party or any such director, officer, employees or agents or controlling person in connection with investigating or defending or -19- preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Participant may otherwise have to any Issuing Party or any such director, officer or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall have notified the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnified party shall have the right to employ counsel to represent jointly the indemnified party and those other Participants and its respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Participants against the indemnifying party under this Section 8 if, in the reasonable judgment of the indemnified party it is advisable for the indemnified party and those Participants, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the indemnifying party. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to local counsel). Each indemnified party, as a condition of the indemnity agreements contained in Section 8, shall use its best efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. -20- (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, in such proportion as shall be appropriate to reflect the relative fault of such Issuing Party on the one hand and the Participants on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Issuing Party or the Participants, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuing Parties and the Participants agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Participants were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Participant shall be required to contribute any amount in excess of the amount by which proceeds received by such Participant from an offering of the Securities exceeds the amount of any damages which such Participant has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Participants' obligations to contribute as provided in this Section 8(d) are several and not joint. 9. Rule 144A. Each of the Issuing Parties hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 10. Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, -21- indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. 11. Selection of Underwriters. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Issuing Parties; provided, that such investment bankers and managers must be reasonably satisfactory to the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering. 12. Miscellaneous. (a) Remedies. The Issuing Parties agree that monetary damages -------- (including Liquidated Damages) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. None of the Issuing Parties --------------------------- will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. No Issuing Party has previously entered into any agreement granting any registration rights with respect to its securities to any Person (other than Oak Hill Securities Fund, L.P., Oak Hill Securities Fund II, L.P. or other accounts managed by Oak Hill Advisors, Inc. or its Affiliates), other than, in the case of the Company, the Registration Rights Agreement, dated as of January 26, 2001, relating to $270,000,000 aggregate principal amount of its 9% Senior Notes due 2008 and $180,000,000 aggregate principal amount of its 9?% Senior Notes due 2011. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuing Parties' securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Securities. The Issuing Parties ------------------------------------- will not take any action, or permit any change to occur, with respect to Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer unless such action or change is required by applicable law. (d) Amendments and Waivers. The provisions of this Agreement may ----------------------- not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Issuing Parties have obtained the written consent of Holders of a majority of the outstanding principal amount of the Notes. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being -22- tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. (e) Notices. All notices and other communications provided for -------- or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address of such Holder maintained by the Registrar under the Indenture; and (ii) if to any of the Issuing Parties: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, DC 20007 Attention: John Emery, Chief Financial Officer Facsimile: (202) 295-2248 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Richard S. Borisoff, Esq. Facsimile: (212) 757-3990 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the ----------------------- benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. -23- (g) Counterparts. This Agreement may be executed in any number ------------- of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience --------- of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by and -------------- construed in accordance with the laws of the State of New York. (j) Severability. In the event that any one or more of the ------------- provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement, together with the other ----------------- transaction documents, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Issuing Parties with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. (l) Required Consents. Whenever the consent or approval of ------------------ Holders of a specified percentage of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by any Issuing Party or any of its respective Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. -24- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Issuers: ------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: MeriStar Hospitality Corporation, as general partner By: /s/ Christopher L. Bennett ------------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal MERISTAR HOSPITALITY FINANCE CORP. II, a Delaware corporation By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal Parent: ------ MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -25- Subsidiary Guarantors: --------------------- MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal AGH PSS I, INC., a Delaware corporation By: /s/ Christopher L. Bennett ---------------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, a Maryland corporation, member By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -26- CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MIDLAND PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. Each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -27- EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR CS COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR INDIANAPOLIS COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -28- MERISTAR SANIBEL INN COMPANY, LLC MERISTAR SUNDIAL BEACH COMPANY, LLC MERISTAR SAFETY HARBOR COMPANY, LLC MERISTAR SEASIDE INN COMPANY, LLC MERISTAR PLANTATION SHOPPING CENTER COMPANY, LLC MERISTAR SONG OF THE SEA COMPANY, LLC MERISTAR SHIRLEY'S PARCEL COMPANY, LLC MERISTAR SANIBEL GOLF COMPANY, LLC MERISTAR MARCO ISLAND COMPANY, LLC MERISTAR S.S. PLANTATION COMPANY, LLC MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (VANCOUVER) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC AGH 75 ARLINGTON HEIGHTS LLC Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal MERISTAR SANTA BARBARA, L.P., a Delaware limited partnership MERISTAR CATHEDRAL CITY, L.P., a Delaware limited partnership MERISTAR LAJV, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -29- 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------- Name: Christopher L. Bennett Title: Vice President, Legal BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------- Name: Christopher L. Bennett Title: Vice President, Legal By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -30- MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------- Title: Vice President, Legal HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ -31- Name: Christopher L. Bennett Title: Vice President, Legal MERISTAR LP, INC., a Nevada corporation By: /s/ Christopher L. Bennett ---------------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal MERISTAR HOTEL LESSEE, INC. By: /s/ Christopher L. Bennett --------------------------------------------- Name: Christopher L. Bennett Title: Vice President, Legal -32- MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal 455 MEADOWLANDS ASSOCIATES, LTD., a Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Vice President, Legal -33- Accepted as of the date thereof: LEHMAN BROTHERS INC. DEUTSCHE BANC ALEX. BROWN INC. SG COWEN SECURITIES CORPORATION BANC OF AMERICA SECURITIES LLC BANC ONE CAPITAL MARKETS, INC. CIBC WORLD MARKETS CORP. DRESDNER KLEINWORT WASSERSTEIN - GRANTCHESTER, INC. FLEET SECURITIES, INC. SALOMON SMITH BARNEY INC. SCOTIA CAPITAL (USA) INC. WELLS FARGO BROKERAGE SERVICES, LLC By LEHMAN BROTHERS INC. By: /s/ Edward B. Conway -------------------------------- Name: Edward B. Conway Title: Authorized Signatory -34- EX-4.6.3 16 dex463.txt EXHIBIT 4.6.3 Exhibit 4.6.3 FIRST SUPPLEMENTAL INDENTURE This "Supplemental Indenture", dated as of February 7, 2002, between the subsidiary of MeriStar Hospitality Operating Partnership, a Delaware limited partnership, (the "Company"), indicated as the New Guarantor on the signature pages hereto (the "Guarantor") and U.S. Bank Trust National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company, MeriStar Hospitality Finance Corp. II ("MeriStar Finance," and together with the Company, the "Issuers"), MeriStar Hospitality Corporation (the "Parent"), the Subsidiary Guarantors who are parties to the indenture referred to below, have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of December 19, 2001, providing for the issuance of up to an aggregate principal amount of $250,000,000 of 10-1/2% Senior Notes due 2009 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company and the Parent are required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Issuers' Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other guarantors under the Indenture, to guarantee the Issuers' obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of any Issuer or any other guarantor under the Notes, any guarantees under the Indenture, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such 2 liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. New Guarantor: ------------- MERISTAR HOSPITALITY FINANCE CORP. III, a Delaware corporation By: _____________________________________ Christopher L. Bennett Senior Vice President and General Counsel Trustee: ------- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: _____________________________________ Name: Adam Berman Title: Trust Officer EX-4.7 17 dex47.txt EXHIBIT 4.7 Exhibit 4.7 EXECUTIVE COPY ================================================================================ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III, MERISTAR HOSPITALITY CORPORATION and SUBSIDIARY GUARANTORS $200,000,000 9 1/8% SENIOR NOTES DUE 2011 SERIES E AND SERIES F INDENTURE Dated as of February 7, 2002 U.S. BANK TRUST NATIONAL ASSOCIATION Trustee ================================================================================ Table of Contents
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................................................... 1 SECTION 1.1. DEFINITIONS......................................................................... 1 SECTION 1.2. OTHER DEFINITIONS................................................................... 16 SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT................................... 17 SECTION 1.4. RULES OF CONSTRUCTION............................................................... 17 SECTION 1.5. ONE CLASS OF SECURITIES............................................................. 18 ARTICLE 2 THE NOTES..................................................................................... 18 SECTION 2.1. FORM AND DATING..................................................................... 18 SECTION 2.2. EXECUTION AND AUTHENTICATION........................................................ 19 SECTION 2.3. REGISTRAR AND PAYING AGENT.......................................................... 20 SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST................................................. 20 SECTION 2.5. HOLDERS LISTS....................................................................... 20 SECTION 2.6. TRANSFER AND EXCHANGE............................................................... 21 SECTION 2.7. REPLACEMENT NOTES................................................................... 21 SECTION 2.8. OUTSTANDING NOTES................................................................... 22 SECTION 2.9. TREASURY NOTES...................................................................... 22 SECTION 2.10. TEMPORARY NOTES..................................................................... 22 SECTION 2.11. CANCELLATION........................................................................ 23 SECTION 2.12. DEFAULTED INTEREST.................................................................. 23 SECTION 2.13. RECORD DATE......................................................................... 23 SECTION 2.14. CUSIP NUMBER........................................................................ 23 SECTION 2.15. RESTRICTIVE LEGENDS................................................................. 23 SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY........................................... 26 SECTION 2.17. SPECIAL TRANSFER PROVISIONS......................................................... 27 ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE............................................................ 29 SECTION 3.1. NOTICES TO TRUSTEE.................................................................. 29 SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED...................................... 29 SECTION 3.3. NOTICE OF REDEMPTION................................................................ 30 SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION...................................................... 31 SECTION 3.5. DEPOSIT OF REDEMPTION PRICE......................................................... 31 SECTION 3.6. NOTES REDEEMED IN PART.............................................................. 31 SECTION 3.7. OPTIONAL REDEMPTION................................................................. 31 SECTION 3.8. MANDATORY REDEMPTION................................................................ 32 SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS................................. 32
i
Page ARTICLE 4 COVENANTS..................................................................................... 34 SECTION 4.1. PAYMENT OF NOTES.................................................................... 34 SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY..................................................... 34 SECTION 4.3. SEC REPORTS......................................................................... 35 SECTION 4.4. COMPLIANCE CERTIFICATE.............................................................. 35 SECTION 4.5. TAXES............................................................................... 36 SECTION 4.6. STAY, EXTENSION AND USURY LAWS...................................................... 36 SECTION 4.7. LIMITATION ON RESTRICTED PAYMENTS................................................... 36 SECTION 4.8. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES........................................................... 40 SECTION 4.9. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF CERTAIN CAPITAL STOCK......... 41 SECTION 4.10. LIMITATION ON SALE OF ASSETS........................................................ 43 SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.......................................... 44 SECTION 4.12. LIMITATION ON LIENS................................................................. 45 SECTION 4.13. CORPORATE EXISTENCE................................................................. 46 SECTION 4.14. CHANGE OF CONTROL................................................................... 46 SECTION 4.15. SUBSIDIARY GUARANTEES............................................................... 47 SECTION 4.16. LINE OF BUSINESS.................................................................... 47 SECTION 4.17. PAYMENTS FOR CONSENT................................................................ 47 SECTION 4.18. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS............................................ 48 SECTION 4.19. [intentionally left blank].......................................................... 48 SECTION 4.20. CERTAIN COVENANTS OF MERISTAR FINANCE............................................... 48 SECTION 4.21. COVENANTS UPON ATTAINMENT AND MAINTENANCE OF AN INVESTMENT GRADE RATING............. 48 ARTICLE 5 SUCCESSORS.................................................................................... 48 SECTION 5.1. WHEN THE COMPANY MAY MERGE, ETC..................................................... 48 SECTION 5.2. SUCCESSOR SUBSTITUTED............................................................... 49 ARTICLE 6 DEFAULTS AND REMEDIES......................................................................... 49 SECTION 6.1. EVENTS OF DEFAULT................................................................... 49 SECTION 6.2. ACCELERATION........................................................................ 52 SECTION 6.3. OTHER REMEDIES...................................................................... 52 SECTION 6.4. WAIVER OF PAST DEFAULTS............................................................. 52 SECTION 6.5. CONTROL BY MAJORITY................................................................. 52 SECTION 6.6. LIMITATION ON SUITS................................................................. 53 SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT................................................ 53 SECTION 6.8. COLLECTION SUIT BY TRUSTEE.......................................................... 53 SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.................................................... 54 SECTION 6.10. PRIORITIES.......................................................................... 54 SECTION 6.11. UNDERTAKING FOR COSTS............................................................... 55
ii
Page ARTICLE 7 TRUSTEE....................................................................................... 55 SECTION 7.1. DUTIES OF TRUSTEE.................................................................... 55 SECTION 7.2. RIGHTS OF TRUSTEE.................................................................... 56 SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE......................................................... 57 SECTION 7.4. TRUSTEE'S DISCLAIMER................................................................. 57 SECTION 7.5. NOTICE OF DEFAULTS................................................................... 57 SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS........................................................ 57 SECTION 7.7. COMPENSATION AND INDEMNITY........................................................... 58 SECTION 7.8. REPLACEMENT OF TRUSTEE............................................................... 58 SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC..................................................... 60 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION........................................................ 60 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................................... 60 ARTICLE 8 DISCHARGE OF INDENTURE........................................................................ 60 SECTION 8.1. DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE NOTES............................. 60 SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE....................................................... 61 SECTION 8.3. COVENANT DEFEASANCE.................................................................. 62 SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE........................................... 62 SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS........................................................... 64 SECTION 8.6. REPAYMENT TO THE ISSUERS............................................................. 65 SECTION 8.7. REINSTATEMENT........................................................................ 65 ARTICLE 9 AMENDMENTS.................................................................................... 65 SECTION 9.1. WITHOUT CONSENT OF HOLDERS........................................................... 65 SECTION 9.2. WITH CONSENT OF HOLDERS.............................................................. 66 SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.................................................. 67 SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.................................................... 68 SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES..................................................... 68 SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC...................................................... 68 ARTICLE 10 GUARANTEES................................................................................... 68 SECTION 10.1. GUARANTEES........................................................................... 68 SECTION 10.2. WHEN A SUBSIDIARY GUARANTOR MAY MERGE, ETC........................................... 70 SECTION 10.3. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY....................................... 70 SECTION 10.4. RELEASE OF A GUARANTOR............................................................... 71
iii
Page ARTICLE 11 MISCELLANEOUS................................................................................ 71 SECTION 11.1. TRUST INDENTURE ACT CONTROLS........................................................ 71 SECTION 11.2. NOTICES............................................................................. 71 SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS......................................... 73 SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.................................. 73 SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION....................................... 73 SECTION 11.6. RULES BY TRUSTEE AND AGENTS......................................................... 74 SECTION 11.7. LEGAL HOLIDAYS...................................................................... 74 SECTION 11.8. RECOURSE AGAINST OTHERS............................................................. 74 SECTION 11.9. DUPLICATE ORIGINALS................................................................. 74 SECTION 11.10. GOVERNING LAW....................................................................... 75 SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS....................................... 75 SECTION 11.12. SUCCESSORS.......................................................................... 75 SECTION 11.13. SEVERABILITY........................................................................ 75 SECTION 11.14. COUNTERPART ORIGINALS............................................................... 75 SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC.................................................... 75
iv EXHIBITS Exhibit A Form of Note Exhibit B Form of Supplemental Indenture Exhibit C Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S v INDENTURE dated as of February 7, 2002 among MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership (the "Company"), MeriStar Hospitality Finance Corp. III, a Delaware corporation ("MeriStar Finance"; and collectively with the Company, the "Issuers"), MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors (as defined herein) and U.S. Bank Trust National Association, as trustee (the "Trustee"). Each of the parties hereto agrees as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 9?% Series E Senior Notes due 2011 of the Issuers (the "Initial Notes"), and the 9?% Series F Senior Notes due 2011 of the Issuers if and when issued in exchange for the Initial Notes and the Existing Notes in the Exchange Offer (the "Exchange Notes," and, together with the Initial Notes, the "Notes"). ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "Adjusted Consolidated Net Tangible Assets" means the total amount of the assets of the Parent, the Company and their respective Restricted Subsidiaries on a consolidated basis (less applicable depreciation, amortization and other valuation reserves), except to the extent resulting from write-ups of capital assets (excluding write-ups in connection with accounting for acquisitions in conformity with GAAP), after deducting from the total amount of assets: (1) all of the current liabilities of the Parent, the Company and their respective Restricted Subsidiaries on a consolidated basis, excluding intercompany items, and (2) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the most recent quarterly or annual consolidated balance sheet of the Parent, the Company and their respective Restricted Subsidiaries, prepared in conformity with GAAP and filed with the SEC or otherwise provided to the Trustee. "Adjusted Total Assets" means, for any Person, the Total Assets for such Person and its Restricted Subsidiaries as of any Transaction Date, as adjusted to reflect the application of the proceeds of the incurrence of Indebtedness and issuance of Disqualified Stock on such Transaction Date. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-Registrar or agent for service of notices and demands. 2 "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease (other than operating leases in respect of facilities which are ancillary to the operation of the Company's, the Parent's or a Restricted Subsidiary's Hospitality-Related Business properties or assets), conveyance or other disposition of any property or assets of the Company, the Parent or any Restricted Subsidiary (including by way of a sale and leaseback transaction), (ii) the issuance or sale of Equity Interests of any of the Company's or the Parent's Restricted Subsidiaries or (iii) any Event of Loss, other than, with respect to clauses (i), (ii) and (iii) above, the following: (1) the sale or disposition of personal property held for sale in the ordinary course of business, (2) the sale or disposal of damaged, worn out or other obsolete property in the ordinary course of business as long as such property is no longer necessary for the proper conduct of the business of the Company, the Parent or such Restricted Subsidiary, as applicable, (3) the transfer of assets by the Company or the Parent to one of its respective Restricted Subsidiaries or by a Restricted Subsidiary of the Company or the Parent to the Company or the Parent or to another Restricted Subsidiary of the Company or the Parent, (4) (A) the exchange of one or more lodging facilities and related assets held by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent for one or more lodging facilities and related assets of any person or entity, provided that if any other assets are received by the Company, the Parent or such Restricted Subsidiary in such exchange, such other consideration is in cash or Cash Equivalents; provided, further, that such cash or Cash Equivalent consideration shall be deemed to be cash proceeds of an Asset Sale for the purposes of calculating "Net Proceeds" and applying Net Proceeds, if any, as described in Section 4.10 hereof, or (B) the issuance of OP Units or Preferred OP Units as full or partial consideration for the acquisition of lodging facilities and related assets, provided that the Board of Directors of the Parent has determined that the terms of any exchange or acquisition are fair and reasonable and that the fair market value of the assets received by the Company, the Parent or such Restricted Subsidiary, as set forth in an opinion of a Qualified Appraiser, are equal to or greater than the fair market value of the assets exchanged, sold or issued by the Company, the Parent or such Restricted Subsidiary of the Company or the Parent, (5) any Restricted Payment, permitted under Section 4.7 hereof, (6) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or the Parent in compliance with the provisions of Section 4.14 and Article V hereof, (7) the conversion of or foreclosure or any mortgage or note, provided that the Company, the Parent or a Restricted Subsidiary of the Company or the Parent receives the real property underlying any such mortgage or note or (8) any transaction or series of related transactions that would otherwise be an Asset Sale where the fair market value of the assets, sold, leased, conveyed or otherwise disposed of was less than $5.0 million or an Event of Loss or related series of Events of Loss pursuant to which the aggregate value of property or assets involved in such Event of Loss or Events of Loss is less than $5.0 million. "Assumed Indebtedness" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Subsidiary of such specified Person and (ii) Indebtedness encumbering any asset acquired by such specified Person, in each case excluding Indebtedness incurred in connection with, or in contemplation of such other Person merging with or into or becoming a Subsidiary of, such specified Person. 3 "Board of Directors" means the Board of Directors of the Parent or any authorized committee of the Board of Directors. "Business Day" means any day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York or the city in which the Corporate Trust Office is located are authorized or obliged by law or executive order to close. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. "Cash Equivalents" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (ii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers acceptances with maturities not exceeding six months from the date of acquisition and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i) and (ii) entered into with any financial institution meeting the qualifications specified in clause (ii) above, (iv) commercial paper or commercial paper master notes having a rating of at least P-2 or the equivalent thereof by Moody's Investors Service, Inc. or at least A-2 or the equivalent thereof by Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition, (v) money market mutual funds that provide daily purchase and redemption features, and (vi) corporate debt with maturities of not greater than six months and with a rating of at least A or the equivalent thereof by Standard & Poor's Corporation and a rating of at least A2 or the equivalent thereof by Moody's Investors Service, Inc. "Change of Control" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the Company's or the Parent's assets to any person or group (as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company or the Parent, (iii) the acquisition by any person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of a direct or indirect interest in more than 50% of the ownership of the Parent or, other than by the Parent, of the Company, or the voting power of the voting stock of the Parent or, other than by the Parent, the Company's general partner interest, by way of purchase, merger or consolidation or otherwise (other than a creation of a holding company that does not involve a change in the beneficial ownership of the Company or the Parent as a result of such transaction), (iv) the merger or consolidation of the Company or the Parent with or into another Person or the merger of another Person into the Company or the Parent with the effect that immediately after such transaction the stockholders of the Company or the Parent immediately prior to such transaction hold, directly or indirectly, less than 50% of the 4 total voting power of all securities generally entitled to vote in the election of directors, managers, or trustees, or no longer hold the general partner interest, of the Person surviving such merger or consolidation or (v) the first day on which a majority of the members of the Board of Directors of the Parent are not Continuing Directors. "Clearstream" means Clearstream Banking, S.A. or its successor. "Company" means MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: (a) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing Consolidated Net Income, plus (b) provisions for taxes based on income or profits of such Person for such period, to the extent such provision for taxes was included in computing Consolidated Net Income, plus (c) Consolidated Interest Expense of such Person for such period to the extent such expense was deducted in computing Consolidated Net Income, plus (d) Consolidated Depreciation and Amortization Expense of such Person for such period, to the extent deducted in computing Consolidated Net Income less (e) noncash items increasing such Consolidated Net Income for such period in each case, on a consolidated basis for such Person and its Restricted Subsidiaries and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, the depreciation and amortization of and the interest expense of, a Restricted Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. Any calculation of the Consolidated Cash Flow of an individual hotel property shall be calculated in a manner consistent with the foregoing. "Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the Parent, the Company and their respective Restricted Subsidiaries, determined on a consolidated basis, which may properly be classified as current liabilities (including taxes payable as accrued), on a consolidated basis, after eliminating (i) all intercompany items between the Parent, the Company and any of their respective Restricted Subsidiaries and (ii) all current maturities of long-term Indebtedness, all as determined in accordance with GAAP consistently applied. "Consolidated Depreciation and Amortization Expense" means, with respect to any Person for any period, the total amount of depreciation and amortization expense (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and the total amount of non-cash charges (other than non-cash charges that represent an accrual or reserve for cash charges in future periods or which 5 involved a cash expenditure in a prior period) of such Person and its Restricted Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, without duplication, the sum of (a) interest expense, whether paid or accrued, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the interest component of Capital Lease Obligations, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of deferred financing fees), (b) commissions, discounts and other fees and charges paid or accrued with respect to letters of credit and bankers acceptance financing and (c) interest for which such Person or its Restricted Subsidiaries is liable, whether or not actually paid, pursuant to Indebtedness or under a Guarantee of Indebtedness of any other Person, in each case, calculated for such Person and its Restricted Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (it being understood that the net income of Restricted Subsidiaries shall be consolidated with that of a Person only to the extent of the proportionate interest of such Person in such Restricted Subsidiaries), provided that: (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be excluded, whether or not distributed to such Person or one of its Restricted Subsidiaries, (ii) the Net Income of any Person that is a Restricted Subsidiary and that is restricted from declaring or paying dividends or other distributions, directly or indirectly, by operation of the terms of its charter, any applicable agreement, instrument, judgment, decree, order, statute, rule or governmental regulation or otherwise shall be included only to the extent of the amount of dividends or distributions paid to the referent Person or a Restricted Subsidiary, (iii) the Net Income of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of changes in accounting principles shall be excluded. "Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less accumulated depreciation and amortization, allowances for doubtful receivables, other applicable reserves and other similar items properly deducted in determining net assets) which would appear on a consolidated balance sheet of the Parent, the Company and their respective Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, and after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of: (i) minority interests in consolidated Subsidiaries held by Persons other than the Parent, the Company or one of their respective Subsidiaries; (ii) excess of cost over fair value of assets of businesses acquired, as determined in good faith by the Board of Directors; (iii) any revaluation or other write-up in book value of assets subsequent to the date of this Indenture as a result of a change in the method of valuation in accordance with GAAP consistently applied; (iv) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items; (v) treasury stock; and (vi) cash set apart and held in a sinking or other analogous fund established for the purpose of redemption or other 6 retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Parent who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the affirmative vote of at least a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office" shall be at the address of the Trustee specified in Section 11.2 or such other address as the Trustee may give notice to the Issuers. "Credit Agreement" means the Second Amended and Restated Credit Agreement, dated as of August 3, 1998 and subsequently amended, entered into between and among the Company and the lenders party thereto, providing for borrowings and letters of credit, including any related notes, security documentation, guarantees, collateral documents, instruments and agreements executed in connection therewith, in each case as amended, modified, supplemented, restructured, renewed, restated, refunded, replaced or refinanced or extended, in each case on a senior basis, from time to time on one or more occasions with respect to the Company or the Parent. "Credit Agreement 4.12 and 4.18" means the Second Amended and Restated Credit Agreement, dated as of August 3, 1998 and subsequently amended, entered into between and among the Company and the lenders party thereto, and any other senior debt facilities or commercial paper facilities with banks or other institutional lenders providing for borrowings, receivables financings (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case as amended, modified, supplemented, restructured, renewed, restated or extended, from time to time on one or more occasions; provided that the term "Credit Agreement 4.12 and 4.18" shall not include Indebtedness described in clause (a) of the definition of "Non-Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities." "Credit Facilities" means, with respect to the Company or the Parent, one or more senior debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities with banks or other institutional lenders providing for borrowings, receivables financings (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Default" with respect to the Notes means any event that is or with the passage of time or the giving of notice or both would be an Event of Default with respect to the Notes. "Disqualified Stock" means any Capital Stock (other than OP Units and Preferred OP Units) which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of 7 the holder thereof, in whole or in part, on or prior to the first anniversary of the date on which the Notes mature. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for Capital Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system, or its successor. "Event of Loss" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (A) any loss, destruction or damage of such property or asset or (B) any actual condemnation, seizure or taking by the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means Indebtedness of the Parent, the Company and their respective Restricted Subsidiaries in existence on the date of this Indenture (after giving effect to the use of proceeds of the Notes issued hereunder), excluding, for this purpose, amounts outstanding under the Credit Agreement and other Indebtedness outstanding pursuant to clause (b) of the second paragraph of Section 4.9 as in effect on the date of this Indenture. "Existing Notes" means the Company's 9 1/8 Senior Notes due 2011 issued pursuant to an indenture, dated as of January 26, 2001, among the Company, the Parent, the other parties set forth therein and the Trustee, as trustee. "Existing Preferred OP Units" means Preferred OP Units issued and outstanding on the date of this Indenture. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company, the Parent or any of their respective Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings that provide working capital in the ordinary course of business) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Company, the Parent or any of their respective Restricted Subsidiaries, including all mergers, consolidations and dispositions, during the four-quarter 8 reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. "Fixed Charges" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, to the extent such expense was deducted in computing Consolidated Net Income and (b) the product of (i) all cash dividend or distribution payments on any series of Preferred Stock of such Person or its Restricted Subsidiaries (other than Preferred Stock owned by such Person or its Restricted Subsidiaries), times (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then-current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; provided, however, that if the cash dividend or distribution on such Preferred Stock is deductible for federal tax purposes, then the fraction shall be equal to one. "Funds From Operations" for any period means the Consolidated Net Income of the Parent for such period excluding gains or losses from debt restructurings and sales of depreciable operating property, plus depreciation on real estate assets and amortization related to real estate assets and other non-cash charges related to real estate assets, after adjustments for unconsolidated partnerships and joint ventures plus minority interests, if applicable (it being understood that the accounts of such Person's Restricted Subsidiaries shall be consolidated only to the extent of such Person's proportionate interest therein). "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which were in effect as of January 26, 2001. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which obligations or guarantee the full faith and credit of the United States of America is pledged. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business) or otherwise incurring, assuming or becoming liable for the payment of any principal, premium or interest, direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligation (including agreements to keep-well and to purchase assets, goods, securities or services). "Guarantor" means (a) the Parent and (b) any Subsidiary Guarantor, and in each case its successor, if any. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate 9 collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" means the Person in whose name a Note is registered on the Registrar's books. "Hospitality-Related Business" means the lodging business and other businesses necessary for, incident to, in support of, connected with, complementary to or arising out of the lodging business, including, without limitation, (i) developing, managing, operating, improving or acquiring lodging facilities, restaurants and other food-service facilities and convention or meeting facilities, and marketing services related thereto, (ii) acquiring, developing, operating, managing or improving any real estate taken in foreclosure (or similar settlement) by the Company, the Parent or any of their respective Restricted Subsidiaries, or any real estate ancillary or connected to any lodging owned, managed or operated by the Company, the Parent or any of their respective Restricted Subsidiaries, (iii) owning and managing mortgages in, or other Indebtedness secured by Liens on, lodging and real estate related or ancillary to lodging or (iv) other related activities thereto. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, and also includes, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. "Indenture" means this Indenture, as amended or supplemented from time to time. "Investment Grade" means a rating of the Notes by both S&P and Moody's, each such rating being in one of such agency's four highest generic rating categories that signifies investment grade (i.e., currently BBB- (or the equivalent) or higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided in each case such ratings are publicly available; provided, further, that in the event Moody's or S&P is no longer in existence for purposes of determining whether the Notes are rated "Investment Grade," such organization may be replaced by a nationally recognized statistical rating organization (as defined in rule 436 under the Securities Act) designated by the Company, notice of which shall be given to the Trustee. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company, the Parent or any Restricted Subsidiary of the Company or the Parent sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the 10 Company or the Parent such that, after giving effect to any such sale or disposition, the Company or the Parent, as the case may be, no longer owns, directly or indirectly, greater than 50% of the outstanding common stock of such Restricted Subsidiary, the Company or the Parent, as the case may be, shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the investments in such Restricted Subsidiary not sold or disposed of. "Issuance Date" means the date of this Indenture. "Issuers" means each of the Company and MeriStar Finance, until a successor replaces either such party in accordance with the applicable provisions of this Indenture, and thereafter, means, with respect to such replaced party, such successor. "Lien" means, with respect to any asset, or income or profits therefrom, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" has the meaning assigned to such term in the Registration Rights Agreement. "MeriStar Finance" means MeriStar Hospitality Finance Corp. III, a Delaware corporation, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with any Asset Sale, and excluding any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company, the Parent or any of their respective Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "Non-Recourse Indebtedness" means Indebtedness (a) as to which none of the Company, the Parent or any of their respective Restricted Subsidiaries (i) provides credit support (other than in the form of a Lien on an asset serving as security for Non-Recourse Indebtedness 11 of the Company, the Parent or any of their respective Restricted Subsidiaries) pursuant to any undertaking, agreement or instrument that would constitute Indebtedness, (ii) is directly or indirectly liable (other than in the form of a Lien on an asset serving as security for Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries) or (iii) constitutes the lender and (b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "Notes" means the Notes issued under this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officers" means the Chairman of the Board, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller, Secretary, any Assistant Secretary or any Vice President of the Company or the Company's general partner, the Parent or MeriStar Finance, as applicable. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, the President, the Chief Operating Officer, or a Vice President and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary, as applicable, of each of the Company's general partner, the Parent and MeriStar Finance, as applicable, except with respect to certificates required to be furnished by the Issuers and the Parent to the Trustee pursuant to Section 4.4 hereof, in which event "Officers' Certificate" means a certificate signed by the principal executive officer or principal financial officer of each of the Company's general partner, the Parent or MeriStar Finance, as applicable. "OP Units" means limited partnership interests in the Company or any successor operating partnership that require the issuer thereof to pay dividends or distributions which are tied to dividends paid on the Parent's common stock and which by their terms may be converted into, or exercised or redeemed for, cash or the Parent's common stock. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee complying with the requirements of this Indenture. "Parent" means MeriStar Hospitality Corporation, a Maryland corporation, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter, means such successor. "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Clearstream). "Permitted Investments" means any (a) Investments in the Company or the Parent, (b) Investments in any Restricted Subsidiary of the Company or the Parent, (c) Investments in 12 Cash Equivalents, (d) Investments by the Company, the Parent or any Restricted Subsidiary of the Company or the Parent in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or the Parent or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company, the Parent or a Restricted Subsidiary of the Company or the Parent, (e) Investments in Unrestricted Subsidiaries or Permitted Joint Ventures, provided that such Investments are in entities solely or principally engaged in Hospitality-Related Businesses and that the aggregate of such Investments does not exceed the greater of (i) $50.0 million or (ii) 5% of Consolidated Net Tangible Assets collectively, (f) Investments in MeriStar Investment Partners, L.P. in an aggregate amount not to exceed $10.0 million collectively and (g) loans to MeriStar Hotels & Resorts Inc. in an aggregate amount not to exceed $25.0 million at any time outstanding. "Permitted Joint Venture" means any corporation, partnership, limited liability company or partnership or other similar entity formed to hold lodging properties in which the Company or the Parent, directly or indirectly, owns less than a 50.1% interest. "Permitted Refinancing" means Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, to the extent (a) the principal amount of Refinancing Indebtedness or the liquidation preference amount of Refinancing Disqualified Stock, as the case may be, does not exceed the principal amount of Indebtedness or the liquidation preference amount of Disqualified Stock, as the case may be, so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of premiums and reasonable expenses incurred in connection therewith); (b) such Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, is scheduled to mature or is redeemable at the option of the holder, as the case may be, no earlier than the Indebtedness or Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded; (c) in the case of Refinancing Indebtedness, the Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (d) in the case of Refinancing Disqualified Stock, the Disqualified Stock has a Weighted Average Life to Mandatory Redemption equal to or greater than the Weighted Average Life to Mandatory Redemption of the Disqualified Stock being extended, refinanced, renewed, replaced, defeased or refunded; (e) if the Indebtedness or the Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded is subordinated or junior in right of payment to the Notes, the Refinancing Indebtedness or Refinancing Disqualified Stock, as the case may be, is subordinated or junior in right of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness or the Disqualified Stock, as the case may be, being extended, refinanced, renewed, replaced, defeased or refunded and (f) such Refinancing Indebtedness or Refinancing Disqualified Stock is incurred or issued either by the Parent, by the Company or by a Restricted Subsidiary who is the obligor on the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. 13 "Physical Securities" means permanent certificated Notes in registered form, in substantially the form set forth in Exhibit A. "Preferred OP Units" means limited partnership interests in the Company or any successor operating partnership that require the issuer thereof to pay regularly scheduled fixed distributions thereon, which are not related to dividends on the Parent's common stock, and which by their terms may be converted into, or exercised or redeemed for, cash or the Parent's common stock. "Preferred Stock" means (i) any Equity Interest with a preferential right in the payment of dividends or distributions or upon liquidation, and (ii) any Disqualified Stock. "Refinancing Disqualified Stock" means Disqualified Stock issued in exchange for, or the proceeds of which are used, to extend, refinance, renew, replace, defease or refund Disqualified Stock or Indebtedness permitted to be issued pursuant to the tests set forth in the first paragraph of Section 4.9 hereof or Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the second paragraph of Section 4.9 hereof. "Refinancing Indebtedness" means Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness permitted to be incurred pursuant to the tests set forth in the first paragraph of Section 4.9 hereof or Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the second paragraph of Section 4.9 hereof. "Registration Rights Agreement" means that certain Registration Rights Agreement dated as of the Issuance Date among the Issuers, the Parent, the Subsidiary Guarantors and Lehman Brothers Inc., Deutsche Banc Alex. Brown Inc., SG Cowen Securities Corporation, Banc of America Securities LLC, Banc One Capital Markets, Inc., CIBC World Markets Corp., Dresdner Kleinwort Wasserstein - - Grantchester, Inc., Fleet Securities, Inc., Salomon Smith Barney Inc., Scotia Capital (USA) Inc. and Wells Fargo Brokerage Services, LLC (the "Initial Purchasers") setting forth certain registration rights with respect to the Notes. "Restricted Investments" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Security" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "S&P" means Standard & Poor's Ratings Services and its successors. 14 "Secured Indebtedness" means any Indebtedness or Disqualified Stock secured by a Lien upon property of the Company, the Parent or any of their respective Restricted Subsidiaries, other than Indebtedness under a Credit Facility secured only by a Stock Pledge. "Securities Act" means the Securities Act of 1933, as amended. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stock Pledge" means a first priority security interest in the equity interests of Subsidiaries of the Company or Subsidiaries of the Parent. "Subsidiary" means, with respect to any Person, (1) any corporation, association or other business entity of which more than 50% of the voting power of the outstanding voting stock is owned, directly or indirectly, by such Person, by such Person and one or more subsidiaries of such Person or by one or more subsidiaries of such Person, or the accounts of which would be consolidated with those of such Person in its consolidated financial statements in accordance with GAAP, if such statements were prepared as of such date; and (2) any partnership: (a) in which such Person or one or more subsidiaries of such Person is, at the time, a general partner and owns alone or together with the Company a majority of the partnership interest; or (b) in which such Person or one or more subsidiaries of such Person is, at the time, a general partner and which is controlled by such Person in a manner sufficient to permit its financial statements to be consolidated with the financial statements of such Person in conformity with GAAP and the financial statements of which are so consolidated. "Subsidiary Debt" means, without duplication, all Unsecured Indebtedness (including Guarantees other than Guarantees by Restricted Subsidiaries of Secured Indebtedness) of which a Restricted Subsidiary of the Company or the Parent (other than the Company) other than a Guarantor is the obligor. A release of the Subsidiary Guarantee of a Guarantor which remains a Restricted Subsidiary of the Company or the Parent shall be deemed to be an incurrence of Subsidiary Debt in an amount equal to the proportionate interest of the Company or the Parent in the Unsecured Indebtedness of such Guarantor. "Subsidiary Guarantor" means (a) each of the Company's Subsidiaries that guarantees the Credit Agreement on the date of this Indenture and (b) any Restricted Subsidiary that becomes a guarantor of the Notes pursuant to the terms of this Indenture, and in each case, its successor, if any. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Total Assets" means the sum of: (a) Undepreciated Real Estate Assets; and (b) all other assets (excluding intangibles) of the Parent, the Company and their respective Restricted Subsidiaries determined on a consolidated basis. "Total Unencumbered Assets" as of any date means the sum of: (a) those Undepreciated Real Estate Assets not securing any portion of Secured Indebtedness; and (b) all other assets (but excluding intangibles) of the Parent, the Company and their respective 15 Restricted Subsidiaries not securing any portion of Secured Indebtedness determined on a consolidated basis in accordance with GAAP. "Transaction Date" means, with respect to the incurrence of any Indebtedness or issuance of Disqualified Stock by the Company, the Parent or any their respective Restricted Subsidiaries, the date such Indebtedness is to be incurred or such Disqualified Stock is to be issued and, with respect to any Restricted Payment, the date such Restricted Payment is to be made. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Trust Officer" means any officer in the Corporate Trust Office of the Trustee. "Undepreciated Real Estate Assets" means, as of any date, the cost (being the original cost to the Company, the Parent or any their respective Restricted Subsidiaries plus capital improvements) of real estate assets of the Company, the Parent and their respective Restricted Subsidiaries on such date, before depreciation and amortization of such real estate assets, determined on a consolidated basis. "Unrestricted Subsidiary" means (i) any Subsidiary that is (or has been under this Indenture) designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a board resolution, but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Indebtedness; (b) is not party to any agreement, contract, arrangement or understanding with the Company, the Parent or any Restricted Subsidiary of the Company or the Parent unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company, the Parent or such Restricted Subsidiary than those that might be obtained at the same time from Persons who are not affiliates of the Company; (c) is a Person with respect to which none of the Company, the Parent or any of their respective Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results (other than pursuant to agreements relating to the management of hotels entered into between Restricted Subsidiaries and Unrestricted Subsidiaries in the ordinary course of such Subsidiaries' business, consistent with past practice); and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries. Any such designation by the Board of Directors made after the Issuance Date shall be evidenced to the Trustee by filing with the Trustee a certified copy of the board resolution giving effect to such designation and an officer's certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.7 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company or the Parent as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.9 hereof, the Company and the Parent shall be in default of such covenant). The Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary, provided that such designation shall be deemed to be an 16 incurrence of Indebtedness by a Restricted Subsidiary of the Company or the Parent of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.9 hereof and (ii) no Default or Event of Default would be in existence following such designation. MeriStar Finance shall not under any circumstances be designated as an Unrestricted Subsidiary. "Unsecured Indebtedness" means any Indebtedness or Disqualified Stock of the Company, the Parent or any of their respective Restricted Subsidiaries that is not Secured Indebtedness. "Weighted Average Life to Mandatory Redemption" means, when applied to any Disqualified Stock at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding liquidation preference amount of such Disqualified Stock. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. SECTION 1.2. OTHER DEFINITIONS. Defined in Term Section - ---- ------- "Affiliate Transaction" 4.11 "Agent Members" 2.16 "Asset Sale Offer" 4.10 "Asset Sale Offer Price" 4.10 "Bankruptcy Law" 6.1 "Change of Control Offer" 4.14 "Change of Control Payment" 4.14 "Change of Control Payment Date" 4.14 "Covenant Defeasance" 8.3 "Custodian" 6.1 "defeasance trust" 8.4 "Depositary" 2.1 "Event of Default" 7.1 "Excess Proceeds" 4.10 "Exchange Global Note" 2.1 "Global Notes" 2.1 "incur" 4.9 17 Defined in Term Section - ---- ------- "incurrence" 4.9 "insolvent" 10.3 "Legal Defeasance" 8.2 "Legal Holiday" 11.7 "Paying Agent" 2.3 "Payment Blockage Notice" 10.3 "Private Placement Legend" 2.15 "Public Equity Offering" 3.7 "Registrar" 2.3 "Regulation S" 2.1 "Regulation S Global Note" 2.1 "Regulation S Permanent Global Note" 2.1 "Regulation S Temporary Global Note" 2.1 "Restricted Payments" 4.7 "Rule 144A" 2.1 "Rule 144A Global Note" 2.1 SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means any Issuer, any Guarantor and any successor obligor. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires: (a) a term has the meaning assigned to it; 18 (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions. SECTION 1.5. ONE CLASS OF SECURITIES. The Initial Notes and the Exchange Notes shall vote and consent together on all matters as one class and none of the Initial Notes or the Exchange Notes shall have the right to vote or consent as a separate class on any matter. ARTICLE 2 THE NOTES SECTION 2.1. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part of this Indenture. Subject to Section 2.7 hereof, the Notes shall be issued at any time, or from time to time, in an aggregate principal amount not to exceed $400,000,000. The Notes may have notations, legends or endorsements required by law, stock exchange rule or agreements to which any Issuer or any Guarantor is subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued initially in denominations of $1,000 and integral multiples thereof. Notes offered and sold in reliance on Rule 144A under the Securities Act ("Rule 144A") shall be issued initially in the form of one or more permanent global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (each, a "Rule 144A Global Note"), deposited with the Trustee, as custodian for The Depository Trust Company (the "Depositary"), duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. Notes offered and sold in reliance on Regulation S under the Securities Act ("Regulation S") shall be issued initially in the form of one or more temporary global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (each, a "Regulation S Temporary Global Note"), which shall be deposited with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Restricted Period for the Notes shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to 19 the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by Section 2.17 hereof), and (ii) an Officers' Certificate from the Issuers. Following the termination of the Restricted Period, beneficial interests in a Regulation S Temporary Global Note shall be exchanged for beneficial interests in one or more permanent global notes in registered form without interest coupons, in substantially the form set forth in Exhibit A (a "Regulation S Permanent Global Note," and collectively with the Regulation S Temporary Global Note, the "Regulation S Global Notes") pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Notes. The aggregate principal amount of the Regulation S Temporary Global Notes and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. Exchange Notes exchanged for interests in the Rule 144A Global Notes, the Regulation S Global Notes or any Physical Securities will be issued in the form of one or more permanent global notes in registered form without interest coupons, substantially in the form of Exhibit A (an "Exchange Global Note"), deposited with the Trustee, as custodian for the Depositary, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Notes, the Regulation S Temporary Global Notes, the Regulation S Permanent Global Notes and the Exchange Global Notes are collectively referred to herein as the "Global Notes." The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Notes and the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream. SECTION 2.2. EXECUTION AND AUTHENTICATION. An Officer of each of Issuer shall sign the Notes for the Issuers by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture. The form of Trustee's certificate of authentication to be borne by the Notes shall be substantially as set forth in Exhibit A hereto. The Trustee shall, upon a written order of the Issuers signed by two Officers of each of the Issuers, authenticate Notes for original issue up to an aggregate principal amount 20 stated in Section 2.1 hereof. The aggregate principal amount of Notes outstanding at any time may not exceed the amount set forth herein, except as provided in Section 2.7. The Trustee may appoint an authenticating agent to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuers or an Affiliate of the Issuers. SECTION 2.3. REGISTRAR AND PAYING AGENT. The Issuers shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the "Registrar") and (ii) an office or agency where Notes may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. Either Issuer or any of its Subsidiaries may act as Paying Agent or Registrar. The Issuers shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall incorporate the provisions of the TIA. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuers shall notify the Trustee of the name and address of any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.7 hereof. The Issuers initially appoint the Trustee as Registrar, Paying Agent and agent for service of notices and demands in connection with the Notes. SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders of Notes or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, or interest or Liquidated Damages (as defined in the Registration Rights Agreement), if any, on the Notes, and will notify the Trustee of any default by the Issuers or Guarantors, if any, in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than an Issuer) shall have no further liability for the money delivered to the Trustee. If either Issuer or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. SECTION 2.5. HOLDERS LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of Notes and shall 21 otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven (7) Business Days before each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, including the aggregate principal amount thereof, and the Issuers and the Guarantors shall otherwise comply with TIA Section 312(a). SECTION 2.6. TRANSFER AND EXCHANGE. (a) Where Notes are presented to the Registrar with a request to register the transfer thereof or exchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met; provided, however, that any Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Issuers shall issue and the Trustee shall authenticate Notes at the Registrar's request, subject to such rules as the Trustee may reasonably require. (b) The Issuers and the Registrar shall not be required (i) to issue, to register the transfer of, or to exchange Notes during a period beginning at the opening of business on a Business Day fifteen (15) days before the day of any selection of Notes for redemption or purchase under Section 3.2 and ending at the close of business on the day of selection, or (ii) to register the transfer of or exchange any Note so selected for redemption or purchase in whole or in part, except the unredeemed or unpurchased portion of any Note being redeemed or purchased in part. (c) No service charge shall be made for any registration of a transfer or exchange (except as otherwise expressly permitted herein), but the Issuers may require payment by the Holder of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Section 2.10, 3.6 or 9.5). (d) Prior to due presentment for registration of transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and neither the Trustee, any Agent, nor any Issuer shall be affected by notice to the contrary. (e) Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry. SECTION 2.7. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or either the Issuers or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the 22 Issuers shall issue and the Trustee, upon the written order of the Issuers signed by two Officers of each Issuer, shall authenticate a replacement Note if an indemnity bond is supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Issuers, the Trustee, each Agent and each authenticating agent from any loss which any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge for its expenses in replacing a Note. Every replacement Note is an additional Obligation of the Issuers. SECTION 2.8. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in interest in a Global Note effected by the Trustee in accordance with the provision hereof, and those described in this Section as not outstanding. If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue. Subject to Section 2.9 hereof, a Note does not cease to be outstanding because an Issuer or an Affiliate of an Issuer holds the Note. SECTION 2.9. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by any Issuer, any Guarantor, or any Affiliate of any Issuer or any Guarantor, shall be considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer knows to be so owned shall be so considered. The Issuers agree to notify the Trustee of the existence of any Notes owned by any Issuer, by any Guarantor or by any Affiliate of any Issuer or any Guarantor. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Issuers may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuers and the Trustee consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of the written order of the Issuers signed by two Officers of each Issuer, shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. 23 SECTION 2.11. CANCELLATION. The Issuers at any time may deliver Notes to the Trustee for cancellation along with written instructions to cancel such Notes. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act) unless an Issuer directs them to be returned to them. The Issuers may not issue new Notes to replace Notes that have been redeemed or paid or that have been delivered to the Trustee for cancellation. All cancelled Notes held by the Trustee shall be destroyed and certification of their destruction delivered to the Issuers unless by a written order, signed by an Officer of each of the Issuers, the Issuers shall direct that cancelled Notes be returned to them. SECTION 2.12. DEFAULTED INTEREST. If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders of the Notes on a subsequent special record date, which date shall be at the earliest practicable date but in all events at least five (5) Business Days prior to the payment date, in each case at the rate provided in the Notes and in Section 4.1 hereof. The Issuers shall, with the consent of the Trustee, fix or cause to be fixed each such special record date and payment date. At least fifteen (15) days before the special record date, the Issuers (or the Trustee, in the name of and at the expense of the Issuers) shall mail to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. SECTION 2.13. RECORD DATE. The record date for purposes of determining the identity of Holders of Notes entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA Section 316(c). SECTION 2.14. CUSIP NUMBER. The Issuers in issuing the Notes may use a "CUSIP" number, and if they do so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuers will promptly notify the Trustee in writing of any change in the CUSIP number. SECTION 2.15. RESTRICTIVE LEGENDS. Each 144A Global Note and Physical Security that constitutes a Restricted Security shall bear the following legend (the "Private Placement Legend") unless otherwise agreed by the Issuers and the Holder thereof: 24 THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER 25 PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES. Each Temporary Regulation S Global Note shall bear the following legend on the face thereof : PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENTS RELATING TO ALL THE SECURITIES. Each Global Note shall also bear the following legend on the face thereof: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY, OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN 26 ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY. (a) The Global Notes initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear the appropriate legends as set forth in Section 2.15. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Note, and the Depositary may be treated by the Issuers, the Trustee and any agent of an Issuer or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of any Global Note shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. Except as provided below, owners of beneficial interests in Global Notes will not be entitled to receive Physical Securities. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Physical Securities in exchange for their beneficial interests in a Global Note upon written request in accordance with the Depositary's and the Registrar's procedures. In addition, Physical Securities shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (i) the Depositary notifies the Issuers that it is unwilling or unable to continue as depositary for such Global Note or the Depositary ceases to be a clearing agency registered under the Exchange Act, at a time when the Depositary is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Issuers within 90 days of such notice or, (b) the Issuers execute and deliver to the Trustee and Registrar an Officers' Certificate stating that such Global Note shall be so exchangeable or (c) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depositary to issue Physical Securities; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Issuers for Physical Securities prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. (c) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b) above, the Registrar shall (if one or more Physical Securities are to be issued) reflect on its books and records the date and a decrease in the principal amount of the beneficial interest in such Global Note to be transferred, and the Issuers shall execute, and the Trustee shall authenticate and deliver, one or more Physical Securities of like tenor and amount. (d) In connection with the transfer of an entire Global Note to beneficial owners pursuant to paragraph (b) above, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Issuers shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Physical Securities of authorized denominations. (e) Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Note pursuant to paragraph (b) or (c) above shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.17, bear the legend regarding transfer restrictions applicable to the Physical Securities set forth in Section 2.15. (f) The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.17. SPECIAL TRANSFER PROVISIONS. (a) Transfers to Non-U.S. Persons. The following provisions ----------------------------- shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to any Non-U.S. Person: (i) the Registrar shall register the transfer of any Note constituting a Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after December 19, 2003, or (y) the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit C hereto; and (ii) if the proposed transferee is an Agent Member and the Notes to be transferred consist of Physical Securities which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Securities so transferred. (b) Transfers to QIBs. The following provisions shall apply ----------------- with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): 28 (i) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Issuers and the Registrar in writing, that the sale has been effected in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Issuers and the Registrar in writing, that it is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and that any such account is a QIB within the meaning of Rule 144A, and it is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (ii) if the proposed transferee is an Agent Member and the Notes to be transferred consist of Physical Securities which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Securities so transferred. (c) Private Placement Legend. Upon the registration of the ------------------------ transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the registration of the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement legend unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section 2.17 exists or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (d) General. By its acceptance of any Note bearing the ------- Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. (e) Notwithstanding anything to the contrary contained herein, (i) prior to the expiration of the Restricted Period, transfers of beneficial interests in a Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than the Initial Purchasers), and (ii) a beneficial interest in a Regulation S Temporary Global Note may not be exchanged for a Physical Security or transferred to a Person who takes delivery thereof in the form of a Physical Security prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. 29 The Registrar shall retain for at least two years copies of all letters, notices and other written communications received pursuant to Section 2.16 hereof or this Section 2.17. The Issuers shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE SECTION 3.1. NOTICES TO TRUSTEE. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.7 hereof, they shall furnish to the Trustee, at least 45 days but not more than 90 days before a redemption date (unless a shorter notice period shall be satisfactory to the Trustee), an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. If the Company is required to make an offer to purchase Notes pursuant to the provisions of Sections 4.10 or 4.14, it shall furnish to the Trustee, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase price, (iv) the principal amount of the Notes to be purchased and (v) a statement to the effect that (a) the Company, the Parent or one of their respective Restricted Subsidiaries has made an Asset Sale and that the conditions set forth in Sections 3.9 and 4.10 have been satisfied or (b) a Change of Control has occurred and the conditions set forth in Section 4.14 have been satisfied, as applicable. SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED. In the event that less than all of the Notes are to be purchased in an Asset Sale Offer or redeemed at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements). The Issuers shall give written notice to the Trustee of such requirements of any securities exchange not less than forty-five (45) nor more than ninety (90) days prior to the date on which notice of such redemption or purchase is to be given. In the event a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes of the applicable series or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as practicable (subject to procedures of the Depositary), unless such method is otherwise prohibited. In the event of partial redemption, other than pro rata, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes of such series not previously called for redemption. In the event that less than all of the Notes of a series properly tendered in an Asset Sale Offer are to be purchased, the particular Notes of such series to be purchased shall be selected promptly upon the expiration of such Asset Sale Offer. 30 The Trustee shall promptly notify the Issuers in writing of the Notes of any series selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of them selected shall be in principal amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of any series of a Holder are to be redeemed or purchased, the entire outstanding principal amount of Notes of such series held by such Holder shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. In the event the Company is required to make an Asset Sale Offer pursuant to Section 3.9 and Section 4.10 hereof, and the amount of Excess Proceeds to be applied to such purchase would result in the purchase of a principal amount of Notes which is not evenly divisible by $1,000, the Trustee shall promptly refund to the Company the portion of such Excess Proceeds that is not necessary to purchase the immediately lesser principal amount of Notes that is so divisible. SECTION 3.3. NOTICE OF REDEMPTION. At least thirty (30) days but not more than sixty (60) days before a redemption date, the Issuers shall mail, or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the CUSIP number of the Notes, if any, and the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note in principal amount equal to the unredeemed portion will be issued; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Issuers default in making such redemption payment, interest and Liquidated Damages, if any, on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. 31 At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at their expense. SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.3 hereof, Notes called for redemption become due and payable on the redemption date at the redemption price. On and after the redemption date, unless the Issuers default in the payment of the redemption price, interest and Liquidated Damages, if any, will cease to accrue on the Notes or portions of them called for redemption and all rights of Holders of such Notes will terminate except for the right to receive the redemption price. Upon surrender to the Paying Agent, the Holders of such Notes shall be paid the redemption price plus accrued interest and Liquidated Damages, if any, to the redemption date, but interest installments and unpaid Liquidated Damages, if any, whose maturity is on or prior to the redemption date will be payable to the Holder of record at the close of business on the relevant record dates referred to in the Notes. A notice of redemption may not be conditional. SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. At least one Business Day before the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money in immediately available funds sufficient to pay the redemption price of and, if applicable, accrued interest and Liquidated Damages, if any, on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly, and in any event within two Business Days after the redemption date, return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of and, if applicable, accrued interest and Liquidated Damages, if any, on all Notes to be redeemed. If the Issuers comply with the provisions of the preceding paragraph, interest and Liquidated Damages, if any, on the Notes or the portions of Notes to be redeemed will cease to accrue on the applicable redemption date, whether or not such Notes are presented for payment. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, from the redemption date until such unpaid interest is paid, in each case at the rate provided in the Notes and in Section 4.1 hereof. SECTION 3.6. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Issuers shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered; provided, however, that no Note of $1,000 or less in principal amount shall be purchased or redeemed in part. SECTION 3.7. OPTIONAL REDEMPTION. Prior to January 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity 32 Offering), up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 109.125% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remains outstanding immediately after each such redemption. SECTION 3.8. MANDATORY REDEMPTION. Subject to the Company's obligation to make an offer to purchase Notes pursuant to Section 4.10 and Section 4.14, the Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. Within 30 days after the date that Excess Proceeds exceed $10.0 million and an Asset Sale Offer is required under Section 4.10 hereof, the Company shall mail or cause the Trustee to mail (in the Company's name and at its expense and pursuant to an Officers Certificate) an offer to purchase to each Holder of Notes pursuant to the terms of this Section 3.9 and to holders of other Indebtedness that ranks by its terms pari passu in right of payment with the Notes and the terms of which contain substantially similar requirements with respect to the application of net proceeds from asset sales as are contained herein. The Asset Sale Offer (as defined in Section 4.10) with respect to the Notes shall be mailed by the Company (or the Trustee) to Holders of Notes of each series at their last registered address with a copy to the Trustee and the Paying Agent and shall set forth (a) notice that an Asset Sale has occurred, that the Company is making an Asset Sale Offer, pursuant to this Section 3.9, and that each Holder of Notes of each series then outstanding has the right to require the Company to repurchase, for cash, such Holder's Notes at the Asset Sale Offer Price, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the payment date; (b) the purchase price per $1,000 of principal amount and the payment date of the Asset Sale Offer, (c) the maximum amount of Excess Proceeds, required to be applied to such Asset Sale Offer with respect to the Notes; (d) that any Notes properly tendered pursuant to the Asset Sale Offer will be accepted for payment (subject to reduction as provided in this Section 3.9) on the payment date of the Asset Sale Offer and any Notes not properly tendered will remain outstanding and continue to accrue interest and Liquidated Damages, if applicable; (e) that unless the Company defaults in the payment of the Asset Sale Offer Price, all Notes accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest and Liquidated Damages after the payment date of the Asset Sale Offer; (f) that Holders electing to have any Notes purchased pursuant to an Asset Sale Offer will be required to surrender the Notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the Notes completed, or transfer by book-entry transfer, to the Issuers, the Depository or the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the payment date of the Asset Sale Offer; (g) that Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase the Notes provided that the Paying Agent receives, not later than the close of business on the second Business Day preceding the payment date of the Asset Sale Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount and series of Notes tendered for purchase, and a statement that 33 such Holder is withdrawing such Holder's tendered Notes and such Holder's election to have such Notes purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the amount of the Asset Sale Offer, the Company shall select the Notes of each series to be purchased by lot on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased or otherwise in accordance with this Indenture); and (i) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). If the payment date of the Asset Sale Offer is on or after an interest payment record date and on or before the related interest payment date, any accrued interest and Liquidated Damages will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender a Note pursuant to the Asset Sale Offer. The Company shall fix the payment date of the Asset Sale Offer for such purchase no earlier than 30 but no more than 60 days after the Asset Sale Offer is mailed as set forth above, except as may otherwise be required by applicable law. The Company shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to this Section 3.9. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 3.9, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue thereof. On the payment date of the Asset Sale Offer, the Company shall, to the extent permitted by law, (x) accept for payment Notes or portions thereof properly tendered pursuant to the Asset Sale Offer, (y) deposit with the Paying Agent the amount of money, in immediately available funds, equal to the maximum Excess Proceeds required under Section 4.10 to be applied to such Asset Sale Offer with respect to such Notes and (z) deliver or cause to be delivered to the Trustee, Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof tendered to the Company. If the aggregate purchase price of all Notes of any series properly tendered exceeds the maximum amount of Excess Proceeds required to be applied to such Asset Sale Offer with respect to such Notes, as applicable, the Notes or portions thereof to be purchased shall be selected pursuant to Section 3.2 hereof. The Paying Agent shall promptly mail to each Holder of Notes so accepted for payment a check in an amount equal to the aggregate purchase price of the Notes purchased by the Company from such Holder and the Trustee shall promptly authenticate and mail to each Holder a new Note of the same series equal in principal amount to any unpurchased portion of any Note surrendered, if any, or return any unpurchased Note to such Holder; provided, however, that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce in a newspaper of national circulation or in a press release provided to a nationally recognized financial wire service the results of the Asset Sale Offer on the payment date. Other than as specifically provided in this Section 3.9, each purchase pursuant to this Section 3.9 shall be made pursuant to the provisions of Sections 3.1, 3.2, 3.5 and 3.6 hereof. ARTICLE 4 COVENANTS SECTION 4.1. PAYMENT OF NOTES. The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes on the dates and in the manner provided in this Indenture and the Notes. Principal, premium, if any, and interest and Liquidated Damages, if any, shall be considered paid on the due date if the Paying Agent, if other than an Issuer or a Subsidiary of an Issuer, holds as of 9:00 a.m. Eastern Time on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest and Liquidated Damages, if any, then due. Such Paying Agent shall return to the Issuers promptly, and in any event, no later than five days following the date of payment, any money (including accrued interest) that exceeds such amount of principal, premium, if any, and interest paid on the Notes. The Issuers shall pay all Liquidated Damages, if any, in the same manner and on the same dates as set forth above and in the amounts set forth in the Registration Rights Agreement. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the interest rate then applicable to the Notes to the extent lawful. In addition, the Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY. The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of their obligations to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.3. 35 SECTION 4.3. SEC REPORTS. (a) The Issuers and the Parent shall, whether or not required by the rules and regulations of the SEC, submit to the SEC for public availability (unless the SEC will not accept such a submission) and provide to the Trustee and the Holders of outstanding Notes copies of all quarterly and annual reports and other information, documents and reports specified in Sections 13 and 15(d) of the Exchange Act for so long as the Notes are outstanding (which shall include, without limitation, a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by its certified independent accountants). The Issuers and the Parent shall make such information available to investors and securities analysts who request it in writing. Such information may be combined into one or two reports if permitted by the rules and regulations of the SEC. (b) If an Issuer, the Parent or a Subsidiary Guarantor is required to furnish annual or quarterly reports to its stockholders pursuant to the Exchange Act, the Issuers and the Parent shall cause such annual report or quarterly or other financial report furnished to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Notes maintained by the Registrar. (c) The Issuers, the Parent and the Subsidiary Guarantors shall deliver all reports and other documents and information to the Holders under this Section 4.3. The Trustee shall, if requested to by the Issuers, deliver such reports, other documents and information to the Holders, but at the sole expense of the Issuers. (d) The Issuers and the Parent, for so long as the Notes are outstanding, will continue to provide to Holders and to prospective purchasers of Notes the information required by Rule 144A(d)(4). (e) Notwithstanding anything contrary herein, the Trustee shall have no duty to review such documents for purposes of determining compliance with any provision of this Indenture. SECTION 4.4. COMPLIANCE CERTIFICATE. (a) Each of the Issuers and the Parent shall deliver to the Trustee, within sixty (60) days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Parent, the Issuers and their respective Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether each of the Parent, the Issuers and their respective Subsidiaries has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of the Parent, each Issuer and their respective Subsidiaries has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action each of the Parent, each Issuer and their respective Subsidiaries is taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the 36 principal of or interest or Liquidated Damages, if any, on the Notes are prohibited (or if such event has occurred, a description of the event and what action each is taking or proposes to take with respect thereto). (b) Each of the Issuers and the Parent shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of (i) any Default or Event of Default or (ii) any event of default under any other mortgage, indenture or instrument which with the passage of time or giving of notice would be a Default or an Event of Default under Section 6.1 hereof, an Officers' Certificate specifying such Default or Event of Default and what action the Issuers or the Parent are taking or propose to take with respect thereto. SECTION 4.5. TAXES. Each of the Issuers and the Parent shall, and shall cause each of their respective Subsidiaries to pay prior to delinquency, all material taxes, assessments, and governmental levies except as contested in good faith and by appropriate proceedings. SECTION 4.6. STAY, EXTENSION AND USURY LAWS. Each of the Issuers, the Parent and the Subsidiary Guarantors covenant, and the Company and the Parent shall cause any future Guarantors to covenant (to the extent they may lawfully do so), that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture. Each of the Issuers, the Parent and the Subsidiary Guarantors (to the extent it may lawfully do so) hereby expressly waives, and the Company and the Parent will cause any future Guarantor (to the extent it may lawfully do so) expressly to waive, all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.7. LIMITATION ON RESTRICTED PAYMENTS. The Company and the Parent shall not, and shall not permit any of their respective Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's, the Parent's or any of their respective Restricted Subsidiaries' Equity Interests, other than: (1) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or the Parent; (2) dividends or distributions by a Restricted Subsidiary of the Company or the Parent (other than the Company), provided that to the extent that a portion of such dividend or distribution is paid to a holder of Equity Interests of a Restricted Subsidiary other than the Company, the Parent or a Restricted Subsidiary of the Company or the Parent, such portion of such dividend or distribution is not greater than such holder's pro rata aggregate common equity interest in such Restricted Subsidiary; and (3) dividends or distributions payable on Existing Preferred OP Units and Preferred OP Units issued in compliance with Section 4.9 hereof; (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent or other Affiliate of the Company or the 37 Parent, other than (A) any Equity Interests owned by the Company, the Parent or any Restricted Subsidiary of the Company or the Parent; (B) any Existing Preferred OP Units and (C) any Preferred OP Units issued in compliance with Section 4.9 hereof; (iii) purchase, redeem or otherwise acquire or retire for value any Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of payment, by its terms, to the Notes or any Guarantee thereof prior to the scheduled final maturity or sinking fund payment dates for payment of principal and interest in accordance with the original documentation for such subordinated or junior Indebtedness; or (iv) make any Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) the Company and the Parent would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the tests set forth in the first paragraph of Section 4.9 hereof; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company, the Parent and their respective Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v) and (vii)(X) of the second next succeeding paragraph) is less than the sum, without duplication, of (i) 95% of the aggregate amount of the Funds From Operations (or, if the Funds From Operations is a loss, minus 100% of the amount of such loss) (determined by excluding income resulting from transfers of assets by the Company, the Parent or any of their respective Restricted Subsidiaries to an Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following January 26, 2001 to the end of the Parent's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, plus (ii) 100% of the aggregate net proceeds (including the fair market value of non-cash proceeds as determined in good faith by the Board of Directors) received by the Company or the Parent from the issue or sale, in either case, since January 26, 2001 of either (A) Equity Interests of the Company or the Parent or of (B) debt securities of the Company or the Parent that have been converted or exchanged into such Equity Interests (other than Equity Interests (or convertible or exchangeable debt securities) sold to a Restricted Subsidiary of the Company or the Parent and other than Disqualified Stock or debt securities that have been converted or exchanged into Disqualified Stock), plus (iii) in case, after January 26, 2001, any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary pursuant to the terms of this Indenture or has been merged, consolidated or amalgamated with or into, or transfers or conveys assets to, or is liquidated into, the Company, the Parent or a Restricted Subsidiary of the Company or the Parent and, provided that no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof, the lesser of (A) the book value (determined in accordance with GAAP) at the date of such redesignation, combination or transfer of the aggregate Investments made by the Company, the Parent and their respective Restricted Subsidiaries in such Unrestricted Subsidiary (or of the assets transferred or conveyed, as applicable) and (B) the fair market value of such Investments 38 in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), in each case as determined in good faith by the Board of Directors of the Parent, whose determination shall be conclusive and evidenced by a resolution of such Board and, in each case, after deducting any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or with the assets so transferred or conveyed, plus (iv) 100% of any dividends, distributions or interest actually received in cash by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent after January 26, 2001 from (A) a Restricted Subsidiary the Net Income of which has been excluded from the computation of Funds From Operations, (B) an Unrestricted Subsidiary, (C) a Person that is not a Subsidiary or (D) a Person that is accounted for on the equity method (except in the case of each of clauses (B), (C) and (D), to the extent any such amounts are included in the calculation of Funds From Operations). Notwithstanding the foregoing, the Company or the Parent may declare or pay any dividend or make any distribution that is necessary to maintain the Parent's status as a REIT under the Internal Revenue Code if: (a) the aggregate principal amount of all of the outstanding Indebtedness of the Company, the Parent and their respective Restricted Subsidiaries on a consolidated basis at such time is less than 80% of the Parent's Adjusted Total Assets; and (b) no Default or Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the provisions of this Section 4.7 will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) (X) the redemption, purchase, retirement or other acquisition of any OP Unit or Preferred OP Unit in exchange for Equity Interests of the Parent (other than Disqualified Stock) and (Y) the redemption, purchase, retirement or other acquisition of any Equity Interests of the Company, the Parent or a Restricted Subsidiary of the Company or the Parent (other than OP Units or Preferred OP Units) in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company or the Parent) of other Equity Interests of the Company or the Parent (other than any Disqualified Stock); provided that in the case of (X) and (Y) the amount of any proceeds that is utilized for such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the first paragraph of this Section 4.7; (iii) the defeasance, redemption, repayment or purchase of Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of payment, by its terms, to the Notes or any Guarantee thereof in a Permitted Refinancing; (iv) the defeasance, redemption, repayment or purchase of Indebtedness of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent that is subordinated or junior in right of payment, by its terms, to the Notes or any Guarantee thereof with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or the Parent) of Equity Interests (other than Disqualified Stock) of the Company or the Parent; provided that the amount of any proceeds that is utilized for such defeasance, redemption, 39 repayment or purchase shall be excluded from clause (c)(ii) of the first paragraph of this Section 4.7; (v) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or the Parent pursuant to any management equity subscription agreement, stock option agreement or stock award; provided, however, that the aggregate price paid for all such purchased, redeemed, acquired or retired Equity Interests shall not exceed $3,000,000 in any 12 month period; (vi) payments or distributions to dissenting stockholders pursuant to applicable law pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of this Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property or assets of the Company or the Parent; (vii) (X) the making of any Permitted Investment described in clauses (a), (b), (c), (d), (f) or (g) of the definition thereof and (Y) the making of any Permitted Investment described in clause (e) thereof; and (viii) payments that would otherwise be Restricted Payments, in an aggregate amount not to exceed $35 million collectively, provided that at the time of, and after giving effect to, the proposed payment, the Company and the Parent could have incurred at least $1.00 of additional Indebtedness under the first paragraph of Section 4.9; provided, however, that, in the case of clauses (ii)(Y), (iii), (iv), (v), (vi), (vii)(Y) and (viii), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof. In determining whether any Restricted Payment is permitted by this Section 4.7, the Company or the Parent may allocate or reallocate all or any portion of such Restricted Payment among the clauses (i) through (viii) of the preceding paragraph or among such clauses and the first paragraph of this Section 4.7 including clauses (a), (b) and (c); provided that at the time of such allocation or reallocation, all such Restricted Payments, or allocated portions thereof, would be permitted under the various provisions of this Section 4.7. The amount of all Restricted Payments (other than cash) shall be the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers Certificate delivered to the Trustee) on the date of the Restricted Payment of the asset(s) proposed to be transferred by the Company, the Parent or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than (i) the end of any calendar quarter in which any Restricted Payment is made or (ii) the making of a Restricted Payment which, when added to the sum of all previous Restricted Payments made in a calendar quarter, would cause the aggregate of all Restricted Payments made in such quarter to exceed $5.0 million, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.7 were computed, which calculations may be based upon the Parent's latest available financial statements. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default or Event of Default. For purposes of making the determination as to whether such designation would cause a Default or Event of Default, all outstanding Investments by the Company, the Parent and their Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.7. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the greatest of (X) 40 the net book value of such Investments at the time of such designation, (y) the fair market value of such Investments at the time of such designation and (z) the original fair market value of such Investments at the time they were made. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Parent giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. SECTION 4.8. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall not permit any of their respective Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any other distributions to the Company, the Parent or any of their respective Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company, the Parent or any of their respective Restricted Subsidiaries, (b) make loans or advances or capital contributions to the Company, the Parent or any of their respective Restricted Subsidiaries, or (c) sell, lease or transfer any of its properties or assets to the Company, the Parent or any of their respective Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reasons of (i) Existing Indebtedness as in effect on the date of this Indenture, (ii) any Credit Facility, provided that the encumbrances or restrictions contained in such facility as amended, modified, supplemented, restructured, renewed, restated, refunded, replaced or refinanced or extended from time to time on one or more occasions are no more restrictive than those contained in the Credit Agreement as in effect on the date of this Indenture, (iii) this Indenture and the Notes, (iv) applicable law, (v) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company, the Parent or any of their respective Restricted Subsidiaries or of any Person that becomes a Restricted Subsidiary as in effect at the time of such acquisition or such Person becoming a Restricted Subsidiary (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition or such Person becoming a Restricted Subsidiary), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that the Consolidated Cash Flow of such Person is not taken into account (to the extent of such restriction) in determining whether such acquisition was permitted by the terms of this Indenture, (vi) restrictions of the nature described in clause (c) above by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (vii) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in this clause (c) above on the property so acquired, (viii) Permitted Refinancings, provided that the encumbrances or restrictions contained in the agreements governing such Permitted Refinancings are no more restrictive than those contained in the agreements governing the Indebtedness or Disqualified Stock being refinanced, or (ix) customary restrictions in security agreements or mortgages 41 securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements and mortgages. SECTION 4.9. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF CERTAIN CAPITAL STOCK. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness (including Assumed Indebtedness), neither the Company nor the Parent shall issue, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to issue, any shares of Disqualified Stock, and neither the Company nor the Parent shall permit any of its Restricted Subsidiaries (other than the Company) to issue any Preferred Stock; provided, however, that the Company or any Guarantor may incur Indebtedness or issue shares of Disqualified Stock if (i) the aggregate principal amount of all outstanding Indebtedness and Disqualified Stock of the Company, the Parent and their respective Restricted Subsidiaries (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the next paragraph or otherwise) determined on a consolidated basis is less than or equal to 65% of the Parent's Adjusted Total Assets, after giving effect to, on a pro forma basis, such incurrence or issuance and the receipt and application of the proceeds thereof; and (ii) the Fixed Charge Coverage Ratio of the Parent for the Parent's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period; provided that the Company, the Parent or any of their respective Restricted Subsidiaries may not incur any Subsidiary Debt or any Secured Indebtedness if immediately after giving effect to, on a pro forma basis, such incurrence of such additional Subsidiary Debt or Secured Indebtedness and the application of the proceeds thereof, the aggregate principal amount of all outstanding Subsidiary Debt or Secured Indebtedness of the Company, the Parent and their respective Restricted Subsidiaries (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the next paragraph or otherwise) on a consolidated basis is greater than 45% of the Parent's Adjusted Total Assets. The foregoing provisions shall not apply to: (a) the incurrence by the Company's or the Parent's Unrestricted Subsidiaries of Non-Recourse Indebtedness; provided, however, that if any such Indebtedness ceases to be Non-Recourse Indebtedness of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by one of the Company's or the Parent's Restricted Subsidiaries; (b) the incurrence by the Company, the Parent or their respective Restricted Subsidiaries of Indebtedness pursuant to the Credit Facilities in an aggregate principal amount not to exceed $700.0 million at any one time outstanding, minus any Net Proceeds that have been applied to permanently reduce the outstanding amount of such Indebtedness pursuant to clause (a) of the second paragraph of Section 4.10 hereof; 42 (c) the incurrence by the Company, the Parent and their respective Restricted Subsidiaries of Existing Indebtedness; (d) the incurrence by the Company, the Parent or their respective Restricted Subsidiaries of Indebtedness under Hedging Obligations that do not increase the Indebtedness of the Company, the Parent or the Restricted Subsidiary, as the case may be, other than as a result of fluctuations in interest or foreign currency exchange rates provided that such Hedging Obligations are incurred for the purpose of providing interest rate protection with respect to Indebtedness permitted under this Indenture or to provide currency exchange protection in connection with revenues generated in currencies other than U.S. dollars; (e) the incurrence or the issuance by the Company or the Parent of Refinancing Indebtedness or Refinancing Disqualified Stock or the incurrence or issuance by a Restricted Subsidiary of Refinancing Indebtedness or Refinancing Disqualified Stock; provided, however, that such Refinancing Indebtedness or Refinancing Disqualified Stock is a Permitted Refinancing; (f) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of intercompany Indebtedness between or among the Company, the Parent and/or any of their respective Restricted Subsidiaries; provided, however, that (a) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than a Restricted Subsidiary and (b) any sale or other transfer of any such Indebtedness to a Person that is not either the Company, the Parent or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company, the Parent or such Restricted Subsidiary, as the case may be; (g) the incurrence of Indebtedness represented by the Notes and any Guarantee thereof; (h) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries, in the ordinary course of business and consistent with past practice, of surety, performance or appeal bonds; (i) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any other clause of this paragraph) in an aggregate principal amount at any time outstanding not to exceed $50.0 million collectively; (j) the incurrence by the Company, the Parent or any of their respective Restricted Subsidiaries of Assumed Indebtedness; provided that, after giving effect to the incurrence thereof, the Company, the Parent and their respective Restricted Subsidiaries could incur at lease $1.00 of additional Indebtedness pursuant to the tests described in the preceding paragraph; (k) the issuance of Preferred OP Units by the Company or any of its Restricted Subsidiaries as full or partial consideration for the acquisition of lodging facilities and related assets, provided that, after giving effect to the issuance thereof, the Company, the Parent and their respective Restricted Subsidiaries could incur at least $1.00 of additional Indebtedness pursuant to the tests described in the preceding paragraph; and 43 (l) the incurrence of Indebtedness by the Company, the Parent or any of their respective Restricted Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any of obligations of the Company, the Parent or any of their respective Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by the Company, the Parent and their respective Restricted Subsidiaries on a consolidated basis in connection with such disposition. SECTION 4.10. LIMITATION ON SALE OF ASSETS. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, conduct an Asset Sale, unless (x) the Company, the Parent or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) and (y) at least 75% of the consideration therefor received by the Company, the Parent or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided, however, that, with respect to the sale of one or more hotel properties, up to 75% of the consideration may consist of Indebtedness of the purchaser of those hotel properties if that Indebtedness is secured by a first priority Lien on the properties sold; provided, further, however, the principal amount of the following shall be deemed to be cash for purposes of this provision: (A) any liabilities (as shown on the Company's, the Parent's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company, the Parent or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Guarantee thereof) that are assumed by the transferee of any such assets and (B) any notes or other obligations received by the Company, the Parent or any such Restricted Subsidiary from such transferee that are converted by the Company, the Parent or such Restricted Subsidiary into cash within 90 days after the closing of such Asset Sale (to the extent of the cash received). Notwithstanding the foregoing, the restriction in clause (y) above will not apply with respect to mortgages, other notes receivable or other securities received by the Company, the Parent or any Restricted Subsidiary from a transferee of any assets to the extent such mortgages, other notes receivable or other securities are Investments permitted to be made by the Company, the Parent or such Restricted Subsidiary under Section 4.7 hereof. In the event and to the extent that the Net Proceeds received by the Company, the Parent and their respective Restricted Subsidiaries collectively from one or more Asset Sales occurring on or after the Issuance Date in any period of 12 consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of the Company, the Parent and their respective Restricted Subsidiaries has been filed with the SEC or otherwise provided to the Trustee), then the Company or the Parent shall, or shall cause the relevant Restricted Subsidiary to, within 365 days after the date the Net Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible Assets: (a) apply the Net Proceeds from such Asset Sale to prepay any Indebtedness under any Credit Facility, in order to effect a permanent reduction in the amount of Indebtedness that may be incurred pursuant to clause (b) of the second paragraph 44 of Section 4.9 hereof, or (b) invest the Net Proceeds from such Asset Sale in property or assets used in a Hospitality-Related Business, provided that the Company, the Parent or such Restricted Subsidiary will have complied with this clause (b) if, within 365 days of such Asset Sale, the Company, the Parent or such Restricted Subsidiary, as applicable, shall have commenced and not completed or abandoned an Investment in compliance with this clause (b) and shall have segregated such Net Proceeds from the general funds of the Company, the Parent and their respective Subsidiaries for that purpose and such Investment is substantially completed within 180 days after the first anniversary of such Asset Sale. Any Net Proceeds from an Asset Sale that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an offer, to all Holders of Notes and to holders of other Indebtedness that ranks by its terms pari passu in right of payment with the Notes and the terms of which contain substantially similar requirements with respect to the application of net proceeds from asset sales as are contained in this Indenture (an "Asset Sale Offer") to purchase on a pro rata basis the maximum principal amount of Notes of each series, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Asset Sale Offer Price"), in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes and other such Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds available for purchase thereof, the Trustee shall select the Notes to be purchased in the manner described under Section 3.3 hereof. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Pending the final application of any Net Proceeds from an Asset Sale pursuant to this paragraph, the Company or any Restricted Subsidiary may temporarily reduce Indebtedness of the Company or a Restricted Subsidiary that ranks by its terms senior to the Notes or otherwise invest such Net Proceeds in Cash Equivalents. Any offer to purchase the Notes pursuant to this Section 4.10 shall be made pursuant to the provisions of Section 3.9 hereof. Simultaneously with the notification of such offer to the Trustee, the Company shall provide the Trustee with an Officer's is Certificate setting forth the calculations used in determining the amount of Excess Proceeds to be applied to the purchase of the Notes. The Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with any offer to purchase and the purchase of Notes as described above. To the extent that the provisions of any securities laws or regulations conflict with Section 3.9 and this Section 4.10, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the provisions of Section 3.9 and this Section 4.10 to make an Asset Sale Offer. SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, sell, lease, transfer or 45 otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms that are no less favorable to the Company, the Parent or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company, the Parent or such Restricted Subsidiary on an arm's length basis with an unrelated Person, (b) the Company delivers to the Trustee (i) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above and such Affiliate Transaction is approved by a majority of the disinterested members of the Board of Directors and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $10.0 million (other than an Affiliate Transaction involving the acquisition or disposition of a lodging facility by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent), an opinion as to the fairness to the Company, the Parent or such Restricted Subsidiary from a financial point of view issued, at the option of the Company, by an investment banking firm of national standing or a Qualified Appraiser and (c) the Company delivers to the Trustee in the case of an Affiliate Transaction involving the acquisition or disposition of a lodging facility by the Company, the Parent or a Restricted Subsidiary of the Company or the Parent and (x) involving aggregate payments of more than $5.0 million and less than $25.0 million, an appraisal by a Qualified Appraiser to the effect that the transaction is being undertaken at fair market value or (y) involving aggregate payments of $25.0 million or more, an opinion as to the fairness of the transaction to the Company, the Parent or such Restricted Subsidiary from a financial point of view issued by an investment banking firm of national standing; provided, however, that the following shall not be deemed Affiliate Transactions: (A) any employment, deferred compensation, stock option, noncompetition, consulting or similar agreement entered into by the Company, the Parent or any of their respective Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company, the Parent or such Restricted Subsidiary, (B) transactions between or among the Company, the Parent and/or their respective Restricted Subsidiaries, (C) the incurrence of fees in connection with the provision of hotel management services, provided that such fees are paid in the ordinary course of business and are consistent with past practice and (D) Restricted Payments permitted by Section 4.7 hereof. SECTION 4.12. LIMITATION ON LIENS. Neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, secure any Indebtedness under any Credit Agreement 4.12 and 4.18 or any other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 by a Lien (other than a Stock Pledge) unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with the Indebtedness under such Credit Agreement 4.12 and 4.18 or any such other Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 (and any other senior Indebtedness outstanding with similar provisions requiring the Company to equally and ratably secure such Indebtedness) for so long as the Indebtedness under any such Credit Agreement 4.12 and 4.18 or any other such Indebtedness incurred pursuant to clause (b) of the second paragraph of Section 4.9 is secured by such Lien; provided, however, that the Company, the Parent or any of their respective Restricted Subsidiaries may secure with one or more Liens up to $300 million aggregate principal amount of Indebtedness described in clause (a) of the definition of "Non- 46 Recourse Indebtedness" and/or Indebtedness commonly known as "collateralized mortgage-backed securities," without making provision to equally and ratably secure the Notes. SECTION 4.13. CORPORATE EXISTENCE. Subject to Section 4.14 and Article 5 hereof, each of the Issuers and the Parent shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate or limited partnership, as the case may be, existence and the corporate, limited partnership or limited liability company, as the case may be, existence of each of its Subsidiaries, in accordance with its respective organizational documents (as the same may be amended from time to time) and (ii) its (and its Subsidiaries') rights (charter and statutory), licenses and franchises; provided, however, that the Issuers and the Parent shall not be required to preserve any such right, license or franchise, or the corporate, limited partnership or limited liability company, existence of any of its Subsidiaries, if the Board of Directors of the Parent shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Parent, the Company and their respective Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. SECTION 4.14. CHANGE OF CONTROL. Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following the date upon which the Change of Control occurs, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Trustee or Paying Agent, if any, at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.14, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.14 to make a Change of Control Offer. On the Change of Control Payment Date, the Company will, to the extent permitted by law, (x) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (y) deposit with the Paying Agent an amount equal to the 47 aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (z) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so accepted the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail to each Holder a new Note of the same series equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, however, that each such new Note shall be in principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce in a newspaper of national circulation or in a press release provided to a nationally recognized financial wire service the results of the Change of Control Offer on the Change of Control Payment Date. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. SECTION 4.15. SUBSIDIARY GUARANTEES. Prior to guaranteeing any other Indebtedness of the Company or the Parent, a Restricted Subsidiary of the Company or the Parent that is also a Significant Subsidiary must execute and deliver to the Trustee a supplemental indenture in the form of Exhibit B hereto pursuant to which such Restricted Subsidiary shall Guarantee, on an unsecured senior basis, all of the Obligations of the Issuers with respect to the Notes together with an opinion of counsel (which counsel may be an employee of the Company) to the effect that the supplemental indenture has been duly executed and delivered by such Restricted Subsidiary and is in compliance in all material respects with the terms of this Indenture. SECTION 4.16. LINE OF BUSINESS. For so long as any Notes are outstanding, neither the Company nor the Parent shall, and neither the Company nor the Parent shall permit any of their respective Restricted Subsidiaries to, engage in any business or activity other than a Hospitality-Related Business. SECTION 4.17. PAYMENTS FOR CONSENT. None of the Parent, any Issuer or any of their respective Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 48 SECTION 4.18. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company, the Parent and their respective Restricted Subsidiaries shall maintain Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of the Company's, the Parent's and their respective Restricted Subsidiaries' senior Unsecured Indebtedness (including amounts of Refinancing Indebtedness outstanding pursuant to clause (e) of the second paragraph of Section 4.9 or otherwise); provided, however, that this Section 4.18 shall not prohibit the incurrence of Secured Indebtedness under the Credit Agreement - 4.12 and 4.18; and provided further, however, that, to the extent that the Notes are secured by any assets equally and ratably with any other Indebtedness pursuant to Section 4.12 hereof, the related Lien or Liens on such assets securing the Notes and such other Indebtedness shall be ignored when determining the amount of Total Unencumbered Assets and senior Unsecured Indebtedness for purposes of this Section 4.18. SECTION 4.19. [intentionally left blank] SECTION 4.20. CERTAIN COVENANTS OF MERISTAR FINANCE. Notwithstanding anything to the contrary contained herein, MeriStar Finance shall not (a) own any assets other than nominal equity capital or (b) engage in any business other than the co-issuance of debt securities of the Company and the guarantee of existing and future Indebtedness of the Company. SECTION 4.21. COVENANTS UPON ATTAINMENT AND MAINTENANCE OF AN INVESTMENT GRADE RATING. The provisions of Sections 4.7, 4.8, 4.11 and 4.12 shall not be applicable in the event, and only for so long as, the Notes are rated Investment Grade and no Default or Event of Default has occurred and is continuing. ARTICLE 5 SUCCESSORS SECTION 5.1. WHEN THE COMPANY MAY MERGE, ETC. Neither of the Issuers nor the Parent shall consolidate or merge with or into (whether or not such Issuer or the Parent, as the case may be, is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its respective properties or assets in one or more related transactions to, another corporation, Person or entity unless: (i) such Issuer or the Parent, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Issuer or the Parent, as the case may be) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; 49 (ii) the Person formed by or surviving any such consolidation or merger (if other than such Issuer or the Parent, as the case may be) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made assumes all of such Issuer's or the Parent's respective obligations, as the case may be, under the Notes or the Guarantee thereof, as the case may be, and this Indenture, pursuant to a supplemental indenture; (iii) at the time of such transaction and immediately after such transaction after giving pro forma effect thereto, no Default or Event of Default exists or would exist; (iv) such Issuer or the Parent, as the case may be, or any Person formed by or surviving such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made shall, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the tests set forth in the first paragraph of Section 4.9 hereof; and (v) the Issuers and the Parent shall have delivered to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate and an Opinion of Counsel to the combined effect that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, and, if applicable, any supplemental indenture executed in connection therewith, comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel. SECTION 5.2. SUCCESSOR SUBSTITUTED. Upon any consolidation or merger or lease, sale, assignment, disposition, conveyance or transfer of all or substantially all of the assets of any Issuer or the Parent, as the case may be, in accordance with Section 5.1 hereof, the successor Person formed by such consolidation or into which such Issuer or the Parent, as the case may be, is merged or to which such sale, lease, conveyance, assignment, disposition or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, such Issuer or the Parent, as the case may be, under this Indenture and the Notes or the Guarantee thereof, as the case may be, with the same effect as if such successor had been named as such Issuer or the Parent, as the case may be, herein or therein and thereafter (except in the case of a lease) the predecessor Person shall be relieved of all further obligations and covenants under this Indenture and the Notes or the Guarantee, as the case may be. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.1. EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Indenture with respect to the Notes: 50 (1) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (2) default in payment when due of principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (3) failure by any Issuer or the Parent to comply with Section 5.1 or the failure by any Subsidiary Guarantor to comply with Section 10.2; (4) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in this Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (5) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration); (6) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (7) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); 51 (8) except as permitted by this Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns) or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; (9) the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, pursuant to or within the meaning of the Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, (e) admits in writing its inability to pay its debts as they become due; and (10) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief in an involuntary case against the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, (b) appoints a Custodian of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, or for all or substantially all of the property of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent, or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, or (c) orders the liquidation of the Company, the Parent, any Subsidiary of the Company or the Parent that is a Significant Subsidiary of the Company or the Parent or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company or the Parent, and the order or decree remains unstayed and in effect for 60 consecutive days. 52 The term "Bankruptcy Law" means, title 11, U.S. Code or any similar federal or state law for the relief of debtors, each as amended from time to time. The term Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. SECTION 6.2. ACCELERATION. If any Event of Default (other than an Event of Default specified in clauses (9) and (10) of Section 6.1 hereof) with respect to Notes occurs and is continuing, the Trustee by written notice to the Issuers, or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee, may declare all Notes to be due and payable immediately. Upon the effectiveness of such declaration, all amounts due and payable on the Notes, as determined in the succeeding paragraphs, shall be due and payable effective immediately. If an Event of Default specified in clause (9) or (10) of Section 6.1 hereof occurs, all outstanding Notes shall ipso facto become and be immediately due and payable immediately without further action or notice on the part of or by the Trustee or any Holder. In the event that the maturity of the Notes is accelerated pursuant to this Section 6.2, 100% of the principal amount thereof shall become due and payable plus premium, if any, and accrued and unpaid interest and Liquidated Damages, if any, to the date of payment. SECTION 6.3. OTHER REMEDIES. If an Event of Default with respect to Notes occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.4. WAIVER OF PAST DEFAULTS. Subject to Section 9.2 hereof, Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences with respect to the Notes except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest or Liquidated Damages, if any, on any Note held by a non-consenting Holder. Upon any such waiver, such Default shall cease to exist with respect to the Notes, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture with respect to the Notes but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.5. CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy 53 available to the Trustee or exercising any trust or power conferred on it with respect to the Notes. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, or that the Trustee determines may be unduly prejudicial to the rights of other Holders or that may involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. SECTION 6.6. LIMITATION ON SUITS. A Holder may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default or the Trustee receives such notice from an Issuer or the Parent; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (5) during such 60-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest and Liquidated Damages, if any, on such Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. SECTION 6.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against any Issuer or any Guarantor for the whole amount of principal, premium, if any, and interest and Liquidated Damages, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 54 SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.7 hereof) and the Holders allowed in any judicial proceedings relative to any Issuer or any Guarantor (or any other obligor upon the Notes), their creditors or their property and shall be entitled and empowered to collect, receive and distribute any money or securities or other property payable or deliverable on any such claims and to distribute the same, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders of the Notes may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects or receives any money or securities or other property pursuant to this Article with respect to the Notes, it shall pay out the money or securities or other property in the following order: First: to the Trustee, its agents and counsel for amounts due under Section 7.7 hereof with respect to such Notes, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest and Liquidated Damages, if any, ratably, without preference or priority of any kind (including defaulted interest), according to the amounts due and payable on the Notes for principal, premium, if any, and interest and Liquidated Damages, if any, respectively; Third: without duplication, to Holders for any other obligations owing to the Holders under the Notes or this Indenture; and Fourth: to the Issuers or to such party as a court of competent jurisdiction shall direct. 55 The Trustee may fix a record date and payment date for any such payment to Holders. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE SECTION 7.1. DUTIES OF TRUSTEE. (1) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (2) Except during the continuance of an Event of Default with respect to the Notes: (a) the duties of the Trustee with respect to the Notes shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (3) The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that: (a) this paragraph does not limit the effect of paragraph (2) of this Section 7.1; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and 56 (c) the Trustee shall not be liable with respect to any action it takes or omits to take with respect to Notes in good faith in accordance with a direction received by it pursuant to Section 6.5. (4) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (1), (2) and (3) of this Section. (5) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (6) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.2. RIGHTS OF TRUSTEE. Subject to TIA Section 315: (1) The Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (3) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture. (5) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuers shall be sufficient if signed by an Officer of each of the Issuers. (6) Without limiting the provisions of Section 7.1(5), the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Holders of a majority in aggregate principal amount of the then outstanding Notes pursuant to this Indenture, unless such Holders shall have offered to the Trustee 57 reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (7) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (8) Except with respect to Section 4.1, the Trustee shall have no duty to inquire as to the performance of any Issuer's or the Parent's covenants in Article 4. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(1), 6.1(2) or 4.1 or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with any Issuer, the Parent, any Subsidiary of the Company or the Parent or any Affiliate of the foregoing with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 7.10 and 7.11 hereof. SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers' use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers' direction under any provision hereof, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.5. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and subject to Section 7.2(8) if it is known by a Trust Officer of the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal or interest on any Note, the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interests of Holders. The Trustee shall comply with TIA Section 315(b). SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15 beginning with May 15, 2002, the Trustee shall mail to Holders a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). 58 A copy of each report at the time of its mailing to Holders shall be submitted to the SEC and each stock exchange, if any, on which the Notes are listed. The Issuers shall promptly notify the Trustee when the Notes are listed on or delisted by any stock exchange. SECTION 7.7. COMPENSATION AND INDEMNITY. The Issuers agree to pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers agree to reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Issuers agree to indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, except as set forth in the next paragraph. The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers of its obligations hereunder except to the extent the Issuers have been prejudiced thereby. The Issuers shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and, if the Issuers or the Trustee shall have been advised by its respective counsel that representation of the Trustee and the Issuers by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed), the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The provisions of this paragraph shall survive the satisfaction and discharge of this Indenture. The Issuers need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through its own gross negligence or willful misconduct. The obligations of the Issuers under this Section 7.7 shall survive the satisfaction and discharge of this Indenture. To secure the Issuers' payment obligations in this Section, the Trustee shall have a Lien on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(9) or (10) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.8. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. 59 The Trustee may resign at any time with respect to the Notes by so notifying the Issuers in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee for by so notifying the Trustee and the Issuers. The Issuers may remove the Trustee at its discretion or if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee for the Notes. Subject to the provision of TIA Section 315(e), if the Trustee after written request by any Holder who has been a bona fide holder of a Note or Notes for at least six months fails to comply with Section 7.10, such Holder, on behalf of himself and others similarly situated, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Issuers' obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee. In the case of an appointment hereunder of a separate or successor Trustee with respect to the Notes, the Issuers, the Parent, any retiring Trustee and each successor or separate Trustee with respect to the Notes shall execute and deliver an Indenture supplemental hereto (1) which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of any retiring Trustee with respect to the Notes as to which any such retiring Trustee is not retiring shall continue to be vested in such retiring Trustee and (2) that shall add to or change any of the provisions of this Indenture as shall be necessary to 60 provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustee co-trustees of the same trust and that each such separate, retiring or successor Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any such other Trustee. SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any state thereof authorized under such laws to exercise corporate trustee powers, shall be subject to supervision or examination by Federal or state authority and shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a). The Trustee is subject to TIA Section 310(b). The provisions of TIA Section 310 shall apply to the Issuers as the obligors of the Notes. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. The provisions of TIA Section 311 shall apply to the Issuers as the obligors of the Notes. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.1. DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE NOTES. (a) The Issuers may, at the option of the Board of Directors of the Parent, evidenced by a resolution set forth in an Officers' Certificate, at any time, with respect to the Notes, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. (b) The Issuers may terminate their obligations (and the obligations of any Guarantor in respect of the Guarantees with respect to the Notes) under the Notes and this Indenture with respect to the Notes (except those obligations referred to in the penultimate paragraph of this Section 8.1(b)) if all such Notes thereto authenticated and delivered (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment 61 cash in United States dollars has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers, as provided in Section 8.6, or discharged from such trust) have been delivered to the Trustee for cancellation and the Issuers have paid all sums payable by it hereunder, or if (i) either (x) pursuant to Article 3, the Issuers shall have given notice to the Trustee and mailed a notice of redemption to each Holder of the redemption of all of the Notes under arrangements satisfactory to the Trustee for the giving of such notice or (y) all Notes have otherwise become due and payable hereunder, (ii) the Issuers shall have irrevocably deposited or caused to be deposited with the Trustee or a trustee satisfactory to the Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, cash in United States dollars in such amount as is sufficient without consideration of reinvestment of such interest, to pay principal of, premium, if any, interest and Liquidated Damages, if any, on the outstanding Notes to maturity or redemption; provided that the Trustee shall have been irrevocably instructed to apply such deposit to the payment of said principal, premium, if any, interest and Liquidated Damages, if any, with respect to the Notes; (iii) no Default or Event of Default with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company, the Parent, any Guarantor or any or their respective Subsidiaries is a party or by which any of such parties is bound; (iv) the Issuers shall have paid all other sums payable by them hereunder; and (v) the Issuers shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge of this Indenture have been complied with. Such Opinion of Counsel shall also state that such satisfaction and discharge does not result in a default under the Credit Agreement (if then in effect) or any other agreement or instrument then known to such counsel that binds or affects the Issuers or any Guarantor. Notwithstanding the foregoing paragraph, each Issuer's (and any Guarantor's) obligations in Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.6 and 8.7 shall survive with respect to the Notes until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.8. After the Notes are not longer outstanding, the Issuers' obligations in Sections 7.7, 8.6 and 8.7 shall survive. After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Issuers' obligations (and the obligations of any Guarantors in respect of Guarantees of the Notes) under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE. Upon the Issuers' exercise under Section 8.1(a) hereof of the option applicable to this Section 8.2 with respect to the Notes, the Issuers and the Guarantors shall be deemed to have been discharged from their obligations with respect to all outstanding Notes and Guarantees with respect to the Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means that the Issuers shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be outstanding only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in clauses (i) and (ii) of this Section 8.2, and to have 62 satisfied all their other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due, solely from amounts deposited with the Trustee, as provided in Section 8.4 hereof, (ii) the Issuers' and the Guarantors' obligations with respect to the Notes under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.10 and 4.2 hereof, (iii) the rights, powers, trusts, duties, indemnities and immunities of the Trustee and the Issuers' obligations in connection therewith and (iv) this Article 8. SECTION 8.3. COVENANT DEFEASANCE. Upon the Issuers' exercise under Section 8.1(a) hereof of the option applicable to this Section 8.3 with respect to the Notes, the Issuers and the Guarantors, if any, shall be released from their obligations under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.18, 5.1 and 10.2 with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders of Notes (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Notes, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1(3) or 6.1(4) hereof but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Issuers' exercise under Section 8.1 hereof of the option applicable to this Section 8.3, any event described in Sections 6.1(3) through 6.1(8) hereof shall not constitute Events of Default. SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to application of either Section 8.2 or Section 8.3 hereof to the outstanding Notes: (a) the Issuers shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 hereof who shall agree to comply with the provisions of this Article 8 applicable to it), in trust (the "defeasance trust"), for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Notes, (a) cash in United States dollars in an amount, or (b) non-callable Government Securities which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, cash in United States dollars in an amount, or (c) a combination thereof, in such amounts as will be sufficient in the opinion of a nationally 63 recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge the principal of, premium, if any, and interest (including defaulted interest) and Liquidated Damages, if any, on the outstanding Notes and any other obligations owing to the Holders of the Notes, under the Notes or this Indenture on the stated maturity or on the applicable redemption date, as the case may be, of such principal or installment of principal of, premium, if any, interest and Liquidated Damages, if any, on the outstanding Notes, provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such non-callable Government Securities to said payments with respect to the Notes; (b) in the case of an election under Section 8.2 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that (A) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time, as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.3 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company) reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds applied to such deposit) or, insofar as Section 6.1(9) or 6.1(10) hereof is concerned, at any time in the period ending on the 123rd day after the date of such deposit (or greater period of time in which any such deposit of trust funds may remain subject to bankruptcy or insolvency laws insofar as those apply to the deposit by the Issuers) (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture with respect to the Notes) to which any Issuer, the Parent or any of their respective Subsidiaries is a party or by which the Company, the Parent or any of their respective Subsidiaries is bound; (f) in the case of an election under either Section 8.2 or 8.3 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion, (A) the trust funds will not be subject to any rights of holders of Indebtedness other than the Notes and (B) assuming no intervening bankruptcy of the Issuers or the Parent between the 64 date of deposit and the 123rd day following the deposit and assuming no Holder of the Notes is an insider of the Issuer or the Parent, after the 123rd day following the deposit, as of the date of such opinion, the trust funds will not be subject to avoidance under Section 547 of the United States Bankruptcy Code (or any successor provision thereto) and related judicial decisions or any other applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any United States or state law; (g) in the case of an election under either Section 8.2 or 8.3 hereof, the Issuers shall have delivered to the Trustee an Officers' Certificate stating that the deposit made by the Issuers pursuant to its election under Section 8.2 or 8.3 hereof was not made by the Issuers with the intent of preferring the Holders of Notes over other creditors of the Issuers or with the intent of defeating, hindering, delaying or defrauding creditors of the Issuers or others; and (h) the Issuers shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which counsel may be an employee of the Company or any Subsidiary of the Company), each stating that all conditions precedent provided for relating to either the Legal Defeasance under Section 8.2 hereof or the Covenant Defeasance under Section 8.3 hereof (as the case may be) have been complied with as contemplated by this Section 8.4. SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.1(b) or Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including an Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Issuers and the Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.1(b) or Section 8.4 hereof or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the Issuers' request any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 65 SECTION 8.6. REPAYMENT TO THE ISSUERS. The Trustee shall promptly pay to the Issuers after request therefor any excess money held with respect to Notes at such time in excess of amounts required to pay any of the Issuers' Obligations then owing with respect to the Notes. Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for one year after such principal, premium, if any, or interest has become due and payable shall be paid to the Issuers on their request or (if then held by an Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuers cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuers. SECTION 8.7. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any cash or non-callable Government Securities in accordance with Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof, as the case may be, with respect to the Notes by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Issuers and the Guarantors under this Indenture, the Notes and the Guarantee thereof shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.1(b), Section 8.2, Section 8.3 or Section 8.4 hereof, as the case may be; provided, however, that, if any Issuer or any Guarantor makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, such Issuer or such Guarantor shall be subrogated to the rights of the Holders of such Note to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Issuers, any Guarantors and the Trustee, as applicable, may amend or supplement this Indenture, the Notes, and any Guarantee with respect to the Notes without the consent of any Holder: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; 66 (c) to provide for the assumption of an Issuers' or the Parent's obligations to Holders of the Notes under this Indenture or any Guarantor's obligations under its Guarantee of the Notes in the case of a merger, consolidation or sale of assets involving such Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 hereof) or that does not adversely affect the legal rights under this Indenture of any such Holder; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; and (f) to release a Guarantor in accordance with Section 10.4 hereof. Upon the request of the Issuers, the Parent and any Guarantor, accompanied by a resolution of the Board of Directors of such Issuer, the Parent or such Guarantor, as applicable, authorizing the execution of any such amended or supplemental indenture and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Issuers, the Parent and any such Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture which adversely affects its own rights, duties or immunities under this Indenture, or otherwise. SECTION 9.2. WITH CONSENT OF HOLDERS. Except as provided below in this Section 9.2, the Issuers, the Parent, any Guarantors and the Trustee together may amend this Indenture, the Notes and any Guarantee of the Notes with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes affected by such amendment (including consents obtained in connection with a purchase of or a tender offer or exchange offer for Notes). Upon the request of the Issuers, accompanied by a resolution of the Board of Directors of each of the Issuers and the Parent, authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Issuers, the Parent and any Guarantors, as the case may be, in the execution of such supplemental indenture unless such supplemental indenture adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. 67 After an amendment or waiver under this Section 9.2 becomes effective, the Issuers shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in aggregate principal amount of the then-outstanding Notes affected thereby (including consents obtained in connection with a purchase of or a tender offer or exchange offer for Notes) may waive any existing default or compliance in a particular instance by any Issuer or any Guarantor with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes; (c) reduce the rate of or change the time for payment of interest on any Note; (d) waive a Default or an Event of Default in the payment of principal of or premium, if any, or interest on any Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Note; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest or Liquidated Damages on the Notes; (g) waive a redemption payment with respect to any Note; (h) modify or change any provision of this Indenture or the related definitions affecting the ranking of the Notes or any Guarantee of the Notes in a manner which adversely affects the Holders in any material respect; (i) except pursuant to Article 8 or pursuant to Section 10.4, release any Guarantor from its obligations under a Guarantee of the Notes, or change any such Guarantee of the Notes in any manner that would adversely affect the Holders in any material respect; (j) make any change to Section 3.9, Section 4.10 or Section 4.14; or (k) make any change in the foregoing amendment and waiver provisions. SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Notes shall be set forth in an amendment or supplemental indenture that complies with the TIA as then in effect. 68 SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS. Until an amendment or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his or her Note if the Trustee receives written notice of revocation before the date the waiver or amendment becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Issuers may fix a record date for determining which Holders must consent to such amendment or waiver. If the Issuers fix a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or (ii) such other date as the Issuers shall designate. SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment or waiver. SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Trustee shall be entitled to receive, and, subject to Section 7.1 hereof, shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Issuers, the Parent and the Guarantors in accordance with its terms. The Issuers, the Parent and any Guarantors may not sign an amendment or supplemental indenture until the Board of Directors of each Issuer, the Parent or any Guarantor, as applicable, approves it. ARTICLE 10 GUARANTEES SECTION 10.1. GUARANTEES. Each Guarantor, jointly and severally, unconditionally guarantees, on an unsecured senior basis, to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Issuers under this Indenture or the Notes, that: (i) the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes will 69 be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption, offer to purchase or otherwise, and interest on the overdue principal of, premium, and interest and Liquidated Damages, if any, on the Notes and all other Obligations of the Issuers to the Holders or the Trustee under this Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Notes; (ii) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise; and (iii) any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under any Guarantee with respect to the Notes will be paid. Failing payment when due of any amount so guaranteed for whatever reason, any Guarantor will be obligated (subject to any grace periods allowed pursuant to Section 6.1 hereof) to pay the same whether or not such failure to pay has become an Event of Default which could cause acceleration pursuant to Section 6.2 hereof. An Event of Default under this Indenture or the Notes shall constitute an event of default under any Guarantee of the Notes, and shall entitle the Holders of Notes to accelerate the Obligations of any Guarantor hereunder in the same manner and to the same extent as the Obligations of the Issuers. Each Guarantor agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of any Guarantor. Any Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of either or both of the Issuers, protest, notice and all demands whatsoever and covenants that its Guarantee with respect to the Notes will not be discharged except by complete performance of its Obligations under the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to any Issuer, any Guarantor or any Custodian, Trustee, liquidator or other similar official acting in relation to either any Issuer or any Guarantor any amount paid by any such entity to the Trustee or such Holder, any Guarantee to the Notes, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holder in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purpose of such Guarantee of the Notes. A Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holder under its Guarantee of the Notes. Each Holder of a Note by its acceptance thereof agrees to and shall be bound by the provisions of this Section 10.1. 70 SECTION 10.2. WHEN A SUBSIDIARY GUARANTOR MAY MERGE, ETC. No Subsidiary Guarantor shall consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (a) the person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the Obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in the form of Exhibit B hereto and under the Notes and this Indenture; (b) immediately after giving effect to such transaction, no Default or Event of Default exists; and (c) such Subsidiary Guarantor or any Person formed by or surviving any such consolidation or merger would be permitted by virtue of the tests set forth in the first paragraph of Section 4.9 hereof to incur, immediately after giving effect to such transaction, at least $1.00 of additional Indebtedness under those tests. The Subsidiary Guarantor shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel, covering clauses (a) and (b) (in the case of clause (b), to such counsel's knowledge), stating that the proposed transaction and such supplemental indenture comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel. Notwithstanding the foregoing, (A) a Subsidiary Guarantor may consolidate with or merge with or into the Company; provided, however, that the surviving Person (if other than the Company) shall expressly assume by supplemental indenture complying with the requirements of this Indenture, the due and punctual payment of the principal of, premium, if any, and interest and Liquidated Damages, if any, on all of the Notes, and the due and punctual performance and observance of all the covenants and conditions of this Indenture and the Notes to be performed by the Company; (B) a Subsidiary Guarantor may consolidate with or merge with or into any other Subsidiary Guarantor and (C) a Subsidiary Guarantor may consolidate with or merge with or into the Parent; provided, however, that the surviving Person (if other than the Parent) shall expressly assume by supplemental indenture complying with the requirements of this Indenture the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Parent. SECTION 10.3. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY. For purposes of this Article 10 and any Guarantee of the Notes by a Subsidiary Guarantor, each Subsidiary Guarantor's liability will be that amount from time to time equal to the aggregate liability of such Subsidiary Guarantor hereunder and thereunder, but shall be limited to the lesser of (i) the aggregate amount of the obligations of the Issuers under the Notes and this Indenture or (ii) the amount, if any, which would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term is defined in the federal Bankruptcy Code and in the Debtor 71 and Creditor Law of the State of New York) or (B) left it with unreasonably small capital at the time its Guarantee of the Notes was entered into, after giving effect to the incurrence of existing Indebtedness immediately prior to such time; provided that, it shall be a presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to the Guarantee of the Notes is the amount set forth in clause (i) above unless any creditor, or representative of creditors of such Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Subsidiary Guarantor is limited to the amount set forth in clause (ii). In making any determination as to the solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with the previous sentence, the right of such Subsidiary Guarantor to contribution from other Subsidiary Guarantors and any other rights such Subsidiary Guarantor may have, contractual or otherwise, shall be taken into account. SECTION 10.4. RELEASE OF A GUARANTOR. Concurrently with the payment in full of all of the Issuers' Obligations under the Notes and this Indenture (other than with respect to any indemnification obligations), each Guarantor shall be released from and relieved of its Obligations with respect to the Notes under this Article 10. In the event of a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, which sale or other disposition is otherwise in compliance with the terms of this Indenture, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) will be automatically and unconditionally released and relieved of any obligations under its Guarantee of the Notes. The Trustee shall deliver an appropriate instrument evidencing any such release under this Section 10.4 upon receipt of a request by the Issuers accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 10.4. The provisions of Section 10.2 shall not apply to any merger or consolidation pursuant to which a Subsidiary Guarantor is released from its Obligations under this 10.4. ARTICLE 11 MISCELLANEOUS SECTION 11.1. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of TIA Section 318(c), the imposed duties shall control. SECTION 11.2. NOTICES. Any notice or communication by the Issuers, the Parent or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first-class mail (registered or certified, return receipt requested), or sent by telex, telecopier or overnight air courier guaranteeing next Business Day delivery, to the other's address: 72 If to any Issuer: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Richard S. Borisoff, Esq. Telecopier No.: (212) 757-3990 If to the Parent: MeriStar Hospitality Corporation 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Richard S. Borisoff, Esq. Telecopier No.: (212) 757-3990 If to the Trustee: U. S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, New York 10005 Attention: Corporate Trust Department Telecopier No.: (212) 809-5459 The Issuers, the Parent or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after 73 timely delivery to the courier, if sent by overnight air courier guaranteeing next Business Day delivery. Any notice or communication to a Holder shall be mailed by first-class mail to his address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed or given in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Issuers mail a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Issuers or the Parent to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.5) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.5) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.4 and TIA Section 314(a)(4)) shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; 74 (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificate of public officials. SECTION 11.6. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.7. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. SECTION 11.8. RECOURSE AGAINST OTHERS. No past, present or future director, officer, partner, employee, agent, manager, stockholder, incorporator or other Affiliate, as such of any Issuer or of any Guarantor shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, or this Indenture or a Guarantee of the Notes, if any, or for any claim based upon, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. SECTION 11.9. DUPLICATE ORIGINALS. The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture. 75 SECTION 11.10. GOVERNING LAW. THIS INDENTURE, THE NOTES AND THE GUARANTEES OF THE NOTES AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, the LAWS OF THE STATE OF NEW YORK. SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of any Issuer, the Parent or any of their respective Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.12. SUCCESSORS. All agreements of the Issuers, the Parent and the Guarantors in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.13. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.14. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. 76 IN WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto by their respective duly authorized officers as of the date first written above. Issuers: ------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: MeriStar Hospitality Corporation, as general partner By: /s/ Christopher L. Bennett -------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOSPITALITY FINANCE CORP. III, a Delaware corporation By: /s/ Christopher L. Bennett -------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel Parent: ------ MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Christopher L. Bennett --------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 77 Trustee: ------- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel Subsidiary Guarantors: --------------------- MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel AGH PSS I, INC., a Delaware corporation By /s/ Christopher L. Bennett ------------------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 78 AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, a Maryland corporation, member By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MIDLAND PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. Each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 79 EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR CS COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR INDIANAPOLIS COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 80 MERISTAR SANIBEL INN COMPANY, LLC MERISTAR SUNDIAL BEACH COMPANY, LLC MERISTAR SAFETY HARBOR COMPANY, LLC MERISTAR SEASIDE INN COMPANY, LLC MERISTAR PLANTATION SHOPPING CENTER COMPANY, LLC MERISTAR SONG OF THE SEA COMPANY, LLC MERISTAR SHIRLEY'S PARCEL COMPANY, LLC MERISTAR SANIBEL GOLF COMPANY, LLC MERISTAR MARCO ISLAND COMPANY, LLC MERISTAR S.S. PLANTATION COMPANY, LLC MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (VANCOUVER) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC AGH 75 ARLINGTON HEIGHTS LLC Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR SANTA BARBARA, L.P., a Delaware limited partnership MERISTAR CATHEDRAL CITY, L.P., a Delaware limited partnership MERISTAR LAJV, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ---------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 81 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 82 By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 83 HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR LP, INC., a Nevada corporation By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 84 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOTEL LESSEE, INC. By: /s/ Christopher L. Bennett ---------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 85 MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD., a Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------------ Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 86 AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ------------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel EXHIBIT A (Face of Note) 9 1/8% [Series E] [Series F] Senior Notes due 2011 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. III promise to pay to ___________________________, or registered assigns, the principal sum of ________________________________ Dollars on January 15, 2011. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: __________________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: ____________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. III By: ____________________________ Name: Title: A-1 Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory A-2 (Back of Note) 9 1/8% [Series E] [Series F] Senior Notes due 2011 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. III [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES A-3 THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR A-4 PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company"), and MeriStar Hospitality Finance Corp. III, a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 9?% [Series E] [Series F] Senior Note due 2011 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each January 15 and July 15 commencing July 15, 2002 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from January 15, 2002. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. (2) METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 and July 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-5 (3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of February 7, 2002 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. (5) OPTIONAL REDEMPTION. Prior to January 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109.125% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. (6) OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. (7) NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (8) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any A-6 Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. (9) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. (11) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the A-7 Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. (12) GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. (13) SECURITY. The Notes will be senior, unsecured obligations of the Issuers. (14) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are A-8 part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. (15) AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (16) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (17) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. (18) [SERIES E NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 A-9 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ------------------------------------------------------------------------------ (Insert assignee's Social Security or tax I.D. No.) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _____________________________ Your Signature: ____________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* _______________________ - ------------------------------ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-10 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:______________ Your Signature:_____________________________ (Sign exactly as your name appears on the Note) Tax Identification No:_______________________ Signature Guarantee: */______________________ - ------------------ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-11 Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) February 7, 2004, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or (2) ___ pursuant to and in compliance with Rule 144A under the Securities Act; or (3) ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or (4) ___ pursuant to an effective registration statement under the Securities Act; or (5) ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: ___________ Signed:_________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:________________________________________ A-12 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________________ Signed:_________________________ NOTICE: To be executed by an executive officer A-13 SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made:
Principal Amount of Amount of decrease in Amount of increase this Global Note Signature of Principal in Principal Amount following such authorized officer Amount of of this decrease of Trustee or Note Date of Exchange this Global Note Global Note (or increase) Custodian ---------------- ---------------- ----------- ------------- ---------
A-14 EXHIBIT B FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE This "Supplemental Indenture", dated as of ________, between _________________ (the "Guarantor"), a subsidiary of [MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership] [MeriStar Hospitality Corporation, a Maryland corporation], and U.S. Bank Trust National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, MeriStar Hospitality Operating Partnership (the "Company"), MeriStar Hospitality Finance Corp. III ("MeriStar Finance," and together with the Company, the "Issuers"), MeriStar Hospitality Corporation (the "Parent") and the Subsidiary Guarantors parties thereto, have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of February 7, 2002, providing for the issuance of up to an aggregate principal amount of $400,000,000 of 9 1/8% Senior Notes due 2011 (the "Notes"); WHEREAS, Section 4.15 of the Indenture provides that under certain circumstances the Company and the Parent are required to cause the Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the Guarantor shall unconditionally guarantee all of the Issuers' Obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and severally with all other Guarantors, to guarantee the Issuers' obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture. 3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, shareholder or agent of the Guarantor, as such, shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the B-1 Notes. Such waiver or release may not be effective to waive or release liabilities under the federal securities laws. 4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated:____________, ____ [Guarantor] By: ____________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: _______________________ Name: Title: B-2 EXHIBIT C Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, New York 10005 Attention: Corporate Trust Department Re: MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. III (the "Issuers") 9 1/8% Senior Notes due 2011 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of $ [ ___________ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: 1. the offer of the Notes was not made to a Person in the United States; 2. either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; 3. no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; 4. the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and 5. we have advised the transferee of the transfer restrictions applicable to the Notes. C-1 You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, By: ______________________ Authorized Signature C-2 EX-4.7.1 18 dex471.txt EXHIBIT 4.7.1 Exhibit 4.7.1 (Face of Note) 9 1/8% [Series E] [Series F] Senior Notes due 2011 CUSIP:____________ No.___ $___________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. III promise to pay to ___________________________, or registered assigns, the principal sum of ________________________________ Dollars on January 15, 2011. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: __________________________ MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, as general partner By: ____________________________ Name: Title: MERISTAR HOSPITALITY FINANCE CORP. III By: ____________________________ Name: Title: Trustee's Certificate of Authentication: This is one of the [Global] Notes referred to in the within- mentioned Indenture: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By _____________________________ Authorized Signatory (Back of Note) 9 1/8% [Series E] [Series F] Senior Notes due 2011 of MeriStar Hospitality Operating Partnership, L.P. and MeriStar Hospitality Finance Corp. III [IF A RESTRICTED SECURITY, INSERT: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISIONS THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE AFFILIATES WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., MERISTAR HOSPITALITY FINANCE CORP. III OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON- U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER, SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D) OR (E) ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A TEMPORARY REGULATION S GLOBAL NOTE INSERT: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.] [IF A GLOBAL NOTE INSERT: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. MeriStar Hospitality Partnership, L.P., a Delaware limited partnership (the "Company"), and MeriStar Hospitality Finance Corp. III, a Delaware corporation ("MeriStar Finance," and together with the Company, the "Issuers"), promise to pay interest on the principal amount of this 9 1/8% [Series E] [Series F] Senior Note due 2011 (the "Note") at the rate and in the manner specified below. The Issuers shall pay interest on the principal amount of this Note in cash at the rate per annum shown above and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers shall pay interest and Liquidated Damages, if any, semi-annually on each January 15 and July 15 commencing July 15, 2002 or if any such day is not a Business Day (as defined in the Indenture referred to below), on the next succeeding Business Day (each an "Interest Payment Date"). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months for the actual number of days elapsed. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from January 15, 2002. To the extent lawful, the Issuers shall pay interest on overdue principal and premium at the rate of 1% per annum in excess of the then applicable interest rate on this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) at the same rate to the extent lawful. (2) METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 and July 1 immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal and premium, if any, and interest and Liquidated Damages, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. Any Issuer or any of its Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of February 7, 2002 (the "Indenture") among the Issuers, MeriStar Hospitality Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. (5) OPTIONAL REDEMPTION. Prior to January 15, 2004, the Issuers may redeem, on any one or more occasions, with the net cash proceeds of one or more public offerings of the common equity of the Parent (a "Public Equity Offering") (within 60 days of the consummation of any such Public Equity Offering), up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109.125% of the principal amount of such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date; provided, however, that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. (6) OFFERS TO PURCHASE. Subject to the Company's obligation to make an offer to purchase Notes in connection with Asset Sales and a Change of Control (as described in the Indenture), the Issuers have no mandatory redemption or sinking fund obligations with respect to the Notes. Notice of any such offer to purchase will be given as provided in the Indenture. Holders of Notes that are the subject of an offer to purchase may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below and taking certain other actions, all as set forth in the Indenture. (7) NOTICE OF REDEMPTION. Notice of redemption will be mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (8) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 of principal amount. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Registrar shall not be required to issue, exchange or register the Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 of the Indenture and ending at the close of business on the day of selection, or to exchange or register any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or to exchange or register a Note between a record date and the next succeeding Interest Payment Date. (9) PERSONS DEEMED OWNERS. The registered Holder of a Note may b e treated as its owner for all purposes. (10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of an Issuer's or the Parent's obligations to Holders of the Notes under the Indenture or any Guarantor's Obligations under its Guarantee in the case of a merger, consolidation or sale of assets involving an Issuer, the Parent or such Guarantor, as applicable, pursuant to Article 5 or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for Guarantees of the Notes and any supplemental indenture required pursuant to Section 4.15 of the Indenture) or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA and to release a Guarantor in accordance with the Indenture. (11) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or an Assets Sale Offer); (iii) failure by any Issuer or the Parent to comply with Section 5.1 of the Indenture or the failure by any Subsidiary Guarantor to comply with Section 10.2 of the Indenture; (iv) failure by any Issuer, the Parent, any Guarantor or any Restricted Subsidiary for 30 days in the performance of any other covenant, warranty or agreement in the Indenture or the Notes after written notice shall have been given to the Company by the Trustee or to the Company and the Trustee from Holders of at least 25% in principal amount of the Notes of such then outstanding; (v) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of Non-Recourse Indebtedness of the Company, the Parent or any of their respective Restricted Subsidiaries with an aggregate principal amount in excess of the lesser of (A) 10% of the total assets of the Company, the Parent and their respective Restricted Subsidiaries measured as of the end of the Parent's most recent fiscal quarter for which internal financial statements are available immediately prior to the date on which such default occurred, determined on a pro forma basis and (B) $50 million, and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Non-Recourse Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of such acceleration); (vi) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company, the Parent or any Restricted Subsidiary of the Company or the Parent and such failure continues for a period of 10 days or more, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 10 days of receipt by the Company, the Parent or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, in default for failure to pay principal at final maturity or which has been accelerated, in each case with respect to which the 10-day period described above has passed, aggregates $10.0 million or more at any time; (vii) failure by the Company, the Parent or any of their respective Restricted Subsidiaries to pay final judgments rendered against them (other than judgment liens without recourse to any assets or property of the Company, the Parent or any of their respective Restricted Subsidiaries other than assets or property securing Non-Recourse Indebtedness) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days (other than any judgments as to which a reputable insurance company has accepted full liability); (viii) except as permitted by the Indenture, any Guarantee with respect to the Notes shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or its successors or assigns), or any Person acting on behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm its obligations or shall fail to comply with any obligations under its Guarantee with respect to the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuers, or the Holders of at least 25% in principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, the Parent, any of the Company's or the Parent's Subsidiaries that would constitute a Significant Subsidiary or any group of the Company's and/or the Parent's Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any acceleration with respect to the Notes and its consequences. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. (12) GUARANTEES OF NOTES. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, (including interest on overdue principal and overdue interest, if lawful) on the Notes are unconditionally guaranteed by the Guarantors pursuant to, and subject to the terms of, Article 10 of the Indenture. (13) SECURITY. The Notes will be senior, unsecured obligations of the Issuers. (14) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder shall have any liability for any obligations of any Issuer or any Guarantor under the Notes, any Guarantee with respect to the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive or release liabilities under the federal securities laws. (15) AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (16) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (17) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. (18) [SERIES E NOTES] REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement (as defined in the Indenture), and subject to certain terms and conditions stated therein, the Issuers will be obligated to consummate an Exchange Offer pursuant to which the Holders of the Notes shall have the right to exchange this Note for Exchange Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respect to the Note. In certain circumstances, and subject to certain terms and conditions, Holders of the Notes shall have the right to receive liquidated damages if the Issuers shall have failed to fulfill their obligations under the Registration Rights Agreement. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, D.C. 20007 Attention: John Emery, Chief Financial Officer Telecopier No.: (202) 965-4445 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ______________________________________________________________________________ _____ (Insert assignee's Social Security or tax I.D. No.) ______________________________________________________________________________ _____ ______________________________________________________________________________ _____ ______________________________________________________________________________ ______ ______________________________________________________________________________ _____ (Print or type assignee's name, address and zip code) and irrevocably appoint ___________________________________________________________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _____________________________ Your Signature: __________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee:* _______________________ ______________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $___________ Date:______________ Your Signature:_____________________________ (Sign exactly as your name appears on the Note) Tax Identification No:________________________ Signature Guarantee: */_______________________ __________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). Transfer and Exchange In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) February 7, 2004, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: Check One (1) ___ to an Issuer or a subsidiary thereof; or ___ pursuant to and in compliance with Rule 144A under the Securities Act; or ___ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or ___ pursuant to an effective registration statement under the Securities Act; or ___ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided that if box (3) or (5) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (4)) and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated: ___________ Signed:_________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:________________________________________ TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________________ Signed:_________________________ NOTICE: To be executed by an executive officer SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made: Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of Amount of this decrease Trustee or Note Exchange this Global Note Global Note (or increase) Custodian - --------- ---------------- ----------- ------------- --------- EX-4.7.2 19 dex472.txt EXHIBIT 4.7.2 Exhibit 4.7.2 ================================================================================ EXECUTION COPY REGISTRATION RIGHTS AGREEMENT Dated as of February 7, 2002 Among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. and MERISTAR HOSPITALITY FINANCE CORP. III as Issuers MERISTAR HOSPITALITY CORPORATION and Certain Subsidiaries of MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. as Guarantors and LEHMAN BROTHERS INC. SALOMON SMITH BARNEY INC. DEUTSCHE BANC ALEX. BROWN INC. SG COWEN SECURITIES CORPORATION BANC OF AMERICA SECURITIES LLC BANC ONE CAPITAL MARKETS, INC. CIBC WORLD MARKETS CORP. DRESDNER KLEINWORT WASSERSTEIN - GRANTCHESTER, INC. FLEET SECURITIES, INC. SCOTIA CAPITAL (USA) INC. WELLS FARGO BROKERAGE SERVICES, LLC as Initial Purchasers ================================================================================ Table of Contents
Page 1. Definitions ........................................... 3 2. Securities Subject to This Agreement .................. 6 3. Registered Exchange Offer ............................. 6 4. Shelf Registration .................................... 8 5. Liquidated Damages .................................... 9 6. Registration Procedures ............................... 10 7. Registration Expenses ................................. 18 8. Indemnification and Contribution ...................... 18 9. Rule 144A ............................................. 21 10. Participation in Underwritten Registrations ........... 21 11. Selection of Underwriters ............................. 22 12. Miscellaneous ......................................... 22
This Registration Rights Agreement (this "Agreement") is made --------- and entered into as of February 7, 2002, by and among MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership (the "Company"), ------- MeriStar Hospitality Finance Corp. III, a Delaware corporation (the "Co-Issuer"; --------- and, together with the Company, the "Issuers"), MeriStar Hospitality ------- Corporation, a Maryland corporation (the "Parent"), the Subsidiary Guarantors ------ listed on the signature pages hereto (the "Subsidiary Guarantors"; and, together --------------------- with the Parent, the "Guarantors"; the Guarantors and the Issuers being ---------- collectively referred to herein as the "Issuing Parties") and Lehman Brothers --------------- Inc., Salomon Smith Barney Inc., Deutsche Banc Alex. Brown Inc., SG Cowen Securities Corporation, Banc of America Securities LLC, Banc One Capital Markets, Inc., CIBC World Markets Corp., Dresdner Kleinwort Wasserstein - Grantchester, Inc., Fleet Securities, Inc., Scotia Capital (USA) Inc. and Wells Fargo Brokerage Services, LLC (collectively, the "Initial Purchasers"). ------------------ This Agreement is entered into in connection with the Purchase Agreement, dated January 31, 2002, among the Issuing Parties and the Initial Purchasers (the "First Purchase Agreement") and the Purchase Agreement, dated January 31, 2002, among the Issuing Parties and Lehman Brothers Inc. (the "Second Purchase Agreement" and, together with the First Purchase Agreement, the "Purchase Agreements"), which provide for the sale by the Issuers of an aggregate $200,000,000 principal amount of the Issuers' 9?% Senior Notes due 2011 which will be guaranteed on a senior basis by guarantees issued by the Guarantors (collectively, the "Private Notes"). The Private Notes and the Original Notes (as defined below) are collectively referred to herein as the "Securities". Capitalized terms used but not specifically defined herein have the respective meanings ascribed thereto in the Purchase Agreements. As an inducement to the Initial Purchasers and to Lehman Brothers Inc. to enter into the Purchase Agreements and in satisfaction of a condition to their obligations thereunder, the Issuing Parties agree with the Initial Purchasers and Lehman Brothers Inc., for the benefit of the holders of the Private Notes (including the Initial Purchasers and Lehman Brothers Inc.), as follows: 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: Affiliate: As defined in Rule 405 under the Securities Act. --------- Broker-Dealer: Any broker or dealer registered under the ------------- Exchange Act. Business Day: As defined in the Indenture. ------------ Closing Date: The date on which the Private Notes were sold. ------------ Co-Issuer: As defined in the preamble hereto. --------- Commission: The Securities and Exchange Commission. ---------- Company: As defined in the preamble hereto. ------- 3 Consummate: A Registered Exchange Offer shall be deemed ---------- "Consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuing Parties of the Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Transfer Restricted Securities and Original Notes that were validly tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Private Notes, each -------------------- Distribution Date until the earlier of (i) the date on which Liquidated Damages no longer are payable or (ii) maturity of the Private Notes. Distribution Date: Every January 15 and July 15 of each year, ----------------- beginning with July 15, 2002; provided, that if any such day is not a Business Day, the Distribution Date shall be the next succeeding Business Day. Effectiveness Target Date: As defined in Section 5 hereof. ------------------------- Exchange Act: The Securities Exchange Act of 1934, as amended. ------------ Exchange Offer: The registration by the Issuing Parties under -------------- the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Issuing Parties offer the Holders of all outstanding Transfer Restricted Securities and Original Notes the opportunity to exchange all such outstanding Transfer Restricted Securities and Original Notes held by such Holders for Exchange Securities in an aggregate amount equal to the aggregate amount of the Transfer Restricted Securities and Original Notes tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: The Registration ------------------------------------- Statement relating to the Exchange Offer, including the Prospectus which forms a part thereof. Exchange Securities: The Securities to be issued pursuant to ------------------- the Indenture in the Exchange Offer. First Purchase Agreement: As defined in the preamble hereto. ------------------------ Guarantees: As defined in the preamble hereto. ---------- Guarantors: As defined in the preamble hereto. ---------- Holders: As defined in Section 2 hereof. ------- 4 Indenture: The Indenture, dated as of February 7, 2002, among --------- the Issuing Parties and the Trustee, pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. ------------------ Issuers: As defined in the preamble hereto. ------- Issuing Parties: As defined in the preamble hereto. --------------- Liquidated Damages: As defined in Section 5 hereof. ------------------ NASD: National Association of Securities Dealers, Inc. ---- Original Notes: means the Company's 9?% Senior Notes due 2011 -------------- issued pursuant to an indenture, dated January 26, 2001, among the Company, the Parent, the Subsidiary Guarantors and the Trustee, as trustee. Participant: As defined in Section 8 hereof. ----------- Person: An individual, partnership, corporation, limited ------ liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. Private Notes: As defined in the preamble hereto. ------------- Prospectus: The prospectus included in a Registration ---------- Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Purchase Agreements: As defined in the preamble hereto. ------------------- Registration Default: As defined in Section 5 hereof. -------------------- Registration Statement: Any registration statement of the ---------------------- Issuing Parties relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in either case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Second Purchase Agreement: As defined in the preamble hereto. ------------------------- Securities: As defined in the preamble hereto. ---------- 5 Securities Act: The Securities Act of 1933, as amended. -------------- Shelf Filing Deadline: As defined in Section 4 hereof. --------------------- Shelf Registration Statement: As defined in Section 4 hereof. ---------------------------- Subsidiary Guarantors: As defined in the preamble hereto. --------------------- TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section --- 77aaa-77bbbb), as amended. Transfer Restricted Securities: Each Private Note, until the ------------------------------ earliest to occur of (a) the date on which such Private Note has been exchanged by a person other than a Broker-Dealer for Exchange Securities in the Exchange Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer of such Private Note for one or more Exchange Securities, the date on which such Exchange Securities are sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (c) the date on which such Private Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (d) the date on which such Private Note is eligible to be distributed to the public pursuant to Rule 144 under the Securities Act; Trustee: U.S. Bank Trust National Association, in its capacity ------- as trustee under the Indenture. Underwritten Registration or Underwritten Offering: A ------------------------- --------------------- registration in which securities of the Issuing Parties are sold to an underwriter for reoffering to the public. 2. Securities Subject to This Agreement (a) (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities and Original ------------------------------------------------------ Notes. A Person is deemed to be a holder of Transfer Restricted Securities or - ----- Original Notes (each, a "Holder") whenever such Person owns Transfer Restricted ------ Securities or Original Notes, as applicable. 3. Registered Exchange Offer (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or one of the events set forth in Section 4(a)(ii) has occurred the Issuing Parties shall (i) cause to be filed with the Commission promptly after the Closing Date, but in no event later than 150 days after the Closing Date, a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use their best efforts to cause such Registration Statement to become effective no later than 210 days after the Closing Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement 6 (a) pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Issuing Parties will commence the Exchange Offer and use their best efforts to issue on or prior to 30 business days after the date on which such Registration Statement was declared effective by the Commission, Exchange Securities in exchange for all Transfer Restricted Securities and Original Notes tendered prior thereto in the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and Original Notes and to permit resales of Exchange Securities held by Broker-Dealers as contemplated by Section 3(c) below. The 150, 210 and 30 business day periods referred to in (i), (ii) and (iv) of this Section 3(a) shall not include any period during which the Issuing Parties are pursuing a Commission ruling pursuant to Section 6(a)(i) below. (b) The Issuing Parties shall use their best efforts to cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days. The Issuing Parties shall cause the Exchange Offer to comply in all material respects with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. Each of the Issuing Parties shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter. (c) The Issuing Parties shall indicate in a "Plan of Distribution" section contained in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Securities that are Transfer Restricted Securities or Original Notes and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities or Original Notes acquired directly from the Issuing Parties), may exchange such Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Exchange Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy announced after the date of this Agreement. The Issuing Parties shall use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the 7 provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Exchange Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the date on which the Exchange Offer Registration Statement is declared effective. The Issuing Parties shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day period in order to facilitate such resales. 4. Shelf Registration (a) (a) Shelf Registration. If (i) the ------------------ Issuing Parties are not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities that is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) shall notify the Issuing Parties prior to the 20th day following the Consummation of the Exchange Offer (A) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) that such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds Securities acquired directly from an Issuing Party or one of its Affiliates, then the Issuing Parties shall in lieu of, or in the event of (ii) above, in addition to effecting the registration of the Exchange Securities pursuant to the Exchange Offer Registration Statement, use their best efforts to: (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration ------------------ Statement"), on or prior to the earlier to occur of (1) the 60th day after the - --------- date on which the Issuing Parties determine that they are not required to file the Exchange Offer Registration Statement or (2) the 60th day after the date on which the Issuing Parties receive notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above (such earlier date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for --------------------- resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) cause such Shelf Registration Statement to be declared effective by the Commission on or before the 120th day after the Shelf Filing Deadline. The Issuing Parties shall use their best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure 8 that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the second anniversary of the Closing Date. (b) Provision by Holders of Certain Information in ---------------------------------------------- Connection with the Shelf Registration Statement. No Holder of Transfer - ------------------------------------------------ Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Issuing Parties in writing, within 20 business days after receipt of a request therefor, such information as the Issuing Parties may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Issuing Parties all information required to be disclosed in order to make the information previously furnished to the Issuing Parties by such Holder not materially misleading. 5. Liquidated Damages (a) (a) If any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (b) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the Exchange Offer has not been Consummated ------------------------- within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within two business days by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (a) through (d), a "Registration Default"), the Issuing Parties will jointly and severally be -------------------- obligated to pay additional cash interest ("Liquidated Damages") to each Holder ------------------ of the Private Notes commencing upon the occurrence of such Registration Default in an amount equal to $.05 per week per $1,000 principal amount of Private Notes held by such Holder. The amount of Liquidated Damages will increase by an additional $.05 per week per $1,000 principal amount of Private Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Private Notes. All accrued Liquidated Damages shall be paid to Holders by the Issuing Parties in the same manner as interest is paid pursuant to the Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of Liquidated Damages with respect to such Transfer Restricted Securities will cease. Under no circumstances shall the Issuing Parties be required to pay any Liquidated Damages to Holders of Original Notes in their capacity as Holders of Original Notes. All obligations of the Issuing Parties set forth in the preceding paragraph that have accrued and are outstanding with respect to any Transfer Restricted Security at the time 9 such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full. (b) The Issuing Parties shall notify the Trustee within one business day after each and every date on which an event occurs in respect of which Liquidated Damages are required to be paid (an "Event Date"). ---------- Liquidated Damages shall be paid by depositing Liquidated Damages with the Trustee, in trust, for the benefit of the Holders of the Private Notes, on or before the applicable Interest Payment Date (whether or not any payment other than Liquidated Damages is payable on such Securities), in immediately available funds in sums sufficient to pay the Liquidated Damages then due to such Holders. Each obligation to pay Liquidated Damages shall be deemed to accrue from the applicable date of the occurrence of the Registration Default. 6. Registration Procedures Exchange Offer Registration --------------------------- Statement. In connection with the Exchange Offer, the Issuing Parties shall - --------- comply with all of the provisions of Section 6(c) below, shall use their best efforts to effect such exchange to permit the sale of Transfer Restricted Securities and Original Notes being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If in the reasonable opinion of counsel to the Issuing Parties there is a question as to whether the Exchange Offer is permitted by applicable law, the Issuing Parties hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Issuing Parties to Consummate an Exchange Offer for such Securities. The Issuing Parties hereby agree to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Issuing Parties hereby agree, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Issuing Parties setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuing Parties, prior to the Consummation thereof, a written representation to the Issuing Parties (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of any of the Issuing Parties, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Issuing Parties' preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the 10 Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including Brown & Wood LLP (available February 7, 1997), and any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from the Issuing Parties. (iii) Prior to the effectiveness of the Exchange Offer Registration Statement, the Issuing Parties shall provide a supplemental letter to the Commission (A) stating that the Issuing Parties are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991), Brown & Wood LLP (available February 7, 1997) and, if applicable, any no-action letter obtained pursuant to clause (i) above and (B) including a representation that the Issuing Parties have not entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Exchange Offer and that, to the best of the Issuing Parties' information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Securities in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities received in the Exchange Offer. (b) Shelf Registration Statement. In connection with the ---------------------------- Shelf Registration Statement, the Issuing Parties shall comply with all the provisions of Section 6(c) below and shall use their best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Issuing Parties will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) General Provisions. In connection with any ------------------ Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Securities by Broker-Dealers), the Issuing Parties shall: (i) use their best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained 11 therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuing Parties shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use their best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) in the case of a Shelf Registration, advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Issuing Parties shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; 12 (iv) in the case of a Shelf Registration, furnish to each of the selling or exchanging Holders and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review of such Holders and underwriter(s), if any, for a period of at least five business days, and the Issuing Parties will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which selling Holders of a majority in Liquidation Amount of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object within five business days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission; (v) in the case of a Shelf Registration, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s), if any, make the Issuing Parties' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) in the case of a Shelf Registration, make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuing Parties and cause the Issuing Parties' officers, directors, managers and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; (vii) in the case of a Shelf Registration, if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of ------- Distribution" of the Transfer Restricted Securities, information ------------ with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the 13 Issuing Parties are notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (viii) cause the Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any; (ix) in the case of a Shelf Registration, furnish to each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) in the case of a Shelf Registration, deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Issuing Parties hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) in the case of a Shelf Registration, enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be requested by any Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and in connection with an Underwritten Registration, the Issuing Parties shall: (A) upon request, furnish to each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of the effectiveness of the Shelf Registration Statement, signed by (y) the Chairman of the Board, its President or a Vice President and (z) the Chief Financial Officer of the Issuing Parties, confirming, as of the date thereof, such matters as such parties may reasonably request; (2) an opinion, dated the date of the effectiveness of the Shelf Registration Statement, of counsel for the Issuing Parties, covering such matters as such parties may reasonably request, and in any event including 14 a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuing Parties, representatives of the independent public accountants for the Issuing Parties, the Initial Purchasers' representatives and the Initial Purchasers' counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Issuing Parties and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial and statistical data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of the effectiveness of the Shelf Registration Statement, from the Issuing Parties' independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary underwritten offerings. (B) set forth in full or incorporated by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuing Parties pursuant to this clause (xi), if any. If at any time the representations and warranties of the Issuing Parties contemplated in clause (A)(1) above cease to be true and correct, the Issuing 15 Parties shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; (xii) in the case of a Shelf Registration, prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s) may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that the Issuing Parties shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in the case of a Shelf Registration, shall issue, upon the request of any Holder of Securities covered by the Shelf Registration Statement, Exchange Securities in the same amount as the Securities surrendered to the Issuing Parties by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Exchange Securities, as the case may be; in return, the Securities held by such Holder shall be surrendered to the Issuing Parties for cancellation; (xiv) in the case of a Shelf Registration, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xv) use their best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xvi) if any fact or event contemplated by clause (c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue 16 statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (xvii) provide CUSIP numbers for all Exchange Securities not later than the effective date of the Registration Statement and provide certificates for the Exchange Securities; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD, and use their best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; provided, however, that no Issuing Party shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xix) otherwise use their best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to their security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the respective Issuing Party's first fiscal quarter commencing after the effective date of the Registration Statement; (xx) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their best efforts to cause the Trustee to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xxi) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuing Parties of the existence of any fact of the kind described in 17 Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the Issuing Parties that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuing Parties, each Holder will deliver to the Issuing Parties (at the Issuing Parties' expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Issuing Parties shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. 7. Registration Expenses. All expenses incident to the Issuing Parties' performance of or compliance with this Agreement will be borne, jointly and severally, by the Issuing Parties, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), and associated messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuing Parties; (v) all application and filing fees in connection with listing Securities on a national securities exchange or automated quotation system; and (vi) all fees and disbursements of independent certified public accountants of the Issuing Parties (including the expenses of any special audit and comfort letters required by or incident to such performance). Each Issuing Party will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by such Issuing Party. 8. Indemnification and Contribution. (a) In connection with a Shelf Registration Statement or in connection with any delivery of a Prospectus contained in an Exchange Offer Registration Statement by any participating Broker-Dealer or Initial Purchasers, as applicable, who seeks to sell Exchange Securities, each of the Issuing Parties, jointly and severally, shall indemnify and hold harmless each Holder of Transfer Restricted Securities included within any such Shelf Registration Statement and each participating Broker-Dealer or Initial Purchasers selling Exchange Securities, and each person, if any, who controls any such person within the meaning of Section 15 of the Securities Act (each, a "Participant") from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not 18 limited to, any loss, claim, damage, liability or action relating to purchases and sales of Securities) to which such Participant or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each Participant promptly upon demand for any legal or other expenses reasonably incurred by such Participant in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that (i) no Issuing Party shall be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any such Registration Statement or any prospectus forming part thereof or in any such amendment or supplement in reliance upon and in conformity with written information furnished to such Issuing Party by or on behalf of any Participant specifically for inclusion therein; and provided further that as to any preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit of any such Participant or any controlling person of such Participant on account of any loss, claim, damage, liability or action arising from the sale of the Exchange Securities to any person by that Participant if (i) that Participant failed to send or give a copy of the Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act and (ii) the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary Prospectus was corrected in the Prospectus, unless, in each case, such failure resulted from non-compliance by any Issuing Party with Section 6(c). The foregoing indemnity agreement is in addition to any liability which any Issuing Party may otherwise have to any Participant or to any controlling person of that Participant. (b) Each Participant, severally and not jointly, shall indemnify and hold harmless each of the Issuing Parties, their respective directors, officers, employees or agents and each person, if any, who controls any Issuing Party within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which any Issuing Party or any such director, officer, employees or agents or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus, Registration Statement or Prospectus or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to such Issuing Party by or on behalf of that Participant specifically for inclusion herein, and shall reimburse such Issuing Party and any such director, officer, employees or agents or controlling person for any legal or other expenses reasonably incurred by such Issuing Party or any such director, officer, employees or agents or controlling person in connection with investigating or defending or 19 preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Participant may otherwise have to any Issuing Party or any such director, officer or controlling person. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall have notified the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnified party shall have the right to employ counsel to represent jointly the indemnified party and those other Participants and its respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Participants against the indemnifying party under this Section 8 if, in the reasonable judgment of the indemnified party it is advisable for the indemnified party and those Participants, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the indemnifying party. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to local counsel). Each indemnified party, as a condition of the indemnity agreements contained in Section 8, shall use its best efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. 20 (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, in such proportion as shall be appropriate to reflect the relative fault of such Issuing Party on the one hand and the Participants on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Issuing Party or the Participants, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuing Parties and the Participants agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Participants were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Participant shall be required to contribute any amount in excess of the amount by which proceeds received by such Participant from an offering of the Securities exceeds the amount of any damages which such Participant has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Participants' obligations to contribute as provided in this Section 8(d) are several and not joint. 9. Rule 144A. Each of the Issuing Parties hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 10. Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. 21 11. Selection of Underwriters. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Issuing Parties; provided, that such investment bankers and managers must be reasonably satisfactory to the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering. 12. Miscellaneous. (a) (a) Remedies. The Issuing Parties agree -------- that monetary damages (including Liquidated Damages) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. None of the Issuing Parties -------------------------- will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. No Issuing Party has previously entered into any agreement granting any registration rights with respect to its securities to any Person (other than Oak Hill Securities Fund, L.P., Oak Hill Securities Fund II, L.P. or other accounts managed by Oak Hill Advisors, Inc. or its Affiliates), other than, in the case of the Company, the Registration Rights Agreement, dated as of January 26, 2001, relating to $270,000,000 aggregate principal amount of its 9% Senior Notes due 2008 and $180,000,000 aggregate principal amount of its 9?% Senior Notes due 2011 and the Registration Rights Agreement, dated as of December 19, 2001, relating to $200,000,000 aggregate principal amount of its 10 1/2% Senior Notes due 2009. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuing Parties' securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Securities. The Issuing Parties ------------------------------------ will not take any action, or permit any change to occur, with respect to Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer unless such action or change is required by applicable law. (d) Amendments and Waivers. The provisions of this Agreement ---------------------- may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Issuing Parties have obtained the written consent of Holders of a majority of the outstanding principal amount of the Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. 22 (e) Notices. All notices and other communications provided for ------- or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address of such Holder maintained by the Registrar under the Indenture; and (ii) if to any of the Issuing Parties: MeriStar Hospitality Operating Partnership, L.P. 1010 Wisconsin Avenue, N.W. Suite 650 Washington, DC 20007 Attention: John Emery, Chief Financial Officer Facsimile: (202) 295-2248 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Richard S. Borisoff, Esq. Facsimile: (212) 757-3990 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the ---------------------- benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (g) Counterparts. This Agreement may be executed in any number ------------ of counterparts and by the parties hereto in separate counterparts, each of which when so executed 23 shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for -------- convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of New York. (j) Severability. In the event that any one or more of the ------------ provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement, together with the other ---------------- transaction documents, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Issuing Parties with respect to the Securities. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. (l) Required Consents. Whenever the consent or approval of ----------------- Holders of a specified percentage of Securities is required hereunder, Securities held by any Issuing Party or any of its respective Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (m) No Third Party Beneficiaries. Except as expressly noted ---------------------------- otherwise herein, including, without limitation, the indemnified parties mentioned in Section 8, nothing in this Agreement shall confer any rights upon any Person who or which is not a party to or successor or permitted assignee of a party to this Agreement. 24 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Issuers: ------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: MeriStar Hospitality Corporation, as general partner By: /s/ Christopher L. Bennett ------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOSPITALITY FINANCE CORP. III, a Delaware corporation By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel Parent: ------ MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel Subsidiary Guarantors: --------------------- MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett ----------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel AGH PSS I, INC., a Delaware corporation By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, a Maryland corporation, member By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 26 CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MIDLAND PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. Each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 27 EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR CS COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR INDIANAPOLIS COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 28 MERISTAR SANIBEL INN COMPANY, LLC MERISTAR SUNDIAL BEACH COMPANY, LLC MERISTAR SAFETY HARBOR COMPANY, LLC MERISTAR SEASIDE INN COMPANY, LLC MERISTAR PLANTATION SHOPPING CENTER COMPANY, LLC MERISTAR SONG OF THE SEA COMPANY, LLC MERISTAR SHIRLEY'S PARCEL COMPANY, LLC MERISTAR SANIBEL GOLF COMPANY, LLC MERISTAR MARCO ISLAND COMPANY, LLC MERISTAR S.S. PLANTATION COMPANY, LLC MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (VANCOUVER) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC AGH 75 ARLINGTON HEIGHTS LLC Each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR SANTA BARBARA, L.P., a Delaware limited partnership MERISTAR CATHEDRAL CITY, L.P., a Delaware limited partnership MERISTAR LAJV, L.P., a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 29 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 30 MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership By: AGH UPREIT LLC, a Delaware limited liability company, their general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett 31 Title: Senior Vice President as General Counsel MERISTAR LP, INC., a Nevada corporation By: /s/ Christopher L. Bennett --------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, partner By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel MERISTAR HOTEL LESSEE, INC. By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 32 MT. ARLINGTON NEW JERSEY LLC, a Delaware limited liability company By: AGH UPREIT LLC, a Delaware limited liability company, its managing member By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 455 MEADOWLANDS ASSOCIATES, LTD., a Texas limited partnership By: AGH Secaucus LLC, a Delaware limited liability company, its general partner By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel AGH SECAUCUS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, managing member By: MeriStar Hospitality Corporation, a Maryland corporation, general partner By: /s/ Christopher L. Bennett -------------------------------- Name: Christopher L. Bennett Title: Senior Vice President and General Counsel 33 Accepted as of the date thereof: LEHMAN BROTHERS INC. SALOMON SMITH BARNEY INC. DEUTSCHE BANC ALEX. BROWN INC. SG COWEN SECURITIES CORPORATION BANC OF AMERICA SECURITIES LLC BANC ONE CAPITAL MARKETS, INC. CIBC WORLD MARKETS CORP. DRESDNER KLEINWORT WASSERSTEIN - GRANTCHESTER, INC. FLEET SECURITIES, INC. SCOTIA CAPITAL (USA) INC. WELLS FARGO BROKERAGE SERVICES, LLC By LEHMAN BROTHERS INC. By: /s/ Edward Conway --------------------- Name: Edward Conway Title: Managing Director 34 EX-10.2.1 20 dex1021.txt EXHIBIT 10.2.1 Exhibit 10.2.1 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "Amendment"), dated as of March 3, 1999 (the "Amendment Date"), is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, as the Borrower ("Borrower"); the Guarantors; SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger and Administrative Agent (the "Administrative Agent"); and the Lenders a party hereto. RECITALS: A. The Borrower; the Administrative Agent; Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National Association, as Documentation Agent; and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of August 3, 1998 (the "Original Credit Agreement"). B. The parties hereto desire to amend the Original Credit Agreement and the other Credit Documents (as defined in the Original Credit Agreement) as hereinafter provided. NOW, THEREFORE, for and in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. All terms used in this Amendment, but not defined herein, shall have the meaning given such terms in the Original Credit Agreement. 2. This Amendment shall become effective as of the Amendment Date if on or prior to the close of business on March 19, 1999 (the "Termination Date") the following conditions precedent have been satisfied: a. Documentation. The Documentation Agent shall have received ------------- counterparts of this Amendment executed by the Borrower, the Guarantors and the Super Required Lenders. b. Representations and Warranties. The representations and ------------------------------ warranties contained in this Amendment, and in each Credit Document shall be true and correct in all material respects both as of the Amendment Date and the date the other conditions to this Amendment's effectiveness are satisfied except for changes which individually or in the aggregate do not constitute a Material Adverse Change. c. No Default No Default or Event of Default shall exist as of ---------- either the Amendment Date or the date the other conditions to this Amendment's effectiveness are satisfied. If this Amendment does not become effective prior to the Termination Date, this Amendment shall be null and void; provided however that the Borrower shall still be obligated to reimburse Societe Generale, Southwest Agency for costs and expenses incurred in connection with this Amendment. 3. The term "Credit Agreement" as used in the Credit Documents, shall mean the Original Credit Agreement, as amended by this Amendment. 4. The following definitions shall be added to the Credit Agreement: "Conversion Date" means the date upon which either (a) $115,000,000 or more --------------- of the Convertible Indebtedness has been converted into Parent Common Stock or other ownership interest in the Parent or any of the Parent's Subsidiaries or (b) the Parent has caused any of the Convertible Indebtedness to be so converted. "Senior Leverage Ratio" means the ratio on any date of (a) the Parent's --------------------- Total Senior Indebtedness on such date to (b) the EBITDA of the Parent and the Parent's Subsidiaries on a Consolidated basis for the Rolling Period immediately preceding such date, as EBITDA is adjusted for acquisitions and dispositions in the definition of "Leverage Ratio." "Total Senior Indebtedness" of any Person means all Total Indebtedness of ------------------------- such Person and its Subsidiaries on a Consolidated basis except for Total Subordinate Indebtedness. "Total Subordinate Indebtedness" of any Person means all Total Indebtedness ------------------------------ of such Person and its Subsidiaries on a Consolidated basis which is junior and subordinate to the Obligations pursuant to subordination provisions which are either (a) substantially similar to or more advantageous to the Lenders than the subordination provisions contained in either the Convertible Indebtedness or the Existing Subordinate Indebtedness, or (b) satisfactory to the Administrative Agent. The Total Subordinate Indebtedness of the Parent includes the Convertible Indebtedness and the Existing Subordinate Indebtedness. 5. From and after the Amendment Date, the definition of Maximum OPCO Loan Amount is amended by deleting the phrase "$75,000,000" and replacing it with the phrase "$100,000,000". 6. From and after the Amendment Date to the Conversion Date, Section 7.04 of the Credit Agreement is deleted in its entirety and replaced with the following: "Section 7.04 Leverage Ratio. The Parent shall not on any date permit -------------- the Leverage Ratio to exceed (a) prior to January 1, 2000, 5.5 to 1.0, (b) from January 1, 2000 through -2- June 30, 2000, 5.30 to 1.0, (c) from July 1, 2000 through June 30, 2001, 5.0 to 1.0, and (d) on and after July 1, 2001, 4.5 to 1.0." On the Conversion Date, the new Section 7.04 of the Credit Agreement set forth in this Amendment shall be deleted in its entirety and replaced with the original Section 7.04 of the Original Credit Agreement. 7. From and after the Amendment Date, Section 7.05 of the Credit Agreement is amended by deleting the phrase "30%" and replacing it with the phrase"32%". 8. From and after the Amendment Date to the Conversion Date, a new Section 7.09 is added to the Credit Agreement which reads in its entirety as follows: "Section 7.09 Senior Leverage Ratio. The Parent shall not on any date --------------------- permit the Senior Leverage Ratio to exceed 4.5 to 1.0." On the Conversion Date, the Section 7.09 of the Credit Agreement set forth in this Amendment shall be deleted in its entirety. 9. From and after the Amendment Date, the Form of Compliance Certificate attached to the Credit Agreement as Exhibit D is deleted in its entirety and replaced with the form attached to this Amendment as Exhibit D. On the Conversion Date the Form of Compliance Certificate shall be modified to take into account the modifications to Section 7.04 and the deletion of Section 7.09 of the Credit Agreement. 10. Each party hereto represents to the other parties hereto that such party is authorized to execute this Amendment. In addition, the Borrower and the Guarantors represent and warrant to the Banks and the Agents that (a) the representations and warranties contained in this Amendment, and in each Credit Document are true and correct in all material respects as of the Amendment Date except for changes which individually or in the aggregate do not constitute a Material Adverse Change and (b) no Default or Event of Default exists as of the Amendment Date. 11. This Amendment may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one Amendment. -3- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] Executed as of the ate first set forth above. BORROWER: --------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By:________________________________ Name:______________________________ Title:_____________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] JOINDER, CONSENT AND RATIFICATION The Guarantors join in and consent to the terms and provisions of the attached Amendment and agree that the Guaranty and Contribution Agreement (the "Guaranty") executed by the Guarantor dated August 3, 1998 remains in full force and effect and that the Guaranteed Obligations (as defined in the Guaranty) include the additional obligations of the Borrower under the attached Amendment. This Joinder, Consent and Ratification is dated as of the date of the Amendment. GUARANTORS: MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By:_____________________________________ Name:___________________________________ Title:__________________________________ MERISTAR LP, INC., a Nevada corporation By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:___________________________________ Name:_________________________________ Title:________________________________ AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, member By:________________________________________ Name:______________________________________ Title:_____________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:___________________________________ Name:_________________________________ Title:________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MERISTAR SANIBEL INN COMPANY, L.L.C. MERISTAR MARCO ISLAND COMPANY, L.L.C. MERISTAR SAFETY HARBOR COMPANY, L.L.C. MERISTAR SUNDIAL BEACH COMPANY, L.L.C. MERISTAR SS PLANTATION COMPANY, L.L.C. MERISTAR SHIRLEY'S PARCEL COMPANY, L.L.C. MERISTAR SEASIDE INN COMPANY, L.L.C. MERISTAR SANIBEL BEACH COMPANY, L.L.C. MERISTAR PLANTATION SHOPPING CENTER COMPANY, L.L.C. MERISTAR SONG OF THE SEA COMPANY, L.L.C. MERISTAR SANIBEL GOLF COMPANY, L.L.C., each of the above being a Delaware limited liability company By:________________________________________________ Name:______________________________________________ Title:_____________________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] EQUISTAR SOMERSET COMPANY, L.L.C. EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CHARLOTTE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR SANTA BARBARA COMPANY, L.L.C. CAPSTAR C.S. COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR CATHEDRAL CITY COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR LAJV COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C. each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:________________________________ Name:______________________________ Title:_____________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P., each of the above being a Delaware limited partnership CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION MIDLAND PARTNERS, L.P., each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, its general partner By:____________________________ Name:__________________________ Title:_________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:____________________________ Name:__________________________ Title:_________________________ By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:____________________________ Name:__________________________ Title:_________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR U NSECURED CREDIT AGREEMENT] BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, member By: MeriStar Hospitality Corporation, member By:_______________________ Name:_____________________ Title:____________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:___________________ Name:_________________ Title:________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_______________________ Name:_____________________ Title:____________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, partner By: MeriStar Hospitality Corporation, member By:____________________________ Name:__________________________ Title:_________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:________________________ Name:______________________ Title:_____________________ By: MeriStar Hospitality Operating Partnership, L.P., partner By: MeriStar Hospitality Corporation, general partner By:____________________________ Name:__________________________ Title:_________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MT. ARLINGTON NEW JERSEY, LLC, a Delaware limited partnership MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership RICHMOND WILLIAMSBURG ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, general partner By: MeriStar Hospitality Corporation, member By:________________________________ Name:______________________________ Title:_____________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:____________________________ Name:__________________________ Title:_________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_____________________________ Name:___________________________ Title:__________________________ AGH 75 ARLINGTON HEIGHTS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:___________________________ Name:_________________________ Title:________________________ AGH PSS I, Inc., a Delaware corporation By:___________________________________ Name:_________________________________ Title:________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Arranger and Administrative Agent By:__________________________________ Name:________________________________ Title:_______________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] BANKERS TRUST COMPANY, individually and as Arranger and Syndication Agent By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] BANKBOSTON, N.A. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] THE BANK OF NOVA SCOTIA, acting through its San Francisco Agency By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] NATIONSBANK, N.A. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LEHMAN COMMERCIAL PAPER INC., individually and as Arranger and Documentation Agent By:__________________________ Name:________________________ Title:_______________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] BANK ONE TEXAS N.A. By:________________________ Name:______________________ Title:_____________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] GENERAL ELECTRIC CAPITAL CORPORATION By:___________________________ Name:_________________________ Title:________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CIBC INC. By:___________________________ Name:_________________________ Title:________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] DRESDNER BANK AG NEW YORK BRANCH And Grand Cayman Branch By:______________________________ Name:____________________________ Title:___________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] AMSOUTH BANK SONAT TOWER By:________________________ Name:______________________ Title:_____________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CITICORP REAL ESTATE, INC. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] SOUTHTRUST BANK, N.A. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH-HOLDING CORPORATION III By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] FIRST AMERICAN BANK TEXAS, S.S.B. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LEHMAN SENIOR FUNDING INC. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] GOLDMAN SACHS MORTGAGE COMPANY, L.P. By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] FIRST UNION NATIONAL BANK By:_____________________________________ Name:___________________________________ Title:__________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] OCTAGON LOAN TRUST By: Octagon Credit Investors, as Manager By:__________________________________ Name:________________________________ Title:_______________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] ERSTE BANK, DER OESTERREICHISCHEN SPARKASSEN AG By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] FIRST COMMERCIAL BANK, NEW YORK AGENCY By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH-ING-2 CORPORATION By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] THE TRAVELERS INSURANCE COMPANY By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] AG CAPITAL FUNDING PARTNERS, L.P. By: Angelo, Gordon & Co., L.P., as Investment Advisor By:__________________________________ Name:________________________________ Title:_______________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] ML CLO XIX STERLING (CAYMAN) LTD. By: Sterling Asset Manager, L.L.C., As its Investment Advisor By:__________________________________ Name:________________________________ Title:_______________________________ SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MOUNTAIN CLO TRUST By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CERES FINANCE LTD. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MERRILL LYNCH PRIME RATE PORTFOLIO By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH-CNC CORPORATION By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH-CRESCENT CORPORATION By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] MORGAN STANLEY SENIOR FUNDING, INC. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] BANK LEUMI USA By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH-CYPRESSTREE-1 CORPORATION By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH RIVERSIDE LLC By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CYPRESSTREE INVESTMENT PARTNERS II, LTD. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By:__________________________________ Name:________________________________ Title:_______________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] OASIS COLLATERALIZED HIGH INCOME PORTFOLIOS-I, LTD. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] ALLSTATE INSURANCE COMPANY By:_______________________________________ Name:_____________________________________ By:_______________________________________ Name:_____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] ALLSTATE LIFE INSURANCE COMPANY By:_______________________________________ Name:_____________________________________ By:_______________________________________ Name:_____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] AMARA-1 FINANCE LTD. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] AMARA-2 FINANCE LTD. By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CYPRESSTREE INVESTMENT FUND, LLC By: CypressTree Investment Management Company, Inc., its Managing Member By:__________________________________ Name:________________________________ Title:_______________________________ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC. As: Attorney-in-Fact and on behalf of First Allmerica Financial Life Insurance Company, as Portfolio Manager By:_____________________________________ Name:___________________________________ Title:__________________________________ EXHIBIT D FORM OF COMPLIANCE CERTIFICATE ---------------------- This Compliance Certificate is executed this 29th day of July, 1998, and is prepared pursuant to that certain Second Amended and Restated Senior Credit Agreement (the "Agreement") between MERISTAR HOSPITALITY OPERATING PARTNERSHIP, --------- L.P., a Delaware limited partnership (the "Borrower"), SOCIETE GENERALE, -------- SOUTHWEST AGENCY, as Arranger and Administrative Agent, BANKERS TRUST COMPANY as Arranger and Syndication Agent, LEHMAN COMMERCIAL PAPER INC. as Arranger and Documentation Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION as Documentation Agent and the Lenders parties to the Agreement. Capitalized terms used herein but not otherwise defined herein shall have the meanings specified by the Agreement. 1. Representations, Covenants, Defaults: Borrower hereby certifies to the ------------------------------------ Administrative Agent and the Lenders, effective as of the date of execution of this Compliance Certificate, as follows: 1.1 Covenants. All covenants of Borrower set forth in Sections V and VI --------- of the Agreement required to be performed as of the date hereof have been performed and maintained in all material respects, and such covenants continue to be performed and maintained as of the execution date of this certificate, except as follows: NONE 1.2 Representations and Warranties. All representations and warranties of ------------------------------ Borrower set forth in Section IV of the Agreement are true and correct in all material respects as of the execution date of this certificate, except as follows: NONE 1.3 Event of Default. There exists no Event of Default except as follows: ---------------- NONE 2. Operating Covenants. Borrower hereby certifies to the Administrative Agent ------------------- and the Lenders, effective as of the calendar quarter ending June 30, 1998 and as of August 3, 1998, that the amounts and calculations made hereunder pursuant to Section VII of the Agreement are true and correct. 2.1 Interest Coverage Ratio (Section 7.01 of the Agreement). ----------------------- The Interest Coverage Ratio for the Parent, as of the Rolling Period ending on June 30, 1998, is as set forth in (c) below, based on the ratio of: -1- (a) Parent's EBITDA (on a Consolidated basis): $__________ (b) Parent's Interest Expense: $__________ (c) Ratio of (a) to (b) above: ___________ Required by the Agreement: For any Rolling Period commencing with the Rolling Period ending on June 30, 1998 through March 31, 1999, a ratio of not less than 2.20 to 1.0. For any Rolling Period thereafter, a ratio of not less than 2.5 to 1.0. 2.2 Fixed Charge Coverage Ratio (Section 7.02 of the Agreement). --------------------------- The Fixed Charge Coverage Ratio for the Parent, as of the Rolling Period ending on June 30, 1998, is as set forth in (c) below, based on the ratio of: (a) Parent's Adjusted EBITDA (on a Consolidated basis): $__________ (b) Parent's Fixed Charges: $__________ (c) Ratio of (a) to (b) above: ___________ Required by the Agreement: For each Rolling Period commencing with the Rolling Period ending on June 30, 1998 through March 31, 1999, a ratio of not less than 1.85 to 1.0. For any Rolling Period thereafter, a ratio of not less than 2.0 to 1.0. 2.3 Maintenance of Net Worth (Section 7.03 of the Agreement). ------------------------ The Adjusted Net Worth for the Parent, as of the Rolling Period ending on June 30, 1998, is as set forth in (d) below, based on the sum of: (a) Parent's Net Worth (determined in accordance with GAAP): $__________ (b) Minority interest of Parent (determined in accordance with GAAP): $__________ (c) OP Adjustment: $__________ -2- (d) Sum of (a), (b) and (c) above: $__________ The Minimum Tangible Net Worth for the Parent, as of the Rolling Period ending June 30, 1998 is as set forth in (d) below, based upon the sum of: (a) $__________ (b) 75% of the aggregate net proceeds received by the Parent or any of its Subsidiaries after the date of the Agreement in connection with any offering of Stock or Stock Equivalents of the Parent or its Subsidiaries taken as a whole: $__________ (c) 75% of the value of any partnership interests in Borrower issued after the date of the Agreement for the acquisition of a Hotel Property or any interest in a Hotel Property permitted under the Agreement: $__________ (d) The sum of (a), (b), and (c) above: $__________ Required by the Agreement: The Parent shall at all times maintain an Adjusted Net Worth of not less than the Minimum Tangible Net Worth. 2.4 Leverage Ratio (Section 7.04 of the Agreement). -------------- The Leverage Ratio for the Parent, as of the Rolling Period ending on June 30,1998, is set forth in (c) below, based on the ratio of: (a) Parent's Total Indebtedness: $__________ (b) Pro forma EBITDA of Parent and the Parent's Subsidiaries (on a Consolidated basis): $__________ (c) Ratio of (a) to (b) above: ___________ Required by the Agreement: The Parent shall not prior to January 1, 2000 permit the Leverage Ratio to exceed 5.5 to 1.0. The Parent shall not on or after January 1, 2000 through June 30, 2000 permit the Leverage Ratio to exceed 5.3 to 1.0. -3- The Parent shall not on or after July 1, 2000 through June 30, 2001 permit the Leverage Ratio to exceed 5.0 to 1.0. The Parent shall not for any date on or after July 1, 2001 permit the Leverage Ratio to exceed 4.5 to 1.0. 2.5 Limitations on Secured Indebtedness (Section 7.05 of the Agreement). Required by the Agreement: The Parent shall not on any date permit the sum of the Secured Non-Recourse Indebtedness and Secured Recourse Indebtedness of the Parent and its Subsidiaries on a Consolidated basis (excluding the Obligations), to be secured by Liens on Hotel Properties or other Investments which for the Rolling Period immediately preceding such date (a) for any date prior to July 1, 1999, produced 40% or more of the EBITDA of the Parent and its Subsidiaries on a Consolidated basis and (b) for any date on or after July 1, 1999, produced 32% or more of the EBITDA of the Parent and its Subsidiaries on a Consolidated basis. The Parent shall not on any date permit the Secured Indebtedness Ratio to exceed (a) prior to July 1, 1999, 2.75 to 1.0, and (b) on and after July 1, 1999, 2.5 to 1.0. (a) Secured Non-Recourse Indebtedness of the Parent and its Subsidiaries (on a Consolidated basis) $__________ (b) Secured Recourse Indebtedness of the Parent and its Subsidiaries (on a Consolidated Basis excluding Obligations): $__________ (c) Sum of (a) and (b): $__________ (d) EBITDA of the Parent and its Subsidiaries: $__________ (e) Ratio of (c) above to (d) above: ___________ (f) EBITDA of the Parent and its Subsidiaries (on a Consolidated basis): $__________ (g) 40% of (d) above: $__________ (h) 32% of (d) above: $__________ (i) EBITDA of the Hotel Properties or other Investments secured by Liens: $__________ -4- 2.6 Limitations on Secured Recourse Indebtedness of Parent ------------------------------------------------------ (Section 7.06 of the Agreement). Required by the Agreement: The Parent shall not on any date permit the Secured Recourse Indebtedness (excluding the Obligations) of the Parent and its Subsidiaries (on a Consolidated basis) to be secured by Liens on Hotel Properties or other Investments which for the Rolling Period immediately preceding such date produced 20% or more of the EBITDA of the Parent and its Subsidiaries (on a Consolidated basis). (a) Total Indebtedness (excluding any Secured Non-Recourse Indebtedness) of Parent and its Subsidiaries for which the obligations thereunder are secured by Lien on Hotel Properties or other Investments of Parent or its Subsidiaries: $__________ (b) EBITDA of the Hotel Properties or other Investments secured by Liens: $__________ (c) EBITDA of the Parent and its Subsidiaries: $__________ (d) 20% of (c) above: $__________ 2.7 Unsecured Interest Coverage Ratio --------------------------------- (Section 7.07 of the Agreement). Required by the Agreement: The Parent shall maintain at the end of each Rolling Period for the Rolling Periods ending on the dates indicated below a ratio of (a) the Parent's Unencumbered EBITDA to (b) Parent's Unsecured Interest Expense of not less than the amount set forth below next to such dates: Ending Date of Rolling Period Unsecured Interest Coverage Ratio ----------------------------- --------------------------------- September 30, 1998 through June 30, 1999 1.50 to 1.0 September 30, 1999 through June 30, 2000 1.75 to 1.0 September 30, 2000 through June 30, 2001 2.00 to 1.0 September 30, 2001 through June 30, 2002 2.25 to 1.0 For any Rolling Period thereafter 2.50 to 1.0 The Unsecured Interest Coverage Ratio as of June 30, 1998 is set forth in (c) below: -5- (a) Parent's Unencumbered EBITDA: $__________ (b) Parent's Unsecured Interest Expense: $__________ (c) Ratio of (a) to (b): ___________ 2.8 Senior Leverage Ratio (Section 7.09 of the Agreement). --------------------- The Senior Leverage Ratio for the Parent, as of the Rolling Period ending June 30,1998, is set forth in (c) below, based on the ratio of: (a) Parent's Total Indebtedness: $__________ (b) Parent's Total Subordinate Indebtedness: $__________ (c) Parent's Total Senior Indebtedness: [(a) minus (b)] $__________ (d) Pro forma EBITDA of Parent and the Parent's Subsidiaries (on a Consolidated basis): $__________ (e) Ratio of (c) to (d) above: ___________ Required by the Agreement: The Parent shall not permit the Senior Leverage Ratio to exceed 4.5 to 1.0. 3. Other Covenants. Borrower hereby certifies to the Administrative Agent and --------------- the Lenders, effective as of the Rolling Period ending June 30, 1998, that the following amounts and calculations made pursuant to the Agreement are true and correct: 3.1 Status; Applicable Margin (Section 1 of the Agreement) ------------------------- Pursuant to Section 1 of the Agreement, the Status applicable to the loan facility is IX, based upon a Leverage Ratio of 4.49 (as calculated above). Based on the foregoing, the Applicable Margin for each subsequent Advance is as follows: Swingline Advances: 0.20% Base Rate Advances: 0.20% LIBOR Rate Advances: 1.65% Unused Commitment Fee: 0.25% 3.2 Restricted Payments (Section 6.04 of the Agreement) ------------------- -6- Required by the Agreement: The Parent, Borrower, and their respective Subsidiaries, may not make any Restricted Payment, except as provided in Section 6.04 of the Agreement which includes without limitation a requirement that cash dividends of the Parent in any Rolling Period shall not exceed the greater of (i) the lesser of (A) for the immediately preceding Rolling Period, ninety percent (90%), of the Funds From Operations of the Parent during such Rolling Period or (B) one hundred percent (100%) of Free Cash Flow of the Parent during such Rolling Period and (ii) the amount required for the Parent to maintain its status as a REIT. (a) Net Income for the Parent for the Rolling Period: $__________ (b) Funds From Operations for the Parent for the Rolling Period: $__________ (c) 90% of Funds From Operations for the Parent for the Rolling Period: $__________ (d) Free Cash Flow for the Parent for the Rolling Period: $__________ (e) Lesser of (c) or (d) above (provide explanation): $__________ (f) Amount of Restricted Payments needed to maintain REIT status, if greater than (e) above (provide explanation): $__________ 3.3 Investments, Loans, Future Properties (Section 6.07 of the Agreement) ------------------------------------- Required by the Agreement: Neither the Parent nor the Borrower shall, or shall permit any of their respective Subsidiaries to, acquire by purchase or otherwise all or substantially all the business, property or fixed assets of any Person or any Hotel Property, make or permit to exist any loans, advances or capital contributions to, or make any Investments in (including without limitation, loans and advances to, and other Investments in, Subsidiaries or Unconsolidated Entities), or purchase or commit to purchase any evidences of indebtedness of, stock or other securities, partnership interests, member interests or other interests in any Person, except the following (provided that after giving effect thereto there shall exist no Default): (a) the purchase of Liquid Investments with any Person which qualifies as an Eligible Assignee; -7- (b) trade and customer accounts receivable (including in connection with the sale of used FF&E) which are for goods furnished or services rendered in the ordinary course of business and are payable in accordance with customary trade terms, and receivables purchased in connection with the acquisition of a Hotel Property; (c) a Future Property or a Subsidiary or Unconsolidated Entity which owns a Future Property for which the Borrower has provided the Administrative Agent the Property Information for such Future Property at least 10 days prior to the date of acquisition of such Future Property which Property Information does not reflect any material Environmental or structural problems with such Future Property, or if such Property Information does reflect a material Environmental or structural problem, then the Borrower and the Administrative Agent shall have agreed upon the Required Work to correct or remediate such problem; Attach schedule for any transaction or Investment not in compliance ------------------------------------------------------------------- with a, b or c above. --------------------- (d) Investments in unimproved land that either (i) is under development for operation of a Hotel Property or with respect to which such Hotel Property development is planned to commence within twelve months of the acquisition of such land or (ii) does not qualify under the preceding clause (i) and does not in the aggregate then have an Investment Amount which exceeds $100,000,000. Aggregate Investment Amount for Investment in unimproved land which is not under development or will not be under development within twelve months of its acquisition : $__________ (e) Stock or Stock Equivalents (i) received in settlement of liabilities created in the ordinary course of business, and (ii) additional Stock or Stock Equivalents of publicly-traded Unconsolidated Entities engaged in the Hospitality/Leisure-Related Business which in the aggregate do not then have an Investment Amount which exceeds $100,000,000. Aggregate Investment Amount for Stock or Stock Equivalents of publicly-traded Unconsolidated Entities engaged in the Hospitality/Leisure-Rated Business: $__________ (f) Stock, Stock Equivalents, and other Investments in Unconsolidated Entities engaged in the Hospitality/Leisure-Related Business which are not publicly- -8- traded Persons, and Permitted Non-Voting Stock Investments for Permitted Non-Voting Stock Companies engaged in the Hospitality/Leisure-Related Business, provided that (i) the aggregate of all such Stock, Stock Equivalents, Investments and Permitted Non-Voting Stock Investments shall not exceed $250,000,000 in the aggregate without the approval of the Required Lenders and (ii) the aggregate of all such Permitted Non-Voting Stock Investments shall not exceed $125,000,000 in the aggregate without the approval of the Required Lenders. Aggregate Investment Amount for Stock, Stock Equivalents, and other Investments in Unconsolidated Entities engaged in the Hospitality/Leisure-Related Business which are not publicly-traded Persons, and Permitted Non-Voting Stock Investments for Permitted Non-Voting Stock Companies engaged in the Hospitality/Leisure-Related Business: $__________ Aggregate of all such Permitted Non-Voting Stock Investments: $__________ (g) Indebtedness of a Person to the Borrower or to a Subsidiary of the Borrower that is secured by a Lien on one or more Hotel Properties owned by such Person, which Hotel Properties (i) were previously owned by the Borrower or a Subsidiary of the Borrower or (ii) the Borrower reasonably expects to acquire (through trustee's sale, foreclosure, deed in lieu of foreclosure or otherwise), provided, however, that the aggregate amount of all -------- ------- Investments permitted under this clause (g) shall not at any time exceed $200,000,000, excluding for purposes of such calculation the current Indebtedness owed the Borrower from its Subsidiaries which respectively own the Atlanta, Georgia Westin and the Cathedral City, California DoubleTree Hotel. Aggregate amount of all Investments permitted under clause (g): $__________ (h) Investments in Hotel Properties which on the date tested are deemed Development Properties which do not have construction or development budgets which in the aggregate then exceed $200,000,000. Aggregate amount of all construction or development budgets for Investments in Hotel Properties deemed Development Properties: $__________ -9- (i) A loan to OPCO which has an aggregate principal amount which does not exceed the Maximum OPCO Loan Amount and provides for an interest rate during any Fiscal Quarter equal to or greater than the anticipated average interest rate for outstanding Advances in such Fiscal Quarter based upon the Leverage Ratio in effect at the commencement of such Fiscal Quarter. Aggregate principal amount of any loan(s) to OPCO for the purchase of FF&E to maintain REIT status: $__________ Interest rate for any such loan(s) to OPCO: ___________% Required by the Agreement: Cannot exceed the lesser of (A) the amount required to maintain REIT status and (B) $ 5,000,000. Aggregate principal amount of any non-FF&E loan(s) to OPCO: $__________ Interest rate for any such loan(s) to OPCO: ___________% EBITDA of the OPCO and its Subsidiaries: $__________ 5.5 times OPCO EBITDA: $__________ OPCO and OPCO's Subsidiaries Indebtedness on a Consolidated basis: $__________ (excluding Indebtedness to REIT) Required by the Agreement: Cannot exceed the lesser of (A) the difference of (1) OPCO's Consolidated EBITDA times 5.5 minus (2) OPCO's Consolidated Indebtedness (excluding Indebtedness to REIT) and (B) $100,000,000. (j) Permitted Timeshare Receivables. Attach schedule showing detail of the Parent or any Subsidiary -------------------------------------------------------------- providing financing for any purchaser of a timeshare interval which ------------------------------------------------------------------- exceeds 90% of the sales price for such timeshare interval, if any. ------------------------------------------------------------------- None -10- (k) Any Indebtedness of a Guarantor to the Borrower, or vice-versa, provided such Indebtedness is subordinate to the Obligations. (l) Other assets owned in the ordinary course of owning the Parent's and the Parent's Subsidiaries' Hotel Properties and Hospitality/Leisure-Related Business. Attach schedule for any transaction or Investment not in compliance ------------------------------------------------------------------- with a, b or c above. --------------------- None. Required by the Agreement: Neither the Borrower, nor the Parent, nor their respective Subsidiaries shall make an Investment which would individually, and not on a portfolio basis, be in excess of $75,000,000 without the written consent of the Administrative Agent or in excess of $100,000,000 without the written consent of the Required Lenders, cause a Default, or cause or result in the Borrower or the Parent failing to comply with any of the financial covenants contained herein. Attach schedule with detail for any Investment which individually is -------------------------------------------------------------------- in excess of $75,000,000. ------------------------- None. 3.4 Parent Property Requirements (Section 1 and Section 6.07 of the ---------------------------- Agreement) Required by the Agreement: Neither the Borrower, nor the Parent, nor their respective Subsidiaries shall make an Investment which would (a) cause the Parent Properties in the aggregate to violate in any way the Parent Property Requirements without the Administrative Agent's written consent. Required by the Agreement: The Investment Amount for the Parent Properties which are located in an Approved Other Country shall not exceed 15% of the Investment Amount for all Parent Properties. (a) Investment Amount for all Parent Properties: $__________ (b) 15% of (a) above: $__________ -11- (c) Investment Amount for Parent Properties which are located in an Approved Other Country: $__________ The Investment Amount for the Parent Properties which are limited service or extended stay hotels or executive conference centers shall not collectively in the aggregate exceed 20% of the Investment Amount for all Parent Properties. (d) Investment Amount for Parent Properties which are limited service or extended stay hotels: $__________ (e) 20% of (a) above: $__________ The Investment Amount for the Parent Properties which are not operated under any franchise or license agreement with an Approved Franchisor shall not exceed 15% of the Investment Amount for all Parent Properties. (f) Investment Amount for Parent Properties which are not operated under any franchise or license agreement with an Approved Franchisor: $__________ (g) 15% of (a) above: $__________ The Investment Amount for Parent Properties and the total number of guest rooms for all Parent Properties which are subject to a ground lease shall not exceed 20% of the Investment Amount or 20% of the total guest rooms for all Parent Properties. (h) Investment Amount for Parent Properties which are subject to a ground lease: $__________ (i) 20% of (a) above: $__________ (j) Total number of guest rooms for all Parent Properties: ___________ (k) 20% of (j) above: ___________ (l) Total number of guest rooms for Properties subject to ground lease: ___________ The Borrower's Subsidiaries shall not own or lease more than 11 Hotel Properties that are subject to a timeshare program. (a) Number of Hotel Properties owned or leased by a Subsidiary of Borrower: ___________ -12- No Hotel Property shall be subjected to a timeshare program unless the Borrower intends to convert at least 25% of the hotel rooms in such Hotel Property into timeshare units within the three years following the initial subjecting of such Hotel Property to a timeshare program. (a) Number of hotel rooms in each Hotel Property to be subjected to a timeshare program which shall be converted into timeshare units within three years: ___________ The aggregate hotel rooms owned by the Borrower's Subsidiaries that have been included in a timeshare program shall not (i) in any one year commencing with July 1, 1998 and thereafter commencing on each July 1 and ending with the following June 30 increase by an amount equal to the lesser of (A) three and one-third percent (3.33%) of the total hotel rooms of the Parent and its Subsidiaries at the time of any proposed addition to the number of rooms included in a timeshare program and (B) 1,000 hotel rooms and (ii) in the aggregate exceed the lesser of (A) ten percent (10%) of the total hotel rooms of the Parent and its Subsidiaries at the time of any proposed addition to the number of rooms included in a timeshare program. (a) Percentage of increase in the number of hotel rooms owned by the Borrower's Subsidiaries that have been included in a timeshare program commencing with July 1, 1998 and ending with the following June 30: ___________ (b) Aggregate number of hotel rooms owned by the Borrower's Subsidiaries that have been included in a timeshare program expressed as a percentage of the total hotel rooms of the Parent and its Subsidiaries: ___________% 3.5 Limitations on Secured Recourse Indebtedness and Secured Non-Recourse --------------------------------------------------------------------- Indebtedness of Permitted Other Subsidiaries (Section 6.02 of the -------------------------------------------- Agreement) Required by the Agreement: Secured Recourse Indebtedness secured by a Hotel Property shall not exceed 65% of the Market Value of such Hotel Property and all such Secured Recourse Indebtedness secured by Hotel Properties shall not exceed 65% of the aggregate Market Value of such Hotel Properties. (a) If the Hotel Property has been owned for four (4) or more Fiscal Quarters: (i) Adjusted EBITDA for such Hotel -13- Property for the immediately preceding Rolling Period: $__________ (ii) Line (i) above times ten (10): $__________ (b) For any other Hotel Property: (i) The aggregate purchase price: $__________ (ii) The actual cost of any Capital Expenditures: $__________ (iii) The sum of Lines (i) and (ii) above: $__________ (c) Amount in Line (a)(ii) or (b)(iii) as applicable: $__________ (d) 65% of Line (c) above: $__________ Parent's Secured Recourse Indebtedness (on a Consolidated basis): $__________ Required by the Agreement: Secured Non-Recourse Indebtedness secured by a Hotel Property located in the United States shall not exceed 70% of the Market Value of such Hotel Property (or with respect to Secured Non-Recourse Indebtedness which is secured by more than one Hotel Property, such Secured Non-Recourse Indebtedness does not exceed 65% of the aggregate Market Value of all Hotel Properties which secure such Secured Recourse Indebtedness which do not also secure other Indebtedness) and all such Secured Non-Recourse Indebtedness secured by Hotel Properties located in the United States shall not exceed 70% of the aggregate Market Value of such Hotel Properties. (a) If the Hotel Property has been owned for four (4) or more Fiscal Quarters: (i) Adjusted EBITDA for such Hotel Property for the immediately preceding Rolling Period: $__________ (ii) Line (i) above times ten (10): $__________ (b) For any other Hotel Property: (i) The aggregate purchase price: $__________ -14- (ii) The actual cost of any Capital Expenditures: $__________ (iii) The sum of Lines (i) and (ii) above: $__________ (c) Amount in Line (a)(ii) or (b)(iii) as applicable: $__________ (d) 70% of Line (c) above: $__________ Parent's Secured Non-Recourse Indebtedness (on a Consolidated basis): $__________ Required by the Agreement: Secured Non-Recourse Indebtedness secured by a Hotel Property located outside the United States shall not exceed 65% of the Market Value of such Hotel Property and all Secured Non-Recourse Indebtedness in the aggregate secured by Hotel Properties located outside the United States shall not exceed the lesser of (A) 65% of the aggregate Market Value of such Hotel Properties or (B) $100,000,000. (a) If the Hotel Property has been owned for four (4) or more Fiscal Quarters: (i) Adjusted EBITDA for such Hotel Property for the immediately preceding Rolling Period: $__________ (ii) Line (i) above times ten (10): $__________ (b) For any other Hotel Property: (i) The aggregate purchase price: $__________ (ii) The actual cost of any Capital Expenditures: $__________ (iii) The sum of Lines (i) and (ii) above: $__________ (c) Amount in Line (a)(ii) or (b)(iii) as applicable: $__________ (d) 65% of Line (c) above: $__________ -15- EXECUTED as of the date first referenced above. BORROWER: --------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By:__________________________________________ Name: John Emery Title: Chief Financial Officer -16- EX-10.2.2 21 dex1022.txt EXHIBT 10.2.2 EXHIBIT 10.2.2 SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "Amendment"), dated as of March 31, 2000 (the "Amendment Date"), is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, as the Borrower ("Borrower"); the Guarantors; SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger and Administrative Agent (the "Administrative Agent"); and the Lenders a party hereto. RECITALS: A. The Borrower; the Administrative Agent; Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National Association, as Documentation Agent; and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of August 3, 1998 (the "Original Credit Agreement"), as amended by that certain First Amendment to Second Amended and Restated Senior Secured Credit Agreement, dated as of March 3, 1999 (the Original Credit Agreement, as so amended, being referred to herein as the "Amended Credit Agreement"). B. The parties hereto desire to amend the Amended Credit Agreement and the other Credit Documents (as defined in the Original Credit Agreement) as hereinafter provided. NOW, THEREFORE, for and in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. All terms used in this Amendment, but not defined herein, shall have the meaning given such terms in the Amended Credit Agreement. 2. This Amendment shall become effective as of the Amendment Date if on or prior to the close of business on April 14, 2000 (the "Termination Date") the following conditions precedent have been satisfied: a. Documentation. The Documentation Agent shall have received ------------- counterparts of this Amendment executed by the Borrower, the Guarantors and the Super Required Lenders. b. Representations and Warranties. The representations and ------------------------------ warranties contained in this Amendment, and in each Credit Document shall be true and correct in all material respects both as of the Amendment Date and the date the other conditions to this Amendment's effectiveness are satisfied except for changes which individually or in the aggregate do not constitute a Material Adverse Change. 1 c. No Default No Default or Event of Default shall exist as of ---------- either the Amendment Date or the date the other conditions to this Amendment's effectiveness are satisfied. If this Amendment does not become effective prior to the Termination Date, this Amendment shall be null and void; provided however that the Borrower shall still -------- be obligated to reimburse Societe Generale, Southwest Agency for costs and expenses incurred in connection with this Amendment. 3. The term "Credit Agreement" as used in the Credit Documents, shall mean the Amended Credit Agreement, as amended by this Amendment. 4. From and after the Amendment Date to the Conversion Date, Section 7.04 of the Credit Agreement is deleted in its entirety and replaced with the following: "Section 7.04 Leverage Ratio. The Parent shall not on any date permit -------------- the Leverage Ratio to exceed (a) prior to January 1, 2000, 5.5 to 1.0, (b) from January 1, 2000 through June 30, 2001, 5.30 to 1.0, (c) from July 1, 2001 through June 30, 2002, 5.0 to 1.0, and (d) on and after July 1, 2002, 4.5 to 1.0." On the Conversion Date, the new Section 7.04 of the Credit Agreement set forth in this Amendment shall be deleted in its entirety and replaced with the original Section 7.04 of the Original Credit Agreement. 5. From and after the Amendment Date, Section 7.02 of the Credit Agreement is deleted in its entirety and replaced with the following: "Section 7.02 Fixed Charge Coverage Ratio. The Parent shall maintain --------------------------- at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through March 31, 1999, a Fixed Charge Coverage Ratio of not less than 1.85 to 1.0, (b) for the Rolling Periods ending on June 30, 1999 through December 31, 2001. a Fixed Charge Coverage Ratio of not less than 2.00 to 1.0, (c) for any Rolling Period thereafter, a Fixed Charge Coverage Ratio of not less than 1.80 to 1.0." 6. Each party hereto represents to the other parties hereto that such party is authorized to execute this Amendment. In addition, the Borrower and the Guarantors represent and warrant to the Banks and the Agents that (a) the representations and warranties contained in this Amendment, and in each Credit Document are true and correct in all material respects as of the Amendment Date except for changes which individually or in the aggregate do not constitute a Material Adverse Change and (b) no Default or Event of Default exists as of the Amendment Date. 7. This Amendment may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one Amendment. 2 [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] Executed as of the Amendment Date. BORROWER: --------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery ------------------------------------- Name:____________________________________ Title: Chief Financial Officer ---------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] JOINDER, CONSENT AND RATIFICATION The Guarantors join in and consent to the terms and provisions of the attached Amendment and agree that the Guaranty and Contribution Agreement (the "Guaranty") executed by the Guarantor dated August 3, 1998 remains in full force and effect and that the Guaranteed Obligations (as defined in the Guaranty) include the additional obligations of the Borrower under the attached Amendment. This Joinder, Consent and Ratification is dated as of the date of the Amendment. GUARANTORS: MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ John Emery ------------------------------------ Name: ---------------------------------- Title: Chief Financial Officer --------------------------------- MERISTAR LP, INC., a Nevada corporation By: /s/ John Emery ------------------------------------ Name: ---------------------------------- Title: Chief Financial Officer --------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery ---------------------------------- Name:_________________________________ Title: Chief Financial Officer -------------------------------- AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, member By: /s/ John Emery ---------------------------------- Name:_________________________________ Title Chief Financial Officer -------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery ----------------------------------- Name:_________________________________ Title: Chief Financial Officer -------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR SANIBEL INN COMPANY, L.L.C. MERISTAR MARCO ISLAND COMPANY, L.L.C. MERISTAR SAFETY HARBOR COMPANY, L.L.C. MERISTAR SUNDIAL BEACH COMPANY, L.L.C. MERISTAR SS PLANTATION COMPANY, L.L.C. MERISTAR SHIRLEY'S PARCEL COMPANY, L.L.C. MERISTAR SEASIDE INN COMPANY, L.L.C. MERISTAR SANIBEL BEACH COMPANY, L.L.C. MERISTAR PLANTATION SHOPPING CENTER COMPANY, L.L.C. MERISTAR SONG OF THE SEA COMPANY, L.L.C. MERISTAR SANIBEL GOLF COMPANY, L.L.C., each of the above being a Delaware limited liability company By: /s/ John Emery ----------------------------------------------------- Name: --------------------------------------------------- Title: Chief Financial Officer -------------------------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] EQUISTAR SOMERSET COMPANY, L.L.C. EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CHARLOTTE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR SANTA BARBARA COMPANY, L.L.C. CAPSTAR C.S. COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR CATHEDRAL CITY COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR LAJV COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C., each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery --------------------------------- Name: ------------------------------- Title: Chief Financial Officer ------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P., each of the above being a Delaware limited partnership CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION MIDLAND PARTNERS, L.P., each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery ---------------------------------- Name:________________________________ Title: Chief Financial Officer ------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery --------------------------- Name:_________________________ Title: Chief Financial Officer ------------------------ By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery --------------------------- Name:_________________________ Title: Chief Financial Officer ------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, member By: MeriStar Hospitality Corporation, member By: /s/ John Emery -------------------------------- Name: ------------------------------ Title: Chief Financial Officer ----------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery -------------------------------- Name: ------------------------------ Title: Chief Financial Officer ----------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery -------------------------------- Name: ------------------------------ Title: Chief Financial Officer ----------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, partner By: MeriStar Hospitality Corporation, member By: /s/ John Emery -------------------------------- Name: ------------------------------ Title: Chief Financial Officer ----------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery --------------------------- Name: ------------------------- Title: Chief Financial Officer ------------------------ By: MeriStar Hospitality Operating Partnership, L.P., partner By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery -------------------------------- Name: ------------------------------ Title: Chief Financial Officer ----------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MT. ARLINGTON NEW JERSEY, LLC, a Delaware limited partnership MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership RICHMOND WILLIAMSBURG ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, general partner By: MeriStar Hospitality Corporation, member By: /s/ John Emery ---------------------------------------- Name:______________________________________ Title: Chief Financial Officer ------------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery ----------------------------------- Name:_________________________________ Title: Chief Financial Officer -------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ John Emery --------------------------------------------- Name: ___________________________________________ Title: Chief Financial Officer ------------------------------------------ AGH 75 ARLINGTON HEIGHTS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ John Emery -------------------------------- Name: ______________________________ Title: Chief Financial Officer ----------------------------- AGH PSS I, Inc., a Delaware corporation By: /s/ John Emery ------------------------------------------ Name: ________________________________________ Title: Chief Financial Officer --------------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Am South Bank ------------------------------------ By: /s/ Arthur J. Sharbel, III --------------------------------- Name: Arthur J. Sharbel, III ------------------------------- Title: Vice President ------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Bank Leumi USA ---------------------------------------- By: /s/ Charles C. D'Amico ------------------------------------ Name: Charles C. D'Amico ---------------------------------- Title: Vice President --------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: THE BANK OF NOVA SCOTIA, acting through its San Francisco Agency By: /s/ Abid Gilani --------------------------- Name: Abid Gilani ------------------------ Title: Director ----------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER Fleet National Bank -------------------------------- By: /s/ Lori Y. Litow ----------------------------- Name: Lori Y. Litow --------------------------- Title: Vice President -------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: Bank One, NA ---------------------------------------- By: /s/ Dennis J. Redpath ------------------------------------- Name: DENNIS J. REDPATH ----------------------------------- Title: FIRST VICE PRESIDENT ---------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] BANKERS TRUST COMPANY, individually and as Arranger and Syndication Agent By: /s/ Laura S. Burwick -------------------------------------- Name: Laura S. Burwick ------------------------------------ Title: Principal ----------------------------------- CIBC World Markets By: /s/ Dean J. Decker ----------------------- Dean J. Decker Executive Director CIBC World Markets Corp,. AS AGENT [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Citicorp Real Estate, Inc. ----------------------------- By: /s/ Michael Chlopak --------------------------- Name: Michael Chlopak ------------------------- Title: Vice President ------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Dresdner Bank AG, NY Branch and Grand Cayman Branches ________________________________________ By: /s/ Michael Seton /s/ David Sarner ------------------------------------- Name: MICHAEL SETON DAVID SARNER ----------------------------------- Title: VICE PRESIDENT ASSISTANT TREASURER --------------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Erste Bank /s/ Paul Judicke ----------------------------------------- By: Paul Judicke -------------------------------------- Name: Vice President ------------------------------------ Title: Erste Bank New York Branch ----------------------------------- /s/ John S. Runnion JOHN S. RUNNION FIRST VICE PRESIDENT [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: First American Bank Texas, S.S.B. ----------------------------------- By: /s/ David A. Barr -------------------------------- Name: David A. Barr ------------------------------ Title: Vice President ---------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: GENERAL ELECTRIC CAPITAL CORPORATION ---------------------------------------- By: /s/ Karl Kiefer ------------------------------------- Name: KARL KIEFFER ----------------------------------- Title: DULY AUTHORIZED SIGNATORY ---------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Arranger and Administrative Agent By: /s/ Huvishka Ali --------------------------------- Name: Huvishka Ali ------------------------------- Title: Vice President ------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: BANK OF AMERICA, N.A. BY: /s/ ANSEL MCDOWELL --------------------------------- NAME: ANSEL MCDOWELL ------------------------------- TITLE: VICE PRESIDENT ------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent By: /s/ James A. McCartney --------------------------------- Name: James A. McCartney ------------------------------- Title: Vice President ------------------------------ [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] SOUTHTRUST BANK, N.A. By: /s/ Robert M. Searson --------------------------------- Name: ROBERT M. SEARSON ------------------------------- Title: VICE PRESIDENT ------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: FIRST COMMERCIAL BANK -------------------------------- By: /s/ Bruce Ju ----------------------------- Name: BRUCE JU --------------------------- Title: DEPUTY GENERAL MANAGER -------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: CypressTree Investment Partners I, Ltd. By: CypressTree Investment Management Company, Inc, as Portfolio Manager By: /s/ Jonathan D. Sharkey --------------------------------------- Name: JONATHAN D. SHARKEY ------------------------------------- Title: PRINCIPAL ------------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: CypressTree Investment Partners II, Ltd. By: CypressTree Investment Management Company, Inc, as Portfolio Manager By: /s/ Jonathan D. Sharkey --------------------------------------- Name: JONATHAN D. SHARKEY ------------------------------------- Title: PRINCIPAL ------------------------------------ 18 [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: CypressTree Investment Fund, LLC By: CypressTree Investment Management Company, Inc. its Managing Member By: /s/ Jonathan D. Sharkey --------------------------------------- Name: JONATHAN D. SHARKEY ------------------------------------- Title: PRINCIPAL ------------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: CypressTree Investment Management Company, Inc. As: Attorney-in-Fact and on Behalf of First Allmerica Financial Life Insurance Company as Portfolio Manager By: /s/ Jonathan D. Sharkey --------------------------------------- Name: JONATHAN D. SHARKEY ------------------------------------- Title: PRINCIPAL ------------------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER Morgan Stanley Dean Witter Prime Income Trust --------------------------------------------- By: /s/ Peter Gewirtz ----------------------------------- Name: Peter Gewirtz ---------------------------------- Title: Vice President --------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] ML CLO XIX STERLING (CAYMAN) LTD. By: Sterling Asset Manager, L.L.C., As its investment Advisor By: /s/ Louis A. Fistecher ---------------------------- Name: Louis A. Fistecher ------------------------- Title: Executive Vice President ------------------------ [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Mountain Capital CLO I Ltd. -------------------------------- By: /s/ Darren P. Riley ---------------------------- Name: Darren P. Riley -------------------------- Title: Director ------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: Kemper Floating Rate Fund ---------------------------------- By: /s/ Jonathan W. Trutter ----------------------------------- Name: JONATHAN W. TRUTTER --------------------------------- Title: MD -------------------------------- OLYMPIC FUNDING TRUST, SERIES 1999-1 as Lender /s/ Kelly C. Walker ------------------------------------- Kelly C. Walker Authorized Agent [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: HARCH CLD I Ltd. ----------------------------- By: /s/ Michael E. Lewitt -------------------------- Name: Michael E. Lewitt ------------------------ Title: AUTHORIZED SIGNATORY ----------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: CARAVELLE INVESTMENT FUND, L.L.C. -------------------------------------- By: CARAVELLE ADVISORS, L.L.C. By: /s/ [ILLEGIBLE] ----------------------------------- Name: [ILLEGIBLE] --------------------------------- Title: M.D. -------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: ELC (Cayman) LTD. 1999-III -------------------------- By: /s/ John W. Stelwagor -------------------------- Name: John W. Stelwagor ------------------------ Title: Director ----------------------- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH CRESCENT LLC By: /s/ Susan Lee ----------------------------- Name: Susan Lee --------------------------- Title: Authorized Agent -------------------------- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH CRESCENT-2 LLC By: /s/ Susan Lee ----------------------------- Name: Susan Lee --------------------------- Title: Authorized Agent -------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH CRESCENT 3 LLC By: /s/ Susan Lee ------------------------------ Name: Susan Lee ---------------------------- Title: Authorized Agent --------------------------- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH ING-2 LLC By: /s/ Susan Lee ------------------------------ Name: Susan Lee ---------------------------- Title: Authorized Agent --------------------------- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH PONDVIEW LLC By: /s/ Susan Lee ------------------------------ Name: Susan Lee ---------------------------- Title: Authorized Agent --------------------------- [SIGNATURE PAGE OF FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH RIVERSIDE LLC By: /s/ Susan Lee ------------------------------------- Name: Susan Lee ----------------------------------- Title: Authorized Agent ---------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] KZH III LLC By: /s/ Susan Lee ------------------------------------- Name: Susan Lee ----------------------------------- Title: Authorized Agent ---------------------------------- [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER OASIS COLLATERALIZED HIGH INCOM PORTFOLIOS-I, LTD. By: INVESCO Senior Secured Management, Inc., as Sub-Advisor By: /s/ Anne M. McCarthy ------------------------------------- Name: Anne M. McCarthy Title: Authorized Signatory [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER AMARA-2 FINANCE, LTD. By: INVESCO Senior Secured Management, Inc., as Sub-Advisor By: /s/ Anne M. McCarthy ------------------------------------- Name: Anne M. McCarthy Title: Authorized Signatory [SIGNATURE PAGE OF SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT] LENDER: AMARA-I FINANCE, LTD. By: INVESCO Senior Secured Management, Inc., as Sub-Advisor By: /s/ Anne M. McCarthy ------------------------------ Name: Title: Anne M. McCarthy Authorized Signatory EX-10.2.3 22 dex1023.txt EXHIBIT 10.2.3 Exhibit 10.2.3 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "Amendment"), dated as of January 1, 2001 (the "Amendment Date"), is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, as the Borrower ("Borrower"); the Guarantors; SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger and Administrative Agent (the "Administrative Agent"); and the Lenders a party hereto. RECITALS: A. The Borrower; the Administrative Agent; Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National Association, as Documentation Agent; and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of August 3, 1998 (the "Original Credit Agreement"), as amended by that certain First Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 3, 1999, as further amended by that certain Second Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 31, 2000 (the Original Credit Agreement, as so amended, being referred to herein as the "Amended Credit Agreement"). B. Certain amendments, known as the REIT Modernization Act (the "RMA"), have been enacted with respect to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, which, among other things, permit a Real Estate Investment Trust to create a "Taxable REIT Subsidiary" (a "TRS") and to lease its properties to a TRS. C. The Borrower desires to consummate the RMA Conversion (as hereinafter defined) and related transactions as more fully set forth in this Amendment. D. In consideration of the foregoing, the parties hereto desire to amend the Amended Credit Agreement and the other Credit Documents (as defined in the Original Credit Agreement) as hereinafter provided. NOW, THEREFORE, for and in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. All terms used in this Amendment, but not defined herein, shall have the meaning given such terms in the Amended Credit Agreement. 2. This Amendment shall become effective as of the Amendment Date if on or prior to the close of business on January 20, 2001 (the "Termination Date") the following conditions precedent have been satisfied: a. Documentation. The Administrative Agent shall have received -------------- counterparts of this Amendment executed by the Borrower, the Required Lenders. b. Representations and Warranties. The representations and warranties ------------------------------ contained in this Amendment, and in each Credit Document shall be true and correct in all material respects both as of the Amendment Date and the date the other conditions to this Amendment's effectiveness are satisfied except for changes which individually or in the aggregate do not constitute a Material Adverse Change. c. No Default. No Default or Event of Default shall exist as of either ---------- the Amendment Date or the date the other conditions to this Amendment's effectiveness are satisfied. If this Amendment does not become effective prior to the Termination Date, this Amendment shall be null and void; provided however that the Borrower shall still -------- be obligated to reimburse Societe Generale, Southwest Agency for costs and expenses incurred in connection with this Amendment. 3. The term "Credit Agreement" as used in the Credit Documents, shall mean the Amended Credit Agreement, as amended by this Amendment. 4. From and after the Amendment Date, the definition of "Approved Participating Lease" is amended and restated in its entirety to read as follows: "Approved Participating Lease means (a) a participating lease with an ---------------------------- Approved Operator in substantially the form of those participating leases executed in connection with the Merger, (b) a participating lease with a direct or indirect TRS of the Borrower in substantially the form of the participating leases executed in connection with the Merger, as modified by those amendments contemplated in connection with the RMA Conversion, or (c) such other form as is approved by the Administrative Agent in writing (which approval shall not be unreasonably withheld)." 5. In all places in the Credit Documents, including the definition contained in Section 1.01 of the Credit Agreement, the defined term "Approved Operator" shall replace the defined term "Approved Participating Lessee". Contemporaneously with such substitution, the definition of "Approved Operator" is amended by adding the phrase ", OPCO Management" after the phrase "OPCO OP". 6. From and after the Amendment Date, the definition of "Intercompany Agreement" is amended and restated in its entirety to read as follows: "Intercompany Agreement means the Intercompany Agreement dated as of ---------------------- August 3, 1998, by and among the Parent, the Borrower, OPCO, and OPCO OP, as amended by the Approved Amendment to Intercompany Agreement." -2- 7. From and after the Amendment Date, the definition of "Permitted Other Subsidiaries" is amended by adding the following sentence at the end of such definition: "The parties acknowledge that a TRS (a) which is a lessee for a Hotel Property that secures either Secured Non-Recourse Indebtedness or Secured Recourse Indebtedness permitted pursuant to the Credit Agreement and (b) which is not a lessee for any Hotel Property which does not secure any of such Indebtedness is deemed to be a Permitted Other Subsidiary." 8. From and after the Amendment Date, the Credit Agreement shall have the following additional defined terms added in the appropriate alphabetical order in Section 1.01 of the Credit Agreement: a. "Approved Amendment to Intercompany Agreement" means a -------------------------------------------- fully-executed Amendment to Intercompany Agreement dated as of January 1, 2001, substantially in the form provided to the Administrative Agent and the Lenders. b. "Approved Management Agreement" means a management agreement (i) in ----------------------------- substantially the form of those management agreements being executed in connection with the initial Hotel Properties participating in the RMA Conversion, between a direct or indirect TRS of the Borrower and an Approved Operator, a form otherwise customary in the Hospitality/Leisure-Related Business or such other form as is approved by the Administrative Agent in writing (which approval shall not be unreasonably withheld) and (ii) either subject to the terms of the Approved Master Amendment or subject to terms otherwise customary in the Hospitality/Leisure-Related Business. c. "Approved Master Amendment" means the Master Amendment to Hotel ------------------------- Management Agreement dated as of even date as the initial Approved Management Agreements, substantially in the form provided to the Administrative Agent and the Lenders, by and between the initial direct or indirect TRSs of the Borrower and the initial Approved Operators party to the initial Approved Management Agreements, as amended as permitted in this Agreement, including executing an additional Master Amendment to Master Agreements with respect to Hotel Properties which act as security for Secured Non-Recourse Indebtedness or Secured Recourse Indebtedness permitted pursuant to this Agreement. d. "OPCO Management" means MeriStar Management Company, L.L.C. --------------- e. "RMA" means the REIT Modernization Act, as amended. --- f. "RMA Conversion" means, the Borrower and Borrower's Subsidiaries -------------- entering into a set of transactions with respect to any Hotel Property owned or leased by such Person pursuant to which (a) the existing Approved Operator for such Hotel Property assigns such Approved Operator's interests in the Approved Participating Lease -3- for such Hotel Property to a direct or indirect TRS of the Borrower, (b) such assigned Approved Participating Lease is amended to provide for economic terms which the Borrower in good faith believes are consistent with the requirements of the RMA, (c) the TRS who is assigned the Approved Participating Lease for such Hotel Property enters into an Approved Management Agreement for such Hotel Property with an Approved Operator which has an initial term substantially equivalent to the initial term of the Approved Participating Lease that was assigned. g. "TRS" means a "Taxable REIT Subsidiary" as such term is used in the --- RMA. 9. From and after the Amendment Date and at such time or times as the Borrower may elect, the Borrower and Borrower's Subsidiaries shall be permitted to consummate RMA Conversions with respect to all or any portion of such Persons' Hotel Properties. 10. From and after the Amendment Date, each of Section 5.02(c) and 5.02(d) are amended by adding the phrase "either (y) is an Approved Operator of a Hotel Property which secures Secured Non-Recourse Indebtedness or Secured Recourse Indebtedness or (z)" after the phrase "Permitted Other Subsidiaries which" in the first sentence of each such section. 11. From and after the Amendment Date, Section 5.09 of the Credit Agreement is amended by (a) adding the phrase "(other than a TRS)" after the phrase Approved Operator in the second line of such Section 5.09 and (b) adding the phrase "or an Approved Management Agreement, as applicable" after each time the phrase "Approved Participating Lease" is used in such Section 5.09. 12. From and after the Amendment Date, Section 6.07 of the Credit Agreement is amended by (a) deleting the word "and" at the end of clause (k), (b) changing clause "(l)" to clause "(m)", and (c) adding a new clause (l) which reads as follows: "(l) a direct or indirect TRS of the Borrower for which the Borrower owns directly or indirectly ownership interests in such Subsidiary of at least ninety-five percent (95%), provided that if for any Hotel Property the Borrower's direct or indirect ownership interests percentage is less than ninety-five percent (95%), then the Borrower's ownership percentage requirement for the TRS for such Hotel Property shall only be a percentage equal to or greater than the Borrower's direct or indirect ownership interests percentage for such Hotel Property; and". 13. From and after the Amendment Date, Section 6.08 is amended by adding the phrase ", the Approved Management Agreements" after the phrase "the Approved Participating Lease Agreements". 14. The Lenders and Arrangers party hereto consent to the Approved Amendment to Intercompany Agreement referenced above. -4- 15. From and after the Amendment Date, Section 6.12 of the Credit Agreement is amended and restated in its entirety to read as follows: "Section 6.12. Material Documents. The Borrower will not, nor will it ------------------ permit any of its Subsidiaries to without the Required Lender's written consent (a) amend the Borrower's partnership agreement in any material respect, (b) admit a new general partner to the Borrower, or (c) enter into any termination, material modification or amendment of any of the following: (i) the Intercompany Agreement; (ii) the Approved Master Amendment which governs those Hotel Properties which do not secure Secured Non-Recourse Indebtedness or Secured Recourse Indebtedness; or (iii) the Merger Agreement. Notwithstanding the foregoing, without the Required Lender's approval the Borrower will be able to amend the aforementioned Approved Master Amendment to (a) add a Hotel Property to such agreement which the Borrower and the Borrower's Subsidiaries are permitted to invest in under this Credit Agreement, (b) delete a Hotel Property from such agreement, provided that the Hotel Property either (i) is disposed of pursuant to a Permitted Asset Disposition or (ii) on or about such deletion from the Approved Master Amendment the TRS for such Hotel Property enters into an Approved Management Agreement for such Hotel Property with an Approved Operator, (c) release a TRS or Approved Operator, as applicable, from its rights and obligations under the Approved Master Amendment, provided such TRS or Approved Operator, as applicable, no longer is a party to any Approved Management Agreement for any Hotel Property that is subject to the Approved Master Amendment or (d) add a TRS or Approved Operator, as applicable, as a party to the Approved Master Amendment. With respect to Approved Participating Leases which have not been part of a RMA Conversion, the Borrower will not, nor will it permit any of its Subsidiaries to (a) without the written consent of two out of the three Arrangers amend or terminate (except in connection with a Permitted Asset Disposition) an Approved Participating Lease if the net affect of all such amendments and terminations of such Approved Participating Leases is reasonably expected to decrease the expected rentals under all of such Approved Participating Leases taken as a whole by more than 10% of the pro forma rentals for 1997 set forth in the Registration Statements, taking into account acquisitions and dispositions after the Closing Date or (b) without the written consent of the Super Required Lenders amend or terminate (except in connection with a Permitted Asset Disposition) an Approved Participating Lease if the net affect of all such amendments and terminations of such Approved Participating Leases is reasonably expected to either (a) cause the Borrower to violate a covenant in Article VII or (b) cause the expected rentals under all of such Approved Participating Leases taken as a whole to decrease by more than 20% of -5- the pro forma rentals for 1997 set forth in the Registration Statements, taking into account acquisitions and dispositions after the Closing Date. With respect to Approved Participating Leases which have been part of a RMA Conversion, the Borrower will not, nor will it permit any of its Subsidiaries to amend or terminate any such Approved Participating Lease if such event is reasonably likely to cause the Parent to forfeit the Parent's status as a REIT. Any termination, modification or amendment prohibited under this Section 6.12 without the required written consent shall, to the extent permitted by applicable law, be void and of no force and effect." 16. Within ten (10) Business Days of any Hotel Property participating in an RMA Conversion, the Borrower will provide to the Administrative Agent with respect to such Hotel Property (a) a copy of a fully-executed Amendment to Intercompany Agreement and Approved Master Amendment if not already provided to the Administrative Agent, (b) the name of the TRS who will be the Approved Operator for such Hotel Property, (c) a copy of a fully-executed assignment of the Approved Participating Lease to such TRS, any amendment of such assigned Approved Participating Leases and the Hotel Management Agreement, and (d) if the TRS leasing such Hotel Property is not already executed an Accession Agreement and is not a Permitted Other Subsidiary, an Accession Agreement executed by such TRS. 17. Each party hereto represents to the other parties hereto that such party is authorized to execute this Amendment. 18. The Borrower and the Guarantors represent and warrant to the Lenders and the Agents that: a. the representations and warranties contained in this Amendment, and in each Credit Document are true and correct in all material respects as of the Amendment Date except for changes which individually or in the aggregate do not constitute a Material Adverse Change; b. no Default or Event of Default exists as of the Amendment Date; c. to the best of the Borrower's and the Guarantors' knowledge, Exhibit "A" to this Amendment contains (i) a true and correct schedule of all Hotel Properties owned or leased by the Borrower and the Guarantors which the Borrower intends to initially cause to undergo an RMA Conversion, (ii) a reasonable estimate of the anticipated aggregate revenues from those Hotel Properties for the Fiscal Year 2001, and (iii) a reasonable estimate of the anticipated aggregate management fees payable in connection with those Hotel Properties for the Fiscal Year 2001; d. the Borrower has provided the Administrative Agent and the Lenders with a true and correct copy of the form of the Approved Amendment to the Intercompany -6- Agreement and the Approved Master Amendment; e. OPCO OP owns directly or indirectly ownership interests in OPCO Management of at least ninety-five percent (95%); and f. Each TRS acting as an Approved Participating Lessee for the Hotel Properties listed on Exhibit "A" will not be a Permitted Other Subsidiary. 19. This Amendment may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one Amendment. Facsimile signatures will be deemed to be original signatures. -7- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] Executed as of the Amendment Date. BORROWER: --------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By: /s/ Paul Whetsell ------------------------------------ Name: Paul Whetsell ------------------------------------ Title: Chief Executive Officer ------------------------------------ -8- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] JOINDER, CONSENT AND RATIFICATION The Guarantors join in and consent to the terms and provisions of the attached Amendment and agree that the Guaranty and Contribution Agreement (the "Guaranty") executed by the Guarantor dated August 3, 1998 remains in full force and effect and that the Guaranteed Obligations (as defined in the Guaranty) include the additional obligations of the Borrower under the attached Amendment. This Joinder, Consent and Ratification is dated as of the date of the Amendment. GUARANTORS: MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By: /s/ Paul Whetsell ------------------------------------ Name: Paul Whetsell ------------------------------------ Title: Chief Executive Officer ------------------------------------ MERISTAR LP, INC., a Nevada corporation By: /s/ Paul Whetsell ------------------------------------ Name: Paul Whetsell ------------------------------------ Title: Chief Executive Officer ------------------------------------ -9- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ Paul Whetsell ------------------------------------ Name: Paul Whetsell ------------------------------------ Title: Chief Executive Officer ------------------------------------ AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, member By: /s/ Paul Whetsell ---------------------------------------- Name: Paul Whetsell ---------------------------------------- Title: Chief Executive Officer ---------------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ----------------------------------- -10- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR SANIBEL INN COMPANY, L.L.C. MERISTAR MARCO ISLAND COMPANY, L.L.C. MERISTAR SAFETY HARBOR COMPANY, L.L.C. MERISTAR SUNDIAL BEACH COMPANY, L.L.C. MERISTAR SS PLANTATION COMPANY, L.L.C. MERISTAR SHIRLEY'S PARCEL COMPANY, L.L.C. MERISTAR SEASIDE INN COMPANY, L.L.C. MERISTAR SANIBEL BEACH COMPANY, L.L.C. MERISTAR PLANTATION SHOPPING CENTER COMPANY, L.L.C. MERISTAR SONG OF THE SEA COMPANY, L.L.C. MERISTAR SANIBEL GOLF COMPANY, L.L.C., each of the above being a Delaware limited liability company By: /s/ Paul Whetsell -------------------------------------- Name: Paul Whetsell -------------------------------------- Title: Chief Executive Officer -------------------------------------- -11- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] EQUISTAR SOMERSET COMPANY, L.L.C. EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CHARLOTTE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR SANTA BARBARA COMPANY, L.L.C. CAPSTAR C.S. COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR CHERRY HILL COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR CATHEDRAL CITY COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR LAJV COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C., each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ Paul Whetsell ------------------------------------------ Name: Paul Whetsell -------------------------------------- Title: Chief Executive Officer -------------------------------------- -12- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P., each of the above being a Delaware limited partnership CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION MIDLAND PARTNERS, L.P., each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, its general partner By: /s/ Paul Whetsell ------------------------------------------- Name: Paul Whetsell ---------------------------------------- Title: Chief Executive Officer ---------------------------------------- -13- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, member By: MeriStar Hospitality Corporation, member By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- -14- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, partner By: MeriStar Hospitality Corporation, member By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., partner By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- -15- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MT. ARLINGTON NEW JERSEY, LLC, a Delaware limited partnership MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership RICHMOND WILLIAMSBURG ASSOCIATES, LTD., a Texas limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, general partner By: MeriStar Hospitality Corporation, member By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ----------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- -16- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By: /s/ Paul Whetsell ------------------------------------- Name: Paul Whetsell ----------------------------------- Title: Chief Executive Officer ---------------------------------- AGH 75 ARLINGTON HEIGHTS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By: /s/ Paul Whetsell ------------------------------------------ Name: Paul Whetsell --------------------------------------- Title: Chief Executive Officer --------------------------------------- AGH PSS I, INC., a Delaware corporation By: /s/ Paul Whetsell ------------------------------------------ Name: Paul Whetsell --------------------------------------- Title: Chief Executive Officer --------------------------------------- -17- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Arranger and Administrative Agent By: /s/ Thomas K. Day ------------------------------------- Name: Thomas K. Day ---------------------------------- Title: Managing Director ---------------------------------- -18- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BANKERS TRUST COMPANY, individually and as Arranger and Syndication Agent By: /s/ Laura Burinck ------------------------------------- Name: Laura Burinck ---------------------------------- Title: Principal ---------------------------------- -19- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ James A McCartney ------------------------------------ Name: James A. McCartney ---------------------------------- Title: Vice President --------------------------------- -20- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER Fleet National Bank --------------------------------- By: /s/ Lori Y. Litow ------------------------------ Name: Lori Y. Litow ---------------------------- Title: Director --------------------------- -21- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] THE BANK OF NOVA SCOTIA, acting through its San Francisco Agency By: /s/ Abid Gilani --------------------------------- Name: Abid Gilani ------------------------------- Title: Managing Director ------------------------------ -22- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BANK OF AMERICA, (f/k/a NationsBank, N.A.) By: /s/ Ansel McDowell ----------------------------------- Name: Ansel McDowell --------------------------------- Title: Vice President -------------------------------- -23- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LEHMAN COMMERCIAL PAPER, INC., individually and as Arranger and Documentation Agent By: /s/ Francis X. Gilhoul ---------------------------------- Name: Francis X. Gilhoul -------------------------------- Title: Authorized Signatory ------------------------------- -24- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BANK ONE, NA By: /s/ Dennis J. Redpath ---------------------------------- Name: Dennis J. Redpath -------------------------------- Title: FIRST VICE PRESIDENT ------------------------------- -25- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER GENERAL ELECTRIC CAPITAL CORPORATION ------------------------------------ By: /s/ Karl Kieffer ---------------------------------- Name: Karl Kieffer -------------------------------- Title: DULY AUTHORIZED SIGNATORY ------------------------------- -26- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] ERSTE BANK, DER OESTERREICHISCHEN SPARKASSEN AG By: /s/ Paul Judicke ---------------------------------- Paul Judicke, Vice President By: /s/ John Runnion ---------------------------------- John Runnion, First Vice President -27- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H CNC LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -28- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H Crescent LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -29- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H Crescent-2 LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -30- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H Crescent - 3 LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -31- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H Pondview LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -32- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: K2H WaterSide LLC ------------------------------------ By: /s/ Kimberly Rowe ---------------------------------- Name: KIMBERLY ROWE -------------------------------- Title: AUTHORIZED AGENT ------------------------------- -33- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] SEQUILS IV. LTD. By: TCW Advisors, Inc. as its Collateral Manager By: /s/ Mark Gold -------------------------------- Name: Mark Gold Title: Managing Director By: /s/ Jonathan Berg -------------------------------- Name: Jonathan Berg Title: Senior Vice President -34- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] SEQUILS I. LTD. By: TCW Advisors Inc. as its Collateral Manager By: /s/ Mark L. Gold -------------------------------- Name: Mark L. Gold Title: Managing Director By: /s/ Jonathan Berg -------------------------------- Name: Jonathan Berg Title: Senior Vice President -35- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] TCW Leveraged Income Trust, L.P. by: TCW Advisors (Bermuda) Ltd., as General Partner By: /s/ Mark L. Gold -------------------------------- Name: Mark L. Gold Title: Managing Director By: TCW Investment Management Company, as Investment Advisor By: /s/ Jonathan Berg -------------------------------- Name: Jonathan Berg Title: Senior Vice President -36- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] TCW LEVERAGED INCOME TRUST, IV, L.P. By: TCW (LINC IV), L.L.P. as General Partner By: TCW ASSET MANAGEMENT COMPANY, as managing member of the General Partner By: /s/ Mark L. Gold -------------------------------- Name: Mark L. Gold Title: Managing Director By: /s/ Jonathan Berg -------------------------------- Name: Jonathan Berg Title: Senior Vice President -37- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] Crescent/Mach I Partners, L.P., by: TCW Asset Management Company, its Investment Managers By: /s/ Mark L. Gold -------------------------- Mark L. Gold Managing Director -38- [SIGNATURE PAGE OF THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] TCW Leveraged Income Trust II, L.P. by: TCW Advisors (Bermuda), Ltd., as General Partner By: /s/ Mark L. Gold ------------------------------------- Name: Mark L. Gold Title: Managing Director By: TCW Investment Management Company, as Investment Advisor By: /s/ Jonathan Berg ------------------------------------ Name: Jonathan Berg Title: Senior Vice President -39- EX-10.2.4 23 dex1024.txt EXHIBTI 10.2.4 Exhibit 10.2.4 FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "Amendment"), dated as of December 14, 2001 (the "Amendment Date"), is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, as the Borrower ("Borrower"); the Guarantors; SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger and Administrative Agent (the "Administrative Agent"); and the Lenders a party hereto. RECITALS: A. The Borrower; the Administrative Agent; Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National Association, as Documentation Agent; and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of August 3, 1998 (the "Original Credit Agreement"), as amended by that certain First Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 3, 1999, as further amended by that certain Second Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 31, 2000, as further amended by that certain Third Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of January 1, 2001 (the Original Credit Agreement, as so amended, being referred to herein as the "Credit Agreement"). B. The Borrower, the Administrative Agent and the Lenders party thereto executed that certain Waiver to Second Amended and Restated Senior Secured Credit Agreement (the "Waiver"), dated as of September 30, 2001. C. The Borrower desires that the Borrower and the Lenders amend certain financial covenants in and other provisions of the Credit Agreement as more fully set forth in this Amendment and the Lenders party hereto desire to grant such amendment subject to the terms and conditions set forth in this Amendment. NOW, THEREFORE, for and in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. All terms used in this Amendment, but not defined herein, shall have the meaning given such terms in the Credit Agreement. 2. This Amendment shall become effective as of the Amendment Date if on or prior to the close of business on December 28, 2001 (the "Termination Date") the following conditions precedent have been satisfied: a. Documentation. The Administrative Agent shall have received ------------- counterparts of this Amendment executed by the Borrower, the Guarantors and the Super 1 Required Lenders. b. Representations and Warranties. The representations and warranties ------------------------------ contained in this Amendment, and in each Credit Document shall be true and correct in all material respects both as of the Amendment Date and the date the other conditions to this Amendment's effectiveness are satisfied except for changes which individually or in the aggregate do not constitute a Material Adverse Change. c. No Default. No Default or Event of Default shall exist as of either ---------- the Amendment Date or the date the other conditions to this Amendment's effectiveness are satisfied except for any such Default or Event of Default as is expressly waived or eliminated by this Amendment. If this Amendment does not become effective prior to the Termination Date, this Amendment shall be null and void; provided however that the Borrower shall still -------- be obligated to reimburse Societe Generale, Southwest Agency for costs and expenses incurred in connection with this Amendment. 3. The term "Credit Agreement" as used in the Credit Documents, shall mean the Amended Credit Agreement, as amended by this Amendment. 4. From and after the Amendment Date, the definition of "Applicable Margin" is amended by deleting in its entirety the table set forth in such definition and replacing such table with the following table:
Revolving Advances and Term A Advances Term B Advances ---------------------------------------- -------------------------- Unused Base Rate LIBOR Commitment Base Rate LIBOR Advances Advances Fee Advances Advances ------------ ---------- ----------- ------------ ----------- Level I 0% 2.00% .375% 1.50% 3.50% Status Level II .50% 2.50% .375% 1.50% 3.50% Status Level III 1.00% 3.00% .50% 1.50% 3.50% Status Level IV 1.50% 3.50% .50% 2.00% 4.00% Status Level V 2.00% 4.00% .50% 2.00% 4.00% Status
5. From and after the Amendment Date, the definition of "EBITDA" is amended by adding the phrase ", non-cash employee compensation up to $5,000,000 per Fiscal Year in the aggregate commencing with the 2002 Fiscal Year" after the word "amortization". 6. From and after the Amendment Date, the definition of "Maximum OPCO Loan Amount" is amended by replacing the number "5.5" with the phrase "an amount equal to (1) with respect to OPCO's EBITDA for any Rolling Period ended on or prior to June 30, 2001, 5.5, (2) with respect to OPCO's EBITDA for the Rolling Periods ended on September 30, 2001 and December 31, 2001, 6.75, (3) with respect to OPCO's EBITDA for the Rolling Period ended on March 31, 2002, 8.25, (4) with respect to OPCO's EBITDA for the Rolling Period ended on June 2 30, 2002, 7.75, and (5) with respect to OPCO's EBITDA for any Rolling Period ended thereafter, 7.00". 7. From and after the Amendment Date, the definition of "Status" is deleted in its entirety and replaced with the following: `"Status" means the existence of Level I Status, Level II Status, ------ Level III Status, Level IV Status, or Level V Status, as the case may be. As used in this definition: "Level I Status" exists at any date if, at such date, the -------------- Leverage Ratio at the end of the preceding Rolling Period is less than 4.0; "Level II Status" exists at any date if, at such date, the --------------- Leverage Ratio at the end of the preceding Rolling Period is equal to or greater than 4.0 but less than 4.5; "Level III Status" exists at any date if, at such date, the --------------- Leverage Ratio at the end of the preceding Rolling Period is equal to or greater than 4.5 but less than 5.0; "Level IV Status" exists at any date if, at such date, the --------------- Leverage Ratio at the end of the preceding Rolling Period is equal to or greater than 5.0 but less than 5.5; and "Level V Status" exists at any date if, at such date, the --------------- Leverage Ratio at the end of the preceding Rolling Period is equal to or greater than 5.5. Status shall be determined and changed as of the Status Reset Date following any Fiscal Quarter; provided that if the Borrower fails ------------- to timely provide the financial statements needed to recalculate the Leverage Ratio as required by the provisions of Section 5.05(a) prior to the 50th day following the end of any Fiscal Quarter, then Status shall automatically be reset at the Status one level higher than the Status existing immediately prior to such Status reset until such time as the Borrower provides such financial statements.' 8. Notwithstanding the definition of "Status Reset Date" or the other provisions of the Credit Agreement to the contrary, on the Amendment Date the Status under the Credit Agreement will be reset to Level V Status and such Status shall not be reduced until the next Status Reset Date following the Amendment Date. 9. From and after the Amendment Date, the following definitions shall be added to the Credit Agreement in the correct alphabetical order: "Additional Designated Senior Indebtedness" means, for the Parent ----------------------------------------- and its Subsidiaries, Senior Indebtedness of the Parent and its Subsidiaries (a) which is incurred after the Fourth Amendment Date, (b) for which the gross proceeds are equal to or greater than $200,000,000 but do not exceed $500,000,000, (c) which is not subject to financial covenants which are materially more onerous than the terms of the Credit Documents, (d) which is not subject to non-financial covenants or terms which are materially more onerous than the terms of the Other Existing Senior Indebtedness except as expressly permitted by this Amendment, (e) which does not prohibit the Parent or any of the Parent's Subsidiaries from granting Liens on any of such Person's assets to secure the 3 Obligations or any other Senior Indebtedness except as may be expressly permitted by the provisions of Section 6.11, and (f) for which the Net Cash Proceeds are used to repay the Obligations in accordance with the terms of this Agreement. "Base Revolver Limitation Amount" means (a) after the Amendment Date ------------------------------- but prior to September 30, 2002, $375,000,000, (b) on or after September 30, 2002, but prior to June 30, 2003, $350,000,000 and (c) on and after June 30, 2003, $300,000,000. "Fourth Amendment" means Fourth Amendment to Second Amended and ---------------- Restated Senior Secured Credit Agreement executed by the Borrower, the Administrative Agent and the Lenders party thereto. "Fourth Amendment Date" means the "Amendment Date" as such term is --------------------- used in the Fourth Amendment. "Non-Applied Cash Proceeds" means the difference of (a) any Net Cash ------------------------- Proceeds from a Repayment Event after the Fourth Amendment Date minus (b) ----- any Revolving Advances (but not in excess of the Net Cash Proceeds from such Repayment Event) requested by the Borrower within ten (10) days of such Repayment Event to make an optional prepayment of Advances as provided in Section 2.07(b). "Other Existing Senior Indebtedness" means the Parent's $300,000,000 ---------------------------------- of 9% Senior Notes with a maturity in 2008 and $200,000,000 of 9 1/8% Senior Notes with a maturity in 2011. "Quarterly Dividend Limitation" means: ----------------------------- (a) for cash distributions paid in the Fiscal Quarter ended December 31, 2001, the cash dividends declared and already paid by the Parent on or prior to the Fourth Amendment Date. (b) for cash distributions paid in the Fiscal Quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, the lesser of (i) $.01 per share of outstanding Parent Common Stock and (ii) $750,000. (c) for cash distributions paid in the Fiscal Quarter ended December 31, 2002, (i) if the Leverage Ratio at the time of such cash distribution based upon the EBITDA for the Rolling Period ended September 30, 2002 is less than 6.75 to 1.00, then $12,500,000, and (ii) if the Leverage Ratio is not so satisfied, then the lesser of (A) $.01 per share of outstanding Parent Common Stock and (B) $750,000. (d) for cash distributions paid in the Fiscal Quarter ended March 31, 2003, (i) if the Leverage Ratio at the time of such cash distribution based upon the EBITDA for the Rolling Period ended December 31, 2002 is less than 6.50 to 1.00, then $12,500,000, and (ii) if the Leverage Ratio is not so satisfied, then the lesser of (A) $.01 per share of outstanding Parent Common Stock and (B) $750,000. 4 (e) for cash distributions paid in the Fiscal Quarter ended June 30, 2003, (i) if the Leverage Ratio at the time of such cash distribution based upon the EBITDA for the Rolling Period ended March 31, 2003 is less than 6.25 to 1.00, then $15,000,000, and (ii) if the Leverage Ratio is not so satisfied, then the lesser of (A) $.01 per share of outstanding Parent Common Stock and (B) $750,000. (f) for cash distributions paid in any Fiscal Quarter thereafter, the lesser of (i) $.01 per share of outstanding Parent Common Stock and (ii) $750,000. "Senior Indebtedness" of any Person means any Indebtedness of such ------------------- Person and its Subsidiaries on a Consolidated basis which would be all or a part of such Person's Total Senior Indebtedness. "Senior Unsecured Leverage Ratio" means the ratio on any date of (a) ------------------------------- the Parent's Total Senior Unsecured Indebtedness on such date to (b) the Unencumbered EBITDA of the Parent and the Parent's Subsidiaries on a Consolidated basis for the Rolling Period immediately preceding such date, as Unencumbered EBITDA is adjusted for acquisitions and dispositions in the definition of "Leverage Ratio." "Subordinate Indebtedness" of any Person means any Indebtedness of ------------------------ such Person and its Subsidiaries on a Consolidated basis which would be all or a part of such Person's Total Subordinate Indebtedness. "Total Senior Unsecured Indebtedness" of any Person means all Total ----------------------------------- Senior Indebtedness of such Person and its Subsidiaries on a Consolidated basis which is Unsecured Indebtedness. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 5 10. From and after the Amendment Date, Sections 7.01 7.02, 7.04, 7.07 and 7.09 of the Credit Agreement are deleted in their entirety and replaced with the following in the applicable location in the Credit Agreement: "Section 7.01 Interest Coverage Ratio. The Parent shall maintain at ----------------------- the end of each Rolling Period for the Rolling Periods ending on the dates indicated in the following chart an Interest Coverage Ratio of not less than the amount set forth next to such dates: Ending Date of Rolling Period Interest Coverage Ratio --------------------------------------- --------------------------- September 30, 1998 through March 31, 1999 2.20 to 1.0 June 30, 1999 through June 30, 2001 2.50 to 1.0 September 30, 2001 2.10 to 1.0 December 31, 2001 1.80 to 1.0 March 31, 2002 1.60 to 1.0 June 30, 2002 1.50 to 1.0 September 30, 2002 1.45 to 1.0 December 31, 2002 1.55 to 1.0 March 31, 2003 1.65 to 1.0 June 30, 2003 1.75 to 1.0 September 30, 2003 2.00 to 1.0 For any Rolling Period thereafter 2.10 to 1.0" "Section 7.02 Fixed Charge Coverage Ratio. The Parent shall maintain --------------------------- at the end of each Rolling Period for the Rolling Periods ending on the dates indicated in the following chart an Fixed Charge Coverage Ratio of not less than the amount set forth next to such dates: Ending Date of Rolling Period Fixed Charge Coverage Ratio --------------------------------------- --------------------------- September 30, 1998 through March 31, 1999 1.85 to 1.0 June 30, 1999 through June 30, 2001 2.00 to 1.0 September 30, 2001 1.50 to 1.0 December 31, 2001 1.25 to 1.0 March 31, 2002 1.20 to 1.0 June 30, 2002 1.10 to 1.0 September 30, 2002 1.15 to 1.0 December 31, 2002 1.20 to 1.0 March 31, 2003 1.30 to 1.0 June 30, 2003 1.40 to 1.0 September 30, 2003 1.50 to 1.0 For any Rolling Period thereafter 1.60 to 1.0" 6 "Section 7.04 Leverage Ratio. The Parent shall not on any date permit -------------- the Leverage Ratio to exceed during the applicable period indicated in the following chart the amount set forth in such chart for such period: Applicable Period Leverage Ratio ----------------------------------------------- -------------- prior to January 1, 2000 5.50 to 1.0 from January 1, 2000 through September 30, 2001 5.30 to 1.0 from October 1, 2001 through December 31, 2001 5.85 to 1.0 from January 1, 2002 through March 31, 2002 6.85 to 1.0 from April 1, 2002 through September 30, 2002 7.25 to 1.0 from October 1, 2002 through December 31, 2002 7.10 to 1.0 from January 1, 2003 through March 31, 2003 6.75 to 1.0 from April 1, 2003 through June 30, 2003 6.50 to 1.0 from July 1, 2003 through September 30, 2003 6.00 to 1.0 from October 1, 2003 through December 31, 2003 5.75 to 1.0 On and after January 1, 2004 5.50 to 1.0" "Section 7.07 Unsecured Interest Coverage Ratio. The Parent shall --------------------------------- maintain at the end of each Rolling Period for the Rolling Periods ending on the dates indicated in the following chart an Unsecured Interest Coverage Ratio of not less than the amount set forth next to such dates: Ending Date of Rolling Period Unsecured Interest Coverage Ratio ------------------------------------ --------------------------------- September 30, 1998 through June 30, 1999 1.50 to 1.0 September 30, 1999 through June 30, 2000 1.75 to 1.0 September 30, 2000 through June 30, 2001 2.00 to 1.0 September 30, 2001 1.90 to 1.0 December 31, 2001 1.70 to 1.0 March 31, 2002 1.50 to 1.0 June 30, 2002 1.40 to 1.0 September 30, 2002 1.35 to 1.0 December 31, 2002 1.45 to 1.0 March 31, 2003 1.55 to 1.0 June 30, 2003 1.70 to 1.0 September 30, 2003 1.80 to 1.0 For any Rolling Period thereafter 1.90 to 1.0" 7 "Section 7.09 Senior Leverage Ratio. The Parent shall not on any date --------------------- permit the Senior Leverage Ratio to exceed during the applicable period indicated in the following chart the amount set forth in such chart for such period: Applicable Period Senior Leverage Ratio ---------------------------------- --------------------- prior to October 1, 2001 4.50 to 1.0 from October 1, 2001 through December 31, 2001 4.75 to 1.0 from January 1, 2002 through March 31, 2002 5.50 to 1.0 from April 1, 2002 through September 30, 2002 5.75 to 1.0 from October 1, 2002 through December 31, 2002 5.65 to 1.0 from January 1, 2003 through March 31, 2003 5.30 to 1.0 from April 1, 2003 through June 30, 2003 5.15 to 1.0 from July 1, 2003 through September 30, 2003 4.75 to 1.0 from October 1, 2003 through December 31, 2003 4.50 to 1.0 On and after January 1, 2004 4.25 to 1.0" 11. From and after the Amendment Date, a new Section 7.10 and an additional paragraph is added to the end of Article VII of the Credit Agreement which reads in its entirety as follows: "Section 7.10 Senior Unsecured Leverage Ratio. The Parent shall not on ------------------------------- any date permit the Senior Unsecured Leverage Ratio to exceed during the applicable period indicated in the following chart the amount set forth in such chart for such period: Applicable Period Senior Unsecured Leverage Ratio --------------------- ------------------------------- from October 1, 2001 through March 31, 2002 5.50 to 1.0 from April 1, 2002 through September 30, 2002 5.80 to 1.0 from October 1, 2002 through December 31, 2002 5.75 to 1.0 from January 1, 2003 through March 31, 2003 5.35 to 1.0 from April 1, 2003 through June 30, 2003 5.25 to 1.0 from July 1, 2003 through September 30, 2003 4.75 to 1.0 from October 1, 2003 through December 31, 2003 4.50 to 1.0 On and after January 1, 2004 4.25 to 1.0 Until the Status Reset Date occurs in any Fiscal Quarter, with respect to the Leverage Ratio, Senior Leverage Ratio and Senior Unsecured Leverage Ratio tests, the Parent shall remain subject to the applicable ratio limitation for the preceding Fiscal Quarter with the applicable test based upon the EBITDA for the previously reported Rolling Period." 12. From and after the Amendment Date, a new sentence shall be added at the end of Section 2.01(a) which reads in its entirety as follows: "Notwithstanding the foregoing, the sum of (i) the aggregate outstanding principal amount of the Revolving Advances plus (ii) the Letter of Credit Exposure plus (iii) the ---- 8 aggregate outstanding principal amount of the Swingline Advances at any time may not exceed the difference of (A) the Base Revolver Limitation Amount minus (B) the aggregate Non-Applied Cash Proceeds. ----- 13. From and after the Amendment Date, a new Section 2.04(c) is added to the Credit Agreement which reads in its entirety as follows: "(c) Upon the incurrence by the Parent or any of its Subsidiaries of any additional Senior Indebtedness (including any Additional Designated Senior Indebtedness), any Secured Non-Recourse Indebtedness, or any Subordinate Indebtedness after the Fourth Amendment Date which (i) constitutes a Repayment Event and (ii) in the aggregate equals or exceeds $200,000,000, if the aggregate amount of the Lenders' Revolving Commitments have not already been so reduced, then within ten (10) days of the Repayment Event which causes the Borrower to exceed such $200,000,000 threshold the aggregate amount of the Lenders' Revolving Commitments shall be reduced to an amount equal to the Base Revolver Limitation Amount." 14. From and after the Amendment Date, for purposes of the definition of "Repayment Event" (a) the Leverage Ratio shall be deemed to be greater than 4.5, (b) the $250,000,000 exception to a Repayment Event contained in clause (b) of the definition of "Repayment Event" shall not be available to Borrower and (c) the number "6.01" in clause (a)(iv) of the definition shall be changed to "6.02". 15. From and after the Amendment Date, Section 3.02(a)(ii) of the Credit Agreement is amended by adding the phrase ", the Senior Leverage Ratio and the Senior Unsecured Leverage Ratio" after the phrase "Leverage Ratio". 16. From and after the Amendment Date, Section 4.06 of the Credit Agreement is amended by adding the phrase "Except as disclosed in the Parent's Form 10-Q filed with the Securities and Exchange Commission in October 2001," at the beginning of the second to last sentence. 17. From and after the Amendment Date, Section 5.11 of the Credit Agreement is amended by deleting the second sentence in Section 5.11 in its entirety. 18. From and after the Amendment Date, neither the Borrower, the Parent, nor any of their respective Subsidiaries shall be permitted to make any additional Investments under Sections 6.07(c), (d), (e), (f), (g), (h), or (j) of the Credit Agreement except for (a) Capital Expenditures which are otherwise permitted by this Amendment and (b) Investments which in their aggregate do not exceed $10,000,000. 19. From and after the Amendment Date, neither the Borrower, the Parent, nor any of their respective Subsidiaries shall be permitted to enter into any (a) Permitted Timeshare Disposition or (b) Permitted Sale/Leaseback Disposition. 20. From and after the Amendment Date, Section 6.04(a) is amended by adding at the 9 end of such section the phrase, "provided that (A) the limitations set -------- forth in the preceding clause (i) shall not apply during the Fiscal Quarters ended December 31, 2001 through and including September 30, 2002 and (B) except as provided in the preceding clause (ii), any such cash payments in any Fiscal Quarter shall not exceed the Quarterly Dividend Limitation for such Fiscal Quarter". From and after the Amendment Date, neither the Borrower, the Parent, nor any of their respective Subsidiaries shall be permitted to make any Restricted Payments under Section 6.04(e). From and after the Amendment Date, Section 6.04 is amended by adding at the end of such section the following paragraph: "The Parent shall not declare any cash payments to shareholders unless the Parent believes in good faith that the Parent will be in compliance with the provisions of this Section 6.04 at the time of actual payment of such cash payments. In any Fiscal Quarter in which a Quarterly Dividend Limitation exists which is dependent on the EBITDA of a prior Rolling Period, the Parent shall not pay the cash payments, if any, permitted in such Fiscal Quarter until the EBITDA for the applicable Rolling Period is calculated and Borrower has delivered to the Administrative Agent and the Lenders a certificate dated within five (5) days of the date of the cash payments to shareholders in form and substance reasonably acceptable to the Administrative Agent which sets forth the calculations of the Leverage Ratio as of such date using the EBITDA for the applicable Rolling Period." 21. From and after the Amendment Date, neither the Borrower, the Parent, nor any of their respective Subsidiaries shall be permitted to make any Capital Expenditures except for (a) Capital Expenditures for emergency repairs which do not exceed $15,000,000 in the aggregate, and (b) other Capital Expenditures which do not in the aggregate for any Fiscal Quarter exceed the limits set forth below:
- ------------------------------------------------------------------------------------------------------ Time Period Other Capital Expenditure Limitation - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ From October 1, 2001 through and including $55,000,000 December 31, 2002 - ------------------------------------------------------------------------------------------------------ For any Fiscal Quarter thereafter 4.0% of the total revenues of the Parent's and its Subsidiaries' Hotel Properties during such Fiscal Quarter - ------------------------------------------------------------------------------------------------------
22. From and after the Amendment Date, the Borrower and its Subsidiaries shall be entitled to amend in a manner reasonably acceptable to the Administrative Agent the Approved Master Amendment and any Approved Management Agreement between the Borrower or one of the Borrower's Subsidiaries and OPCO or one of OPCO's Subsidiaries to provide that no default shall be called and no termination right or other remedy shall be exercised by the Borrower or one of the Borrower's Subsidiaries, as applicable, under such agreement because of a shortfall in operating revenue or other economic performance by a Hotel Property during the calendar years 2001 and 2002. 23. From and after the Amendment Date, Section 6.01 of the Credit Agreement (and the negative pledge covenants contained therein and in any other Credit Document) are amended 10 to provide that neither the Borrower, the Parent, nor any of their respective Subsidiaries shall be permitted to incur (a) any additional Secured Recourse Indebtedness, (b) any additional Secured Non-Recourse Indebtedness except where (i) no Default or Event of Default then exists and (ii) except for any Secured Non-Recourse Indebtedness incurred in connection with refinancing the existing Secured Non-Recourse Indebtedness for the Atlanta Doubletree, the Secured Non-Recourse Indebtedness is not less than 60% and not greater than 70% of the Market Value of the Hotel Properties securing such Secured Non-Recourse Indebtedness, (c) any additional Permitted Sale/Leaseback Indebtedness, (d) any additional Permitted Timeshare Indebtedness. In addition, from and after the Amendment Date, Section 6.01 of the Credit Agreement is amended by (a) deleting the word "and" at the end of clause (g), (b) deleting the period at the end of clause (h) and replacing such period with the phrase "; and", and (c) by adding a new clause (i) which reads in its entirety as follows: "(i) on assets of the Parent and its Subsidiaries approved by the Administrative Agent as additional security for the Obligations which secure Additional Designated Senior Indebtedness (and to the extent securing Additional Designated Senior Indebtedness, such Liens may also secure the Other Existing Senior Indebtedness), provided that such Liens -------- (i) also secure the Obligations on an equal and ratable basis with such Indebtedness, (ii) are not on the existing Collateral or any future capital stock, limited liability company interests and partnership interests in Subsidiaries of the Parent that constitutes Collateral, and (iii) are granted pursuant to documentation (including documentation granting Liens to secure the Obligations on an equal and ratable basis) reasonably acceptable to the Administrative Agent and the Borrower." 24. From and after the Amendment Date, notwithstanding the definitions of "Secured Non-Recourse Indebtedness", "Secured Recourse Indebtedness" and "Unsecured Indebtedness" to the contrary, any Additional Designated Senior Indebtedness and Other Existing Senior Indebtedness which is secured by Liens on assets of the Parent and its Subsidiaries permitted by the provisions of Section 6.01(i) of the Credit Agreement shall be deemed "Unsecured Indebtedness" for purposes of the financial covenants and other covenants limiting such types of Indebtedness, notwithstanding the granting of the permitted Liens to secure such Additional Designated Senior Indebtedness and Other Existing Senior Indebtedness. 25. From and after the Amendment Date, Section 6.11 of the Credit Agreement is amended by deleting the period at the end of Section 6.11 and adding the following provisions at the end of such Section 6.11: "provided that in connection with the incurrence of Additional Designated -------- Senior Indebtedness of the Parent and its Subsidiaries permitted by the provisions of this Agreement the Parent and its Subsidiaries may enter into such agreements which (x) are in form and substance acceptable to the Administrative Agent in its reasonable discretion, (y) would require the Parent and its Restricted Subsidiaries (as defined in the Indenture for such Additional Designated Senior Indebtedness) to comply with a financial covenant that such Persons' total unencumbered assets to total senior unsecured Indebtedness exceed 150%, provided that the pledging of Liens on Hotel Properties for the equal and ratable benefit of the Obligations, the Additional Designated Senior Indebtedness and the Other Existing Senior Indebtedness would not be prohibited in any way notwithstanding 11 such financial covenant, and (z) would require that assets of the Parent and its Subsidiaries (other than the existing Collateral and any future capital stock, limited liability company interests and partnership interests in Subsidiaries of the Parent that constitutes Collateral) which secure the Obligations or any other Senior Indebtedness of the Parent (excluding (i) existing Secured Recourse Indebtedness [except for the Obligations] and Secured Non-Recourse Indebtedness, (ii) any refinancings thereof, (iii) up to $300,000,000 of other Senior Indebtedness which is either a commercial mortgaged back securities facility or Secured Non-Recourse Indebtedness, and (iv) any other new such Indebtedness permitted under the financial covenants governing such Additional Designated Senior Indebtedness without the granting of Liens to secure such Additional Designated Senior Indebtedness) also secure on an equal and ratable basis such Additional Designated Senior Indebtedness. In connection with the incurrence of Additional Designated Senior Indebtedness of the Parent and its Subsidiaries permitted by the provisions of this Agreement, the Indenture for the Other Existing Senior Indebtedness may be amended in a manner reasonably acceptable to the Administrative Agent to add covenants consistent with the provisions of the preceding clauses (y) and (z). The foregoing provisions shall in no way make effective Sections 4.12 or 4.18 of the Indenture for the Other Existing Senior Indebtedness." 26. From and after the Amendment Date, the form of Compliance Certificate shall be revised in a manner reasonably acceptable to the Borrower and the Administrative Agent to include the changes to the Credit Agreement set forth in this Amendment, including without limitation, the additional financial covenant and the limitations on Revolving Advances. 27. The Borrower agrees that notwithstanding anything to the contrary contained in the Credit Agreement, as soon as available, and in any event no later than the last day of the following month after the end of every fiscal month during the Amendment Period, the Borrower shall provide the Administrative Agent (for distribution to the Lenders) liquidity, cash flow and summary operating information for such fiscal month prepared by the Borrower in a form reasonably satisfactory to the Administrative Agent. 28. This Amendment is limited as specified and shall not constitute a modification, acceptance or amendment of any other provision of the Credit Agreement or any other Credit Document. 29. Each party hereto represents to the other parties hereto that such party is authorized to execute this Amendment. 30. The Borrower and the Guarantors represent and warrant to the Lenders and the Agents that: a. the representations and warranties contained in this Amendment, and in each Credit Document are true and correct in all material respects as of the Amendment Date except for changes which individually or in the aggregate do not constitute a Material Adverse Change; b. no Default or Event of Default exists as of the Amendment Date except for 12 any such Default or Event of Default as is expressly waived or eliminated by this Amendment; and c. such Persons have no claims, offsets, or counterclaims with respect to their respective obligations under the Credit Documents as of the Amendment Date. 31. This Amendment may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one Amendment. Facsimile signatures will be deemed to be original signatures. 13 [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] Executed as of the Amendment Date. BORROWER: -------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By:____________________________________________ Name:__________________________________________ Title:_________________________________________ -14- [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] JOINDER, CONSENT AND RATIFICATION The Guarantors join in and consent to the terms and provisions of the attached Amendment and agree that the Environmental Indemnification Agreement and the Guaranty and Contribution Agreement (the "Guaranty") executed by the Guarantors each dated August 3, 1998 remain in full force and effect and that the Guaranteed Obligations (as defined in the Guaranty) include the additional obligations of the Borrower under the attached Amendment. This Joinder, Consent and Ratification is dated as of the date of the Amendment. GUARANTORS: MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By:_______________________________________ Name:_____________________________________ Title:____________________________________ MERISTAR LP, INC., a Nevada corporation By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:_____________________________ Name:___________________________ Title:__________________________ AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, member By:___________________________________ Name:_________________________________ Title:________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:____________________________________ Name:__________________________________ Title:_________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR SANIBEL INN COMPANY, L.L.C. MERISTAR MARCO ISLAND COMPANY, L.L.C. MERISTAR SAFETY HARBOR COMPANY, L.L.C. MERISTAR SUNDIAL BEACH COMPANY, L.L.C. MERISTAR S.S. PLANTATION COMPANY, L.L.C. MERISTAR SHIRLEY'S PARCEL COMPANY, L.L.C. MERISTAR SEASIDE INN COMPANY, L.L.C. MERISTAR SANIBEL BEACH COMPANY, L.L.C. MERISTAR PLANTATION SHOPPING CENTER COMPANY, L.L.C. MERISTAR SONG OF THE SEA COMPANY, L.L.C. MERISTAR SANIBEL GOLF COMPANY, L.L.C., MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC MERISTAR HOTEL (VANCOUVER) LLC, each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P. a Delaware limited partnership, their managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By:_________________________________________ Name:_______________________________________ Title:______________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] EQUISTAR SOMERSET COMPANY, L.L.C. EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR C.S. COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C., each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:____________________________________________ Name:__________________________________________ Title:_________________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P., each of the above being a Delaware limited partnership CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION MIDLAND PARTNERS, L.P., each of the above being a Delaware limited partnership MERISTAR SANTA BARBARA, L.P. MERISTAR CATHEDRAL CITY, L.P. MERISTAR LAJV, L.P., each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, its general partner By:_______________________________________ Name:_____________________________________ Title:____________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:______________________________ Name:____________________________ Title:___________________________ By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:______________________________ Name:____________________________ Title:___________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, member By: MeriStar Hospitality Corporation, member By:_________________________________ Name:_______________________________ Title:______________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_________________________________ Name:_______________________________ Title:______________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_________________________________ Name:_______________________________ Title:______________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, partner By: MeriStar Hospitality Corporation, member By:________________________________ Name:______________________________ Title:_____________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:________________________________________ Name:______________________________________ Title:_____________________________________ By: MeriStar Hospitality Operating Partnership, L.P., partner By: MeriStar Hospitality Corporation, general partner By:________________________________________ Name:______________________________________ Title:_____________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MT. ARLINGTON NEW JERSEY, LLC, a Delaware limited partnership MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership 455 MEADOWLANDS ASSOCIATES, LTD. a Texas limited partnership MADISON WASHINGTON ASSOCIATES a Delaware limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, general partner By: MeriStar Hospitality Corporation, member By:__________________________________ Name:________________________________ Title:_______________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_____________________________ Name:___________________________ Title:__________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:__________________________________ Name:________________________________ Title:_______________________________ AGH 75 ARLINGTON HEIGHTS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:______________________________________ Name:____________________________________ Title:___________________________________ AGH PSS I, INC., a Delaware corporation By:______________________________________ Name:____________________________________ Title:___________________________________ MERISTAR HOTEL LESSEE, INC., a Delaware corporation By:______________________________________ Name:____________________________________ Title:___________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Arranger and Administrative Agent By:_________________________________________________ Name:_______________________________________________ Title:______________________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BANKERS TRUST COMPANY, individually and as Arranger and Syndication Agent By:_________________________________________________ Name:_______________________________________________ Title:______________________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent By:______________________________________________ Name:____________________________________________ Title:___________________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LEHMAN COMMERCIAL PAPER INC., individually and as Arranger and Documentation Agent By:_________________________________________________ Name:_______________________________________________ Title:______________________________________________ [SIGNATURE PAGE OF FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: ________________________________________________ By:_________________________________________________ Name:_______________________________________________ Title:______________________________________________ EX-10.2.5 24 dex1025.txt EXHIBIT 10.2.5 Exhibit 10.2.5 FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "Amendment"), dated as of February ___, 2002 (the "Amendment Date"), is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, as the Borrower ("Borrower"); the Guarantors; SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger and Administrative Agent (the "Administrative Agent"); and the Lenders a party hereto. RECITALS: A. The Borrower; the Administrative Agent; Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National Association, as Documentation Agent; and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of August 3, 1998 (the "Original Credit Agreement"), as amended by that certain First Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 3, 1999, as further amended by that certain Second Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of March 31, 2000, as further amended by that certain Third Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of January 1, 2001, as further amended by that certain Fourth Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of December 14, 2001 (the Original Credit Agreement, as so amended, being referred to herein as the "Amended Credit Agreement"). B. The Borrower and the Lenders party hereto desire to amend the Amended Credit Agreement as herein provided. NOW, THEREFORE, for and in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. All terms used in this Amendment, but not defined herein, shall have the meaning given such terms in the Amended Credit Agreement. 2. This Amendment shall become effective as of the Amendment Date if on or prior to the close of business on February 28, 2002 (the "Termination Date") the following conditions precedent have been satisfied: a. Documentation. The Administrative Agent shall have received ------------- counterparts of this Amendment executed by the Borrower, the Guarantors and the Required Lenders. b. Representations and Warranties. The representations and warranties ------------------------------ contained in this Amendment, and in each Credit Document shall be true and correct in all material respects both as of the Amendment Date and the date the other conditions to 1 this Amendment's effectiveness are satisfied except for changes which individually or in the aggregate do not constitute a Material Adverse Change. c. No Default. No Default or Event of Default shall exist as of ---------- either the Amendment Date or the date the other conditions to this Amendment's effectiveness are satisfied except for any such Default or Event of Default as is expressly waived or eliminated by this Amendment. If this Amendment does not become effective prior to the Termination Date, this Amendment shall be null and void; provided however that the Borrower shall still -------- be obligated to reimburse Societe Generale, Southwest Agency for costs and expenses incurred in connection with this Amendment. 3. The term "Credit Agreement" as used in the Credit Documents, shall mean the Amended Credit Agreement, as amended by this Amendment. 4. From and after the Amendment Date, Section 2.04(b) of the Amended Credit Agreement is amended by deleting the amount of "$300,000,000" in clause (iii) thereof and replacing such amount with the amount of "$100,000,000". 5. From and after the Amendment Date, Section 6.02(f) of the Amended Credit Agreement is amended by deleting the phrase "the sum of the amount of the Revolving Commitments and the amount of the other Indebtedness of the Borrower or its Affiliates which bears interest at a variable rate" and replacing such phase with the phrase "$500,000,000". 6. This Amendment is limited as specified and shall not constitute a modification, acceptance or amendment of any other provision of the Amended Credit Agreement or any other Credit Document. 7. Each party hereto represents to the other parties hereto that such party is authorized to execute this Amendment. 8. The Borrower and the Guarantors represent and warrant to the Lenders and the Agents that: a. the representations and warranties contained in this Amendment, and in each Credit Document are true and correct in all material respects as of the Amendment Date except for changes which individually or in the aggregate do not constitute a Material Adverse Change; b. no Default or Event of Default exists as of the Amendment Date except for any such Default or Event of Default as is expressly waived or eliminated by this Amendment; and c. such Persons have no claims, offsets, or counterclaims with respect to their respective obligations under the Credit Documents as of the Amendment Date. 2 9. This Amendment may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one Amendment. Facsimile signatures will be deemed to be original signatures. 3 [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] Executed as of the Amendment Date. BORROWER: -------- MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By:________________________________ Name:______________________________ Title:_____________________________ -4- [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] JOINDER, CONSENT AND RATIFICATION The Guarantors join in and consent to the terms and provisions of the attached Amendment and agree that the Environmental Indemnification Agreement and the Guaranty and Contribution Agreement (the "Guaranty") executed by the Guarantors each dated August 3, 1998 remain in full force and effect and that the Guaranteed Obligations (as defined in the Guaranty) include the additional obligations of the Borrower under the attached Amendment. This Joinder, Consent and Ratification is dated as of the date of the Amendment. GUARANTORS: MERISTAR HOSPITALITY CORPORATION, a Maryland corporation By:_________________________________ Name:_______________________________ Title:______________________________ MERISTAR LP, INC., a Nevada corporation By:_________________________________ Name:_______________________________ Title:______________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR ACQUISITION COMPANY, L.L.C., a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:_________________________________ Name:_______________________________ Title:______________________________ AGH UPREIT LLC, a Delaware limited liability company By: MeriStar Hospitality Corporation, member By:______________________________________ Name:____________________________________ Title:___________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:______________________________________ Name:____________________________________ Title:___________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MERISTAR SANIBEL INN COMPANY, L.L.C. MERISTAR MARCO ISLAND COMPANY, L.L.C. MERISTAR SAFETY HARBOR COMPANY, L.L.C. MERISTAR SUNDIAL BEACH COMPANY, L.L.C. MERISTAR S.S. PLANTATION COMPANY, L.L.C. MERISTAR SHIRLEY'S PARCEL COMPANY, L.L.C. MERISTAR SEASIDE INN COMPANY, L.L.C. MERISTAR SANIBEL BEACH COMPANY, L.L.C. MERISTAR PLANTATION SHOPPING CENTER COMPANY, L.L.C. MERISTAR SONG OF THE SEA COMPANY, L.L.C. MERISTAR SANIBEL GOLF COMPANY, L.L.C., MERISTAR HOTEL (CALGARY AIRPORT) LLC MERISTAR HOTEL (SURREY) LLC MERISTAR HOTEL (BURNABY) LLC MERISTAR HOTEL (VANCOUVER) LLC, each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, L.P. a Delaware limited partnership, their managing member By: MeriStar Hospitality Corporation, a Maryland corporation, its general partner By:_________________________________ Name:_______________________________ Title:______________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] EQUISTAR SOMERSET COMPANY, L.L.C. EQUISTAR SCHAUMBURG COMPANY, L.L.C. EQUISTAR BELLEVUE COMPANY, L.L.C. EQUISTAR CLEVELAND COMPANY, L.L.C. EQUISTAR LATHAM COMPANY, L.L.C. EQUISTAR VIRGINIA COMPANY, L.L.C. EQUISTAR BALLSTON COMPANY, L.L.C. EQUISTAR ATLANTA GP COMPANY, L.L.C. EQUISTAR ATLANTA LP COMPANY, L.L.C. EQUISTAR SALT LAKE COMPANY, L.L.C. CAPSTAR CHICAGO COMPANY, L.L.C. CAPSTAR WASHINGTON COMPANY, L.L.C. CAPSTAR C.S. COMPANY, L.L.C. CAPSTAR SAN PEDRO COMPANY, L.L.C. CAPSTAR FRAZER COMPANY, L.L.C. CAPSTAR KC COMPANY, L.L.C. CAPSTAR NATIONAL AIRPORT COMPANY, L.L.C. CAPSTAR GEORGETOWN COMPANY, L.L.C. CAPSTAR JEKYLL COMPANY, L.L.C. CAPSTAR DETROIT AIRPORT COMPANY, L.L.C. CAPSTAR TUCSON COMPANY, L.L.C. CAPSTAR HARTFORD COMPANY, L.L.C. CAPSTAR CROSS KEYS COMPANY, L.L.C. CAPSTAR ROLAND PARK COMPANY, L.L.C. CAPSTAR COLUMBIA COMPANY, L.L.C. CAPSTAR OKLAHOMA CITY COMPANY, L.L.C. CAPSTAR LEXINGTON COMPANY, L.L.C. CAPSTAR MESA COMPANY, L.L.C. CAPSTAR MORRISTOWN COMPANY, L.L.C. CAPSTAR WINDSOR LOCKS COMPANY, L.L.C. CAPSTAR FORRESTAL COMPANY, L.L.C. CAPSTAR LOUISVILLE COMPANY, L.L.C., each of the above being a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:____________________________________ Name:__________________________________ Title:_________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] CAPSTAR HOUSTON SW PARTNERS, L.P. CAPSTAR MOCKINGBIRD PARTNERS, L.P. CAPSTAR DALLAS PARTNERS, L.P., each of the above being a Delaware limited partnership CAPSTAR MEDALLION DALLAS PARTNERS, L.P. CAPSTAR MEDALLION AUSTIN PARTNERS, L.P. CAPSTAR MEDALLION HOUSTON PARTNERS, L.P. CAPSTAR MEDALLION MIDLAND PARTNERS, L.P., each of the above being a Delaware limited partnership MERISTAR SANTA BARBARA, L.P. MERISTAR CATHEDRAL CITY, L.P. MERISTAR LAJV, L.P., each of the above being a Delaware limited partnership By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, general partner By: MeriStar Hospitality Corporation, its general partner By:______________________________ Name:____________________________ Title:___________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] HOTEL COLUMBIA COMPANY, a Maryland general partnership By: CapStar Columbia Company, a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:_________________________________________ Name:_______________________________________ Title:______________________________________ By: CapStar Roland Park Company, L.L.C., a Delaware limited liability company, partner By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:_________________________________________ Name:_______________________________________ Title:______________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BCHI ACQUISITION, LLC, a Delaware limited liability company By: AGH UPREIT LLC, member By: MeriStar Hospitality Corporation, member By:_________________________________________ Name:_______________________________________ Title:______________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_________________________________________ Name:_______________________________________ Title:______________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:_________________________________________ Name:_______________________________________ Title:______________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 3100 GLENDALE JOINT VENTURE, an Ohio general partnership By: AGH UPREIT LLC, partner By: MeriStar Hospitality Corporation, member By:________________________________ Name:______________________________ Title:_____________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:________________________________ Name:______________________________ Title:_____________________________ By: MeriStar Hospitality Operating Partnership, L.P., partner By: MeriStar Hospitality Corporation, general partner By:________________________________ Name:______________________________ Title:_____________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] MT. ARLINGTON NEW JERSEY, LLC, a Delaware limited partnership MDV LIMITED PARTNERSHIP, a Texas limited partnership 183 HOTEL ASSOCIATES, LTD., a Texas limited partnership 455 MEADOWLANDS ASSOCIATES, LTD. a Texas limited partnership MADISON WASHINGTON ASSOCIATES a Delaware limited partnership LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership COCOA BEACH HOTELS, LTD., a Florida limited partnership DURHAM I-85 LIMITED PARTNERSHIP, a Delaware limited partnership By: AGH UPREIT LLC, general partner By: MeriStar Hospitality Corporation, member By:____________________________________ Name:__________________________________ Title:_________________________________ By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:___________________________________ Name:_________________________________ Title:________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] 75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P., a Delaware limited partnership By: AGH 75 Arlington Heights LLC, a Delaware limited liability company, general partner By: MeriStar Hospitality Operating Partnership, L.P., member By: MeriStar Hospitality Corporation, general partner By:____________________________________ Name:__________________________________ Title:_________________________________ AGH 75 ARLINGTON HEIGHTS LLC, a Delaware limited liability company By: MeriStar Hospitality Operating Partnership, a Delaware limited partnership, member By: MeriStar Hospitality Corporation, its general partner By:____________________________________ Name:__________________________________ Title:_________________________________ AGH PSS I, INC., a Delaware corporation By:____________________________________ Name:__________________________________ Title:_________________________________ MERISTAR HOTEL LESSEE, INC., a Delaware corporation By:____________________________________ Name:__________________________________ Title:_________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Arranger and Administrative Agent By:________________________________ Name:______________________________ Title:_____________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] BANKERS TRUST COMPANY, individually and as Arranger and Syndication Agent By:_______________________________ Name:_____________________________ Title:____________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent By:___________________________ Name:_________________________ Title:________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LEHMAN COMMERCIAL PAPER INC., individually and as Arranger and Documentation Agent By:__________________________________________ Name:________________________________________ Title:_______________________________________ [SIGNATURE PAGE OF FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT] LENDER: _____________________________________________ By:__________________________________________ Name:________________________________________ Title:_______________________________________ EX-10.4 25 dex104.txt EXHIBIT 10.4 Exhibit 10.3 INTERCOMPANY AGREEMENT THIS INTERCOMPANY AGREEMENT (the "Agreement") is made and entered into as of August 3, 1998, 1998, among MeriStar Hospitality Corporation, a Maryland corporation ("MSH"), MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership ("MSH OP" and together with MSH, the "MSH Parties"), MeriStar Hotels & Resorts, Inc., a Delaware corporation ("OPCO") and MeriStar H&R Operating Partnership, L.P., a Delaware limited partnership ("OPCO OP") and together with OPCO, the "OPCO Parties"). W I T N E S S E T H : WHEREAS, MSH owns, directly or indirectly, a 1% general partnership interest and an approximately 89% limited partnership interest, in MSH OP; WHEREAS, OPCO owns, directly or indirectly, a 1% general partnership interest and an approximately 83% limited partnership interest, OPCO OP; WHEREAS, the MSH Parties may in certain circumstances determine that they are precluded from pursuing, or are limited in the manner in which they purse, various business opportunities due to the status of MSH as a real estate investment trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, OPCO is a newly created corporation that was formed for the purposes of, among other things, becoming a lessee and operator of various types of assets, including hotel properties owned by the MSH OP and its subsidiaries and others; and WHEREAS, in light of the purposes for which OPCO was formed, the MSH Parties and the OPCO Parties desire to enter into this Agreement in order (a) to provide to each other a right of first opportunity with respect to certain investment opportunities available to each of them, (b) for the OPCO Parties to provide certain corporate and other general services to the MSH Parties, and (c) to set forth certain terms regarding cooperation and coordination between the MSH Parties and the OPCO Parties. NOW, THEREFORE, in consideration of the premises and mutual undertakings herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the undersigned parties hereby agree as follows: 1. Definitions. Except as may be otherwise herein expressly ----------- provided, the following terms and phrases shall have the meanings set forth below: (a) "Change in Control" shall mean a change in ownership or control of a party effected through either of the following transactions: (i) any person or related group of persons (other than such party or a Controlled Affiliate of such party) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of such party's outstanding securities; or (ii) there is a change in the composition of such party's Board of Directors over a period of thirty-six (36) consecutive months (or less) such that a majority of Board members (rounded up to the nearest whole number) ceases, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board. (b) "Company Affiliate" means any entity in which a majority of the beneficial ownership interests are owned by MSH OP or by any entity controlled by, controlling or under common control with MSH OP. (c) "Controlled Affiliate" shall mean, with respect to any party, any entity controlled by, controlling or under common control with such party. (d) "Governmental Authority" means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority. (e) "Information" means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data. -2- (f) "Merger" means the merger of CapStar Hotel Company ("CapStar") with and into MSH pursuant to the Agreement and Plan of Merger among CapStar, MSH, the MSH OP and the other parties specified therein, dated March 15, 1998. (g) "Registration Statement" means any registration statement filed under the Securities Act that covers a Securities Issuance, including the related prospectus, all amendments and supplements to such registration statement (including post-effective amendments), all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. (h) "REIT Opportunity" means a direct or indirect opportunity to invest in (i) real estate or hotel properties, real estate mortgages, real estate derivatives, or entities that invest primarily in or have a substantial portion of their assets in the aforementioned types of real estate assets, or (ii) any other investments which may be structured in a manner so as to be REIT- Qualified Investments (as hereinafter defined), as determined by the MSH Parties in their sole discretion. The MSH Parties shall have the right from time to time to provide written notice to the OPCO Parties specifying certain criteria for a REIT Opportunity in addition to the criteria specified above in this definition of REIT Opportunity. Any such written notice from the MSH Parties may be modified or canceled by written notice given by the MSH Parties at any time. The definition of REIT Opportunity shall be modified as appropriate from time to time in accordance with any such written notices sent by the MSH Parties. (i) "Securities Act" means the Securities Act of 1933, as amended. (j) "Securities Issuance" means a private or public offering, sale, issuance or delivery of, or commitment or agreement to commit to offer, sell, issue or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class, any limited partnership interests or units, or any other debt or equity securities (including, without limitation, indebtedness having the right to vote, indebtedness convertible into any equity of any class or any other securities), or equity equivalents of either (including, without limitation, stock appreciation rights). Securities Issuance shall also mean any reorganization, recapitalization, reclassification, stock dividend, stock split, combination of shares, exchange of shares for other shares of the companies, repurchase or redemption of shares, change in corporate structure or the like in which the outstanding securities would be increased, decreased or changed into or exchanged for a different number or kind of securities. (k) "Tenant Opportunity" means the opportunity to become the lessee under a mutually agreed upon lease arrangement of a property owned or subsequently acquired by the MSH Parties if the MSH Parties, in their sole discretion, determine that (i) consistent with MSH's status as a REIT, the MSH Parties are required to enter into such a lease arrangement for such property, including without limitation a hotel or similar type of facility and (ii) the OPCO Parties or an entity that the OPCO Parties control is qualified to be the lessee based on -3- experience in the industry and financial and legal qualifications. A Tenant Opportunity shall not include (1) a property which already has an existing lessee as of the date of this Agreement (or, with respect to a property acquired subsequent to the date of this Agreement, which has an existing binding lessee arrangement that predates the acquisition of the property by the MSH Parties), provided that the MSH Parties shall offer any such lessee interest to the OPCO Parties if the lessee interest subsequently becomes available), (2) an opportunity in which the seller of the property (or any affiliate or designee of the seller) desires to enter into a lease agreement with the MSH Parties, or (3) a property which has at any time been leased from any of the MSH Parties to any of the OPCO Parties. The OPCO Parties shall have the right from time to time to provide written notice to the MSH Parties specifying certain criteria for a Tenant Opportunity in addition to the criteria specified above in this definition of Tenant Opportunity. Any such written notice from the OPCO Parties may be modified or canceled by written notice given by the OPCO Parties at any time. The definition of Tenant Opportunity shall be modified as appropriate from time to time in accordance with any such written notices sent by the OPCO Parties. 2. MeriStar Right of First Opportunity ----------------------------------- (a) During the term of this Agreement, if the OPCO Parties develop a REIT Opportunity, or if any REIT Opportunity otherwise becomes available to the OPCO Parties, the OPCO Parties shall first offer such REIT Opportunity to the MSH Parties. The offer shall be made by written notice (the "OPCO Notice") from the OPCO Parties to the MSH Parties, which OPCO Notice shall contain a detailed description of the material terms and conditions of the REIT Opportunity. The MSH Parties shall have twenty days (the "Twenty-Day Period") from the date of receipt of the OPCO Notice to notify the OPCO Parties in writing that it has accepted or rejected the REIT Opportunity. If the MSH Parties do not respond by the end of the Twenty-Day Period, the MSH Parties shall be deemed to have rejected the REIT Opportunity. If the MSH Parties accept a REIT Opportunity, but subsequently decide not to pursue such opportunity, or for any other reason fail to consummate the REIT Opportunity, the MSH Parties shall immediately provide written notice that they are no longer pursuing such REIT Opportunity to the OPCO Parties. Notwithstanding the provisions set forth in this Section 2(a), the OPCO Parties may make a limited minority investment or contribution as part of a lease arrangement with a party that is not a Controlled Affiliate of the OPCO Parties in a bona fide arm's-length transaction; provided that such investment does not materially impact the OPCO -------- Parties' financial and legal qualifications to lease and manage additional MeriStar properties. (b) If the MSH Parties reject a REIT Opportunity, or accept such REIT Opportunity but thereafter provide, or are required by the provisions hereof to provide, written notice to the OPCO Parties that they are no longer pursuing such REIT Opportunity, the OPCO Parties shall, for a period of one year after the MSH Withdrawal Date (as hereinafter defined), be entitled to acquire the REIT Opportunity (i) at a price, and on terms and conditions, that are not more favorable to the OPCO Parties in any material respect than the price and terms and conditions set forth in the OPCO Notice relating to such REIT Opportunity or (ii) if the MSH Parties, at any time after the OPCO Notice, negotiated a different price, terms or conditions with -4- the seller, then at a price, and on terms and conditions, that are not more favorable than, the price and terms and conditions negotiated by the MSH Parties with the seller. If the OPCO Parties do not enter into a binding agreement to acquire the REIT Opportunity within such one-year period, or if the price and terms and conditions are more favorable to the OPCO Parties in any material respect than the price and terms and conditions set forth in the OPCO Notice (or, if applicable, than the price and terms and conditions negotiated by the MeriStar Parties with the seller subsequent to the OPCO Notice), the OPCO Parties shall again be required to comply with the procedures set forth above in Section 2(a) if they desire to acquire such REIT Opportunity. The MSH Withdrawal Date means any one of the following dates, as applicable: (i) the date that the MSH Parties notify the OPCO Parties that they have rejected the REIT Opportunity, (ii) if the MSH Parties do not respond to the OPCO Parties regarding the REIT Opportunity, the expiration date of the Twenty-Day Period, or (iii) if the MSH Parties accept the REIT Opportunity but subsequently cease to pursue the opportunity, the earlier of (A) 30 days after the date on which the MSH Parties cease to pursue the REIT Opportunity or (B) the date of receipt by the OPCO Parties of written notice from the MSH Parties that they are no longer pursuing the REIT Opportunity. (c) The OPCO Parties agree to use their commercially reasonable efforts to assist the MSH Parties in structuring and consummating any REIT Opportunity accepted by the MSH Parties, on terms determined by the MSH Parties (including without limitation structuring such investment opportunity as a "REIT-Qualified Investment," as hereinafter defined). A "REIT-Qualified Investment" means an investment, the income from which would qualify under the 95% gross income test set forth in Section 856(c)(2) of the Code, the ownership of which would not cause a REIT to violate the asset limitations set forth in Section 856(c)(5) of the Code, and which otherwise meets the federal income tax requirements applicable to REITs. Any expenses incurred that are directly related to structuring an investment as a REIT-Qualified Investment shall be borne solely by the MSH Parties. 3. OPCO Right of First Opportunity for Tenant Opportunity. ------------------------------------------------------ (a) During the term of this Agreement, if the MSH Parties develop a Tenant Opportunity, or if a Tenant Opportunity otherwise becomes available to the MSH Parties, the MSH Parties shall first offer such Tenant Opportunity to the OPCO Parties. The offer shall be made by written notice (the "MSH Notice") from the MSH Parties to the OPCO Parties, which MSH Notice shall contain a detailed description of the material terms and conditions under which the MSH Parties propose to offer such Tenant Opportunity to the OPCO Parties. The MSH Parties shall thereafter provide or cause to be provided promptly to the OPCO Parties such additional information relating to the Tenant Opportunity as the OPCO Parties reasonably may request. For a period of 30 days after the date that the MSH Parties deliver the MSH Notice to the OPCO Parties, the MSH Parties and the OPCO Parties shall negotiate with each other on an exclusive basis with respect to such Tenant Opportunity. If the MSH Parties and the OPCO Parties are unable to enter into a mutually satisfactory arrangement with respect to the Tenant Opportunity within such 30-day period, or if the OPCO Parties indicate that they are not -5- interested in pursuing such Tenant Opportunity (in which event the OPCO Parties shall provide written notice to the MSH Parties as soon as the OPCO Parties decide against pursuing such opportunity), then the MSH Parties shall be free for a period of one year after the expiration of such 30-day period to enter into a binding agreement with respect to such Tenant Opportunity with any party at a price and on terms and conditions that are not materially more favorable to the tenant than the price and terms and conditions last proposed in writing by the MSH Parties to the OPCO Parties. If the MSH Parties do not enter into a binding agreement with respect to such Tenant Opportunity within such one-year period, or if the price and terms and conditions are more favorable to the tenant in any material respect than the price and terms and conditions last proposed in writing by the MSH Parties to the OPCO Parties, the MSH Parties shall again be required to comply with the procedures set forth above in this Section 3(a) if they desire to pursue such Tenant Opportunity. (b) The OPCO Parties agree to cooperate with the MSH Parties in structuring all dealings with outside parties in connection with any Tenant Opportunity that the OPCO Parties and the MSH Parties agree to enter into pursuant to Section 3(a) above. The OPCO Parties agree to cooperate with the MSH Parties in structuring any Tenant Opportunity with the MSH Parties as a "REIT-Qualified Investment" for the MSH Parties. The MSH Parties shall have the right, in their sole discretion, to structure any investment as a REIT-Qualified Investment, even if such structuring prevents the MSH Parties from creating a Tenant Opportunity for the OPCO Parties. 4. General Terms and Conditions for Rights of First Opportunity ------------------------------------------------------------ (a) Unless waived or agreed to as part of an investment or otherwise provided in this Agreement, each party shall bear its own expenses with respect to any opportunity to which this Agreement is applicable, and each party agrees that it shall not be entitled to any compensation from the other party with respect to any such opportunity. (b) A party shall not be required to comply with the right of first opportunity and notification requirements set forth in this Agreement during any period in which the other party or any Controlled Affiliate of such other party is in default of this Agreement or any other agreement entered into by the parties hereto or any of their Controlled Affiliates, if such default is material and remains uncured for fifteen days after receipt of notice thereof. (c) Any opportunity which is offered to and accepted by the MSH Parties under this Agreement may be entered into by or on behalf of the MSH Parties or by any designee which is a Company Affiliate or Controlled Affiliate of the MSH Parties. Any opportunity which is offered to and accepted by the OPCO Parties under this Agreement may be entered into by or on behalf of the OPCO Parties or by any designee which is a Controlled Affiliate of the OPCO Parties. -6- (d) All rights of first opportunity set forth in this Agreement shall be subordinated to any seller consent and confidentiality requirements; no party shall be required to comply with the first opportunity set forth in this Agreement if such compliance would violate any seller consent or confidentiality requirements. (e) While it is in the intention of the parties to align their businesses in accordance with the terms of this Agreement, each party shall act independently in its own best interest, and neither party shall be considered a partner or agent of the other party or to owe any fiduciary or other common law duties to the other party. 5. Provision of Certain Services. ----------------------------- (a) During the term of this Agreement, the OPCO Parties shall provide the MSH Parties with such administrative, corporate, accounting, financial, insurance, legal, tax, data processing, human resources and operational services as the MSH Parties shall from time to time reasonably request. (b) The MSH Parties shall compensate the OPCO Parties for the services provided to the MSH Parties under this Section 5 in an amount determined in good faith by the OPCO Parties as the amount an unaffiliated third party would charge the MSH Parties for comparable services and shall reimburse the OPCO Parties for certain costs incurred and paid to third parties on behalf of the MSH Parties. The OPCO Parties shall, on a monthly basis, provide the MSH Parties with a statement setting forth its charges for such services and the MSH Parties shall pay all undisputed charges within ten days of the receipt by the MSH Parties of such monthly statement. 6. Non-Exclusive License. --------------------- (a) Subject to the terms and conditions of this Agreement, the OPCO Parties hereby grant to the MSH Parties, and the MSH Parties hereby accept, a non-exclusive, royalty-free license to use "MeriStar Hospitality Corporation" and other names that include "MeriStar Hospitality Corporation" (the "Licensed Property") in the corporate name of the MSH Parties. The MSH Parties acknowledge and agree that the terms of this Agreement shall not restrict the ability of the OPCO Parties and its Affiliates to use the Licensed Property. (b) Upon the termination of this Agreement pursuant to Section 12, (i) all rights of the MSH Parties to the Licensed Property shall immediately terminate and the MSH Parties shall have no further rights with respect thereto; (ii) the MSH Parties shall not offer any services in connection with the Licensed Property or any confusingly similar Licensed Property and shall cease all use of the Licensed Property (including, without limitation, the use of the Licensed Property in the corporate name of the MSH Parties); and (iii) the MSH Parties shall promptly cease any activity which suggests they have any rights to the Licensed Property or that -7- it has any association with the OPCO Parties, in either case except as may be contemplated pursuant to any other agreement between the MSH Parties and the OPCO Parties. 7. General Cooperation and Coordination. ------------------------------------ (a) The MSH Parties and the OPCO Parties hereby agree that it is in the best interests of both entities and their shareholders that they cooperate to the fullest extent possible in the conduct of their respective operations with the goal of enhancing value to their respective shareholders. In furtherance of the foregoing, meetings of the Boards of Directors of the MSH Parties and the OPCO Parties may be held jointly if their respective Chairman or Vice Chairmen so decide. (b) The MSH Parties and the OPCO Parties each hereby agree to establish, as promptly as practicable following the closing of the Merger, and thereafter to continue in effect, a lease committee which shall negotiate and review all hotel leases to be entered into between the MSH Parties and the OPCO Parties. The MSH Parties' lease committee will consist of directors of MSH that are not also directors of OPCO and the OPCO Parties' lease committee will consist of directors of OPCO that are not also directors of MSH. The lease committees of each of the MSH Parties and the OPCO Parties shall establish such procedures for the conduct of their business as they shall deem appropriate from time to time. (c) MSH and OPCO shall make reasonable and ongoing efforts to ensure that members of management of each of the MSH Parties and the OPCO Parties are given appropriate salary, bonuses and options or other similar plans to enhance value to the shareholders of both MSH and OPCO. The respective Board of Directors of MSH and OPCO shall direct each of their compensation committees to take into consideration the objective set forth in the previous sentence in establishing compensation levels and performance criteria for management of MSH and OPCO. 8. Procedures in Connection with Equity Offerings. ---------------------------------------------- (a) If either the MSH Parties or the OPCO Parties shall desire to engage in a Securities Issuance (the "Issuing Party"), then such Issuing Party shall give notice (an "Issuance Notice") to such other party (the "Non-Issuing Party") as promptly as practicable of their desire to engage in a Securities Issuance. Such Issuance Notice shall include the proposed material terms of such issuance, to the extent determined by the Issuing Party, including whether such issuance is proposed to be pursuant to a public or private offering, the amount of securities proposed to be issued, and the manner of determining the offering price and other terms thereof. (b) Upon receipt of an Issuance Notice, the Non-Issuing Party shall promptly cooperate with the Issuing Party in every way to effect such Securities Issuance pursuant to the terms and schedule thereof as established by the Issuing Party, including, without limitation, the following: -8- (i) Making available such members of the Non-Issuing Party's management as shall be requested by the Issuing Party to assist in effective such Securities Issuance; (ii) In connection with a public offering, (A) assisting in the preparation of and (B) executing and filing with the SEC, a Registration Statement or Registration Statements under the Securities Act, including the prospectus contained therein and any amendments or supplements thereto, or any other statements, forms or documents required to be executed pursuant to law or regulation with respect to be executed pursuant to law or regulation with respect to such Securities Issuance, and, in connection therewith, providing the Issuing Party with such information, including financial statements, market studies, environmental and engineering reports and other data, as may be required to be included in such Registration Statement pursuant to the terms of the Securities Act; (iii) Promptly notifying the Issuing Party of any information that comes to the attention of the Non-Issuing Party which affects or could affect such Securities Issuance, including, without limitation, the occurrence of any event which makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference or in any other offering document with respect to such Securities Issuance untrue in any material respect or which requires the making of any changes in such Registration Statement, prospectus or any such offering document so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) Cooperating with the Issuing Party in the preparation, execution and filing of any documents required under the securities laws of any state; (v) Cooperating with the Issuing Party to facilitate the timely preparation and delivery of certificates, if any, representing the Securities Issuance; (vi) Obtaining any consents, approvals or authorizations of Governmental Authorities and other third parties as are necessary in connection with such Securities Issuance; (vii) In connection with any underwritten public offering, cause appropriate members of the Non-Issuing Party's management to cooperate and participate on a reasonable basis in the underwriters' "road show" conferences related to such offering; and (viii) Performing any and all other acts and executing and delivering any and all other certificates, instruments and other documents as shall be requested by the Issuing Party to effect any such Securities Issuance. -9- 9. Exchange of Information. ----------------------- (a) Provision of Corporate Records; Agreement for Exchange of --------------------------------------------------------- Information. From and after the date hereof, the MSH Parties and the OPCO - ----------- Parties shall provide, or cause to be provided, to the other party and such party's authorized accountants, counsel and other designated representatives, as soon as reasonably practicable after written request therefor, reasonable access to and duplicating rights with respects to any Information in the possession or under the control of such party which the requesting party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or other similar requirements, (iii) to comply with its obligations under this Agreement, or (iv) for any other reasonable purpose; provided, however, that in the event that any party determines that any such provision of Information is reasonably likely to be commercially detrimental, violate any law or agreement, or waive any attorney-client or work product privilege, the parties shall take all reasonable measures to attempt to permit the compliance with such obligations in a manner that avoids any such harm or consequence. (b) Ownership of Information. Any Information owned by one ------------------------ party hereto that is provided to a requesting party pursuant to Section 9(a) shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise to use any such Information for any purpose other than those described in Section 6(a). (c) Compensation for Providing Information. The party requesting -------------------------------------- Information agrees to reimburse the other party for the reasonable costs, if any, of gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting party. Except as may be otherwise specifically provide elsewhere in this Agreement or in any other agreement between the parties, such costs shall be computed in accordance with a commercially reasonable procedure. 10. Specific Performance. Each party hereto hereby acknowledges that -------------------- the obligations undertaken by it pursuant to this Agreement are unique and that the other party hereto would likely have no adequate remedy at law if such party shall fail to perform its obligations hereunder, and such party therefor confirms that the other party's right to specific performance of the terms of this Agreement is essential to protect the rights and interests of the other party. Accordingly, in addition to any other remedies that a party hereto may have at law or in equity, such party shall have the right to have all obligations, covenants, agreements and other provisions of this Agreement specifically performed by the other party hereto and the right to obtain a temporary restraining order or a temporary or permanent injunction to secure specific performance and to prevent a breach or threatened breach of this Agreement by the other party -10- hereto. Each party submits to the jurisdiction of the courts of the State of New York for this purpose. 11. Affiliates. Each party hereto shall cause all entities that are ---------- under its control to comply with the terms hereof. 12. Term. The term of the Agreement shall commence as of the date of ---- this Agreement and shall terminate upon the earlier of (a) the tenth (10th) anniversary of the date of this Agreement, and (b) a Change of Control of OPCO. Notwithstanding the forgoing, (i) this Agreement shall terminate if MSH terminates its REIT status for any reason, and (ii) a party hereto may terminate this Agreement if the other party or any Controlled Affiliate of such other party is in default of this Agreement or any other agreement entered into by the parties hereto or any of their Controlled Affiliates, if such default is material and remains uncured for fifteen days after receipt of notice thereof; provided, however, that if such default cannot be reasonably corrected within - ----------------- such 15 day period and such defaulting party is attempting in good faith to cure such default, such 15 day period shall be extended for a period not more than ninety days after receipt of notice thereof. 13. Miscellaneous. ------------- (a) Notices. Notices shall be sent to the parties at the following address: If to the MeriStar Parties: MeriStar Hospitality Corporation 1010 Wisconsin Avenue, N.W. Washington, D.C. 20007 Facsimile: ____________________ Attention: President If to the OPCO Parties: MeriStar Hotels & Resorts, Inc. 1010 Wisconsin Avenue, N.W. Washington, D.C. 20007 Facsimile: ____________________ Attention: President -11- Notices may be sent certified mail, return receipt requested, Federal Express or comparable overnight delivery service, or facsimile. Notice will be deemed received on the fourth business day following deposit in U.S. mail and on the first business day following deposit with Federal Express or other delivery service, or transmission by facsimile. Any party to this Agreement may change its address for notice by giving written notice to the other party at the address and in a accordance with the procedures provided above. (b) Reasonable and Necessary Restrictions. Each of the parties ------------------------------------- hereto hereby acknowledges and agrees that the restrictions, prohibitions and other provisions of this Agreement are reasonable, fair and equitable in scope, term and duration, are necessary to protect the legitimate business interests of the parties hereto and are a material inducement to the parties hereto to enter into the transactions described in and contemplated by the recitals hereto. Each party hereto covenants that it will not sue to challenge the enforceability of this Agreement or raise any equitable defense to its enforcement. (c) Successors and Assigns. Except as provided in Section 12, ---------------------- this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. This Agreement shall not be assigned without the express written consent of each of the parties hereto. (d) Amendments; Waivers. No termination, cancellation, ------------------- modification, amendment, deletion, addition or other change in this Agreement, or any provision hereof or waiver of any right or remedy herein provided, shall be effective for any purpose unless such change or waiver is specifically set forth in a writing signed by the party or parties to be bound thereby, except any addition or modifications to the definition of "REIT Opportunity" or "Tenant Opportunity" as contemplated herein. The waiver of any right or remedy with respect to any occurrence on one occasion shall not be deemed a waiver of such right or remedy with respect to such occurrence on any other occasion. (e) Choice of Law. This Agreement and the rights and ------------- obligations the parties hereunder shall be governed by the laws of the State of New York, without regard to the principles of choice of law thereof. (f) Severability. In the event that one or more of the terms or ------------ provisions of this Agreement or the application thereof to any person(s) or in any circumstance(s) shall, for any reason and to any extent to be found by a court of competent jurisdiction to be invalid, illegal or unenforceable, such court shall have the power, and hereby is directed, to substitute for or limit such invalid term(s) or application(s) and to enforce such substituted or limited terms or provisions or the application thereof. Subject to the foregoing, the invalidity, illegality or enforceability of any one or more of the terms or provisions of this Agreement, as the same may be amended from time to time, shall not affect the validity, legality or enforceabliity of any other terms or provision hereof. -12- (g) Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement (i) constitutes the entire agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, between the parties hereto with respect to the subject matter hereof, so that no such external or separate agreement relating to the subject matter of this Agreement shall have any effect or be binding, unless the same is referred to specifically in this Agreement or is executed by the parties after the date hereof; and (ii) is not intended to confer upon any other person any rights or remedies hereunder, and shall not be enforceable by any party not a signatory to this Agreement. (h) Gender; Number. As the context requires, any word used -------------- herein in the singular shall extend to and include the plural, any word used in the plural shall extend to and included the singular and any word used in any gender or the neuter shall extend to and include each other gender or be neutral. (i) Headings. The Headings if the sections hereof are inserted -------- for convenience of reference only and are not intended to be a part of or affect the meaning or interpretation of this Agreement or of any term or provision hereof. (j) Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which together shall be deemed to be an original and all of which together shall be deemed to constitute one and the same agreement. -13- IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by one of its duly authorized corporate officers, as of the date first above written. MERISTAR HOSPITALITY CORPORATION By: /s/ Bruce G. Wiles -------------------------- Name: Bruce G. Wiles Title: President MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By: /s/ Bruce G. Wiles -------------------------- Name: Bruce G. Wiles Title: President MERISTAR HOTELS & RESORTS, INC. By: /s/ James A. Calder -------------------------- Name: James A. Calder Title: Chief Financial Officer MERISTAR H&R OPERATING PARTNERSHIP, L.P. By: MeriStar Hotels & Resorts, Inc., its general partner By: /s/ James A. Calder -------------------------- Name: James A. Calder Title: Chief Financial Officer -14- EX-10.5 26 dex105.txt EXHIBIT 10.5 Exhibit 10.5 U.S. $75,000,000 REVOLVING CREDIT AGREEMENT Dated as of August 3, 1998 between MERISTAR H & R OPERATING COMPANY, L.P., as the Borrower, ---------------- and MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., as the Lender ------------- TABLE OF CONTENTS -----------------
Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS Section 1.01 Certain Defined Terms 1 Section 1.02 Computation of Time Periods 15 Section 1.03 Accounting Terms; Changes in GAAP 15 Section 1.04 Miscellaneous 16 ARTICLE II ADVANCES Section 2.01 Advances 16 Section 2.02 Method of Borrowing 17 Section 2.03 Reduction of the Commitment 17 Section 2.04 Repayment of Advances 17 Section 2.05 Interest, Late Payment Fee 18 Section 2.06 Prepayments 19 Section 2.07 Payments and Computations 20 Section 2.08 Taxes 21 ARTICLE III CONDITIONS OF LENDING Section 3.01 Conditions Precedent to Initial Advance 22 Section 3.02 Conditions Precedent for Each Borrowing 22 ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.01 Existence; Qualification; Partners; Subsidiaries 23 Section 4.02 Partnership and Corporate Power 23 Section 4.03 Authorization and Approvals 24 Section 4.04 Enforceable Obligations 24 Section 4.05 Financial Statements and Registration Statement 24 Section 4.06 True and Complete Disclosure 24 Section 4.07 Litigation 25 Section 4.08 Use of Proceeds 25 Section 4.09 Investment Company Act 25 Section 4.10 Taxes 25 Section 4.11 Pension Plans 25 Section 4.12 No Burdensome Restrictions; No Defaults 26 Section 4.13 Environmental Condition 26 Section 4.14 Legal Requirements, Zoning, Utilities, Access 27 Section 4.15 Existing Indebtedness 28 Section 4.16 Leases and Management Agreements 28 ARTICLE V AFFIRMATIVE COVENANTS Section 5.01 Compliance with Laws, Etc. 28
Page ---- Section 5.02 Preservation of Existence; Separateness, Etc. 29 Section 5.03 Payment of Taxes, Etc. 29 Section 5.04 Reporting Requirements 29 Section 5.05 Insurance 31 Section 5.06 Material Documents 31 ARTICLE VI NEGATIVE COVENANTS Section 6.01 Liens, Etc. 32 Section 6.02 Indebtedness 32 Section 6.03 Agreements Restricting Distributions From Subsidiaries 33 Section 6.04 Fundamental Changes; Asset Dispositions 33 Section 6.05 Investments, Loans, Future Properties 33 Section 6.06 Affiliate Transactions 33 Section 6.07 Sale or Discount of Receivables 33 Section 6.08 Restricted Payments 33 ARTICLE VII FINANCIAL COVENANTS Section 7.01 Senior Interest Coverage Ratio. 35 Section 7.02 Total Interest Coverage Ratio. 35 Section 7.03 Senior Fixed Charge Ratio. 35 Section 7.04 Total Fixed Charge Ratio. 35 Section 7.05 Senior Indebtedness Leverage Ratio 35 Section 7.06 Leverage Ratio. 35 ARTICLE VIII SUBORDINATION Section 8.01 Agreement to Subordinate. 36 Section 8.02 Liquidation; Dissolution; Bankruptcy. 36 Section 8.03 Default on Financial Institution Senior Indebtedness. 36 Section 8.04 Acceleration of Notes. 38 Section 8.05 When Distribution Must Be Paid Over. 38 Section 8.06 Notice by Borrower. 38 Section 8.07 Subrogation. 38 Section 8.08 Relative Rights. 38 ARTICLE IX EVENTS OF DEFAULT; REMEDIES Section 9.01 Events of Default 38 Section 9.02 Optional Acceleration of Maturity; Other Actions 40 Section 9.03 Automatic Acceleration of Maturity 41 ARTICLE X MISCELLANEOUS Section 10.01 Amendments, Etc. 41 Section 10.02 Notices, Etc. 41 Section 10.03 No Waiver; Remedies 41 Section 10.04 Costs and Expenses 42 Section 10.05 Binding Effect 42
Page ---- Section 10.06 Indemnification 42 Section 10.07 Execution in Counterparts 43 Section 10.08 Survival of Representations, Indemnifications, etc 43 Section 10.09 Severability 43 Section 10.10 Usury Not Intended 44 Section 10.11 GOVERNING LAW 44 Section 10.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL 45 Section 10.13 Knowledge of Borrower 46 Section 10.14 Lender Not in Control 46 Section 10.15 Headings Descriptive 46 Section 10.16 Time is of the Essence 46
EXHIBITS: Exhibit A - Form of Note Exhibit B - Form of Guaranty SCHEDULES: Schedule 1.01 Guarantors Schedule 4.07 Litigation Schedule 4.14 Environmental Condition Schedule 4.15 Legal Requirements; Zoning; Utilities; Access Schedule 4.16 Existing Indebtedness Schedule 4.17 Management Agreements Schedule 9.02 Notice Information REVOLVING CREDIT AGREEMENT THIS REVOLVING CREDIT AGREEMENT, dated as of August 3, 1998, (this Agreement), between MERISTAR H & R OPERATING COMPANY, L.P., a Delaware limited partnership, as the Borrower, and MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., as the Lender. PRELIMINARY STATEMENTS: WHEREAS, the Borrower desires that the Lender extend a credit facility, the proceeds of which will be used to provide financing for working capital and general corporate purposes, including the acquisition of management contracts, leases and entities owning such assets; WHEREAS, the Borrower intends to obtain financing (the Financial Institution Senior Indebtedness) from certain third party financial lending institutions (the Financial Institution Lenders) and desires that borrowings under this credit facility with Lender be subordinated to borrowings under the Financial Institution Senior Indebtedness; and WHEREAS, the Lender has agreed to extend such credit facility as more specifically described in this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals and the provisions contained in this Agreement, the parties hereto do hereby agree as follows: ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS Section 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (unless otherwise indicated, such meanings to be equally applicable to both the singular and plural forms of the terms defined): Advance means any advance by the Lender to the Borrower pursuant to this Agreement or a continuation of an existing Advance. Affiliate means, as to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person or any Subsidiary of such Person. The term control (including the terms controlled by or under common control with) means the 1 possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. AGH OP means American General Hospitality Operating Partnership, L.P., a Delaware limited partnership. AGH REIT means American General Hospitality Corporation, a Maryland corporation. Agreement has the meaning given such term in the initial paragraph of this agreement. Applicable Margin means 3.5% per annum. Asset Disposition means any conveyance, exchange, transfer, or assignment of any Investment or Property by the Borrower or a Guarantor to a Person other than the Borrower or a Guarantor which term shall not include the termination of any Lease or Management Agreement. Borrower means MeriStar H & R Operating Company, L.P., a Delaware limited partnership. Borrowing means a borrowing consisting of Advances made by the Lender pursuant to Section 2.01. Business Day means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Advances, any day other than a Saturday or Sunday or a day on which banking institutions are generally authorized or obligated by law or executive order to close in the City of London, England. Capital Lease means, for any Person, any lease of any Property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person. Capitalized Lease Obligations means, as to any Person, the capitalized amount of all obligations of such Person or any of its Subsidiaries under Capitalized Leases, as determined on a consolidated basis in conformity with GAAP. CapStar means CapStar Hotel Company, a Delaware corporation. CapStar Hotel I means CapStar Hotel Operating Company, LLC, a Delaware limited liability company. 2 CapStar Hotel II means CapStar Hotel Operating Company II, LLC, a Delaware limited liability company. CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and all rules and regulations and requirements thereunder in each case as now or hereafter in effect. Change in Control means for any Person a change in ownership or control of such Person effected through either of the following transactions: (a) any Person or related group of Persons (other than such Person or an Affiliate of such Person) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of such Person's outstanding securities; or (b) there is a change in the composition of such Person's Board of Directors over a period of thirty-six (36) consecutive months (or less) such that a majority of Board members (rounded up to the nearest whole number) ceases to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were still in office at the time such election who were elected in compliance with this clause (ii). Closing Date means August 3, 1998. Code means the Internal Revenue Code of 1986, as amended, and any successor statute. Commitment means $75,000,000. Compliance Certificate means a certificate of the Borrower in the form reasonably acceptable to the Lender. Consolidated refers to the consolidation of the accounts of the Parent with the Parent's Subsidiaries in accordance with GAAP, including principles of consolidation consistent with those applied in the preparation of the Registration Statement. Controlled Group means all members of the controlled group of corporations and all trades (whether or not incorporated) under common control which, 3 together with the Borrower, are treated as a single employer under Section 414 of the Code. Credit Documents means this Agreement, the Notes, the Guaranties, and each other agreement, instrument or document executed by the Borrower or any of its Subsidiaries at any time in connection with this Agreement. Default means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would, unless cured or waived, become an Event of Default. Dollars and $ means lawful money of the United States of America. EBITDA means for any Person or Hotel Property, as applicable, for any period for which such amount is being determined, an amount equal to (a) the Net Income for such Person or Hotel Property, as applicable, for such period plus (b) to the extent deducted in determining Net Income, Interest Expense, income taxes, depreciation, amortization, and other non-cash items for such period, as determined on a Consolidated basis in accordance with GAAP. Effective Date means the date all of the conditions precedent set forth in Section 3.01 have been satisfied. Environment or Environmental shall have the meanings set forth in 42 U.S.C. (S) 9601(8), as amended. Environmental Claim means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the Occupational Safety and Health Acts or similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law. Environmental Law means all Legal Requirements arising from, relating to, or in connection with the Environment, health, or safety, including without limitation CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous, medical, infectious, or toxic substances, materials or wastes; (d) the safety or health of employees; or (e) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal of hazardous, medical, infectious, or toxic substances, materials or wastes. 4 Environmental Permit means any permit, license, order, approval or other authorization under Environmental Law. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. Event of Default has the meaning set forth in Section 9.01. Exchange Act means the Securities Exchange Act of 1934, 15 U.S.C. (S)78a et. seq. Facility means the $75,000,000 revolving credit facility between Borrower and the Lender. Federal Reserve Board means the Board of Governors of the Federal Reserve System or any of its successors. Financial Institution Senior Indebtedness means up to $75,000,000 of Senior Indebtedness obtained by the Borrower subsequent to the execution of this Agreement from a Financial Institution Lender and designated by the Borrower as Financial Institution Senior Indebtedness. Financial Institution Lender means a third party financial lending institution which provides the Borrower with Financial Institution Senior Indebtedness. Fiscal Quarter means each of the three-month periods ending on March 31, June 30, September 30 and December 31. Fiscal Year means the twelve-month period ending on December 31. Fixed Charges means, for any Person for the period for which such amount is being determined, the amount (without duplication) for such Person and its Subsidiaries of all scheduled principal payments on Indebtedness (excluding optional prepayments and scheduled principal payments in respect of any such Indebtedness which is payable in a single installment at final maturity), Total or Senior (as applicable) Interest Expense during such period, all payments scheduled to be made in respect of Capital Leases on a Consolidated basis during such period, and all preferred stock dividends paid during such period. Fund, Trust Fund, or Superfund means the Hazardous Substance Response Trust Fund, established pursuant to 42 U.S.C. (S) 9631 (1988) and the Post-closure Liability Trust Fund, established pursuant to 42 U.S.C. (S) 9641 (1988), which statutory provisions have been amended or repealed by the Superfund Amendments and Reauthorization Act of 1986, and the Fund, Trust Fund, or Superfund that are now maintained pursuant to 42 U.S.C. (S) 9507. 5 GAAP means United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.03. Governmental Authority means any foreign governmental authority, the United States of America, any state of the United States of America and any subdivision of any of the foregoing, and any agency, department, commission, board, authority or instrumentality, bureau or court having jurisdiction over the Lender, the Parent, the Borrower, any Subsidiaries of the Borrower or the Parent, an Approved Participating Lessee, a property manager or any of their respective Properties. Guarantor means each of the Parent and each Subsidiary of the Borrower and Guarantors means all of such Persons. The Guarantors on the Effective Date are identified on Schedule 1.01. Guaranty means one or more Guaranty in substantially the form of the attached Exhibit B executed by the Borrower, the Parent and all of the Subsidiaries of the Borrower, evidencing the joint and several guaranty by the signatories thereto of the obligations of Borrower in respect of the Credit Documents, and any future guaranty and contribution agreement executed to secure Advances, as any of such agreements may be amended hereafter in accordance with the terms of such agreements. Hazardous Substance means the substances identified as such pursuant to CERCLA and those regulated under any other Environmental Law, including without limitation pollutants, contaminants, petroleum, petroleum products, radio nuclides, radioactive materials, and medical and infectious waste. Hazardous Waste means the substances regulated as such pursuant to any Environmental Law. Hospitality/Leisure Management Business shall mean the leasing, management or operation of a full-service and limited-service hotel or resort, executive conference center, condominium rental pool, time share program, an extended stay lodging, or a convention center, and other businesses incidental to, or in support of, such business, including without limitation, (a) leasing, managing or operating lodging facilities, restaurants and other food-service facilities, golf facilities or other entertainment facilities or club, convention or meeting facilities and marketing services or reservation systems related thereto, and (b) leasing, managing or operating real estate ancillary or connected to any lodging facilities, restaurants and other food-service facilities, golf facilities or other entertainment facilities or club, convention or meeting facilities and marketing services or reservation system leased, managed or operated (or proposed to be leased, managed or operated) by the Borrowers, the Guarantors or any of 6 their Subsidiaries at any time (and debt or equity investments in any of the foregoing, which are leased, managed or operated by the Borrower or a Subsidiary). Hotel Property for any hotel operated or managed by Borrower or its Subsidiaries means the real property and the personal property for such hotel. Improvements for any hotel means all buildings, structures, fixtures, tenant improvements and other improvements of every kind and description now or hereafter located in or on or attached to the Land for such hotel; and all additions and betterments thereto and all renewals, substitutions and replacements thereof. Indebtedness means (without duplication), at any time and with respect to any Person, (a) indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services purchased (other than amounts constituting trade payables, accruals or bank drafts arising in the ordinary course of business); (b) indebtedness of others in the amount which such Person has directly or indirectly assumed or guaranteed or otherwise provided credit support therefor or for which such Person is liable as a partner of such Person; (c) indebtedness of others in the amount secured by a Lien on assets of such Person, whether or not such Person shall have assumed such indebtedness; (d) obligations of such Person in respect of letters of credit, acceptance facilities, or drafts or similar instruments issued or accepted by banks and other financial institutions for the account of such Person (other than trade payables or bank drafts arising in the ordinary course); (e) obligations of such Person under Capital Leases; and (f) to the extent required by GAAP, obligations under interest rate swap agreements, interest rate cap agreements, interest rate collar agreements or other similar agreements or arrangements designed to protect against fluctuations in interest rates. Intercompany Agreement means the Intercompany Agreement, dated as of August 3, 1998, by and among the Parent, the Borrower, MeriStar, and MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership. Interest Period means, for each Advance comprising part of the same Borrowing, the period commencing on the date of such Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02. The duration of each such Interest Period shall be one, two, three or six months, in each case as the Borrower may select, upon notice received by the Lender not later than 11:00 a.m. (New York, New York time) on the second Business Day prior to the first day of such Interest Period, pro vided, however, that: 7 (a) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; (b) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month; (c) each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; and (d) no Interest Period with respect to any portion of any Advance shall extend beyond the Maturity Date. Interest Rate Agreements means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect the Borrower, the Parent or any of their respective Subsidiaries against fluctuations in interest rates. Investment means, with respect to any Person, (a) any loan or advance to any other Person, (b) the ownership, purchase or other acquisition of, (i) any Stock, Stock Equivalents, other equity interest, obligations or other securities of, any other Person, (ii) or all or substantially all of the assets of any other Person, or (iii) all or substantially all of the assets constituting the business of a division, branch or other unit operation of any other Person, or (c) any joint venture or partnership with, or any capital contribution to, or other investment in, any other Person or any real property. Investment Amount means for any Investment, the aggregate purchase price paid by the Borrower or its Subsidiary for such Investment (giving effect to any securities used to purchase such Investment at the fair market value of the securities at the time of purchase based upon the price at which such securities could be exchanged into the Parent's common stock assuming such exchange occurred on the date of acquiring such Investment). Land for any hotel means the real property upon which the hotel is located, together with all rights, title and interests appurtenant to such real property, including without limitation all rights, title and interests to (a) all strips and gores within or adjoining such property, (b) the streets, roads, sidewalks, alleys, and ways adjacent thereto, (c) all of the tenements, hereditaments, easements, reciprocal easement agreements, rights-of-way and other rights, privileges and appurtenances thereunto 8 belonging or in any way pertaining thereto, (d) all reversions and remainders, (e) all air space rights, and all water, sewer and wastewater rights, (e) all mineral, oil, gas, hydrocarbon substances and other rights to produce or share in the production of anything related to such property, and (f) all other appurtenances appurtenant to such property, including without limitation, any now or hereafter belonging or in any way appertaining thereto. Lease means a participating lease by and between a lessor and Borrower or its Subsidiary pursuant to which the lessee operates a Hotel Property. Legal Requirement means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority. Lender means MeriStar Hospitality Operating Partnership, L.P., a Delaware limited partnership. Leverage Ratio means the ratio on any date of (a) the Parent's Total Indebtedness on such date to (b) the EBITDA of the Parent and the Parent's Subsidiaries on a Consolidated basis for the Rolling Period immediately preceding such date; provided that if the Borrower or one of its Subsidiary's enters into a Lease or Management Agreement with projected revenue in excess of $100,000, or an Investment with an Investment Amount in excess of $250,000, on or prior to such date, the EBITDA arising from such Lease, Management Agreement or Investment, as applicable, for the applicable Rolling Period, shall be included in the calculation of EBITDA solely for calculation of EBITDA of the Leverage Ratio (adjusted upward or downward to provide for a deemed lease or management fee equal to a two and one-half percent (2.5%) of gross revenues from such Lease, Management Agreement or Investment incurred before the date of acquisition of such Lease, Management Agreement or Investment regardless of the actual lease management fees paid in connection with such Lease, Management Agreement or Investment incurred before the date of acquisition of such Lease, Management Agreement or Investment); and provided further that if such a Lease or Management Agreement with projected revenue in excess of $100,000, or an Investment with an Investment Amount in excess of $250,000, is assigned or sold on or prior to such date, the EBITDA arising from such Lease, Management Agreement or Investment, as applicable, for the applicable Rolling Period, shall be included in the calculation of EBITDA solely for calculation of EBITDA of the Leverage Ratio. LIBOR means, for the Interest Period for each Advance comprising part of the same Borrowing, an interest rate per annum (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) equal to (A) the rate per annum at which deposits in Dollars are offered to prime banks in the London interbank market at 11:00 a.m. (London time) two Business Days before the first day of such Interest Period as shown on the 9 display designated British Banker's Association Interest Settlement Rates on the Telerate System (Telerate) at Page 3750 or Page 3740, or such other page or pages as may replace such pages on Telerate for purposes of displaying such rate, in an amount substantially equal to the Advance comprising part of such Borrowing and for a period equal to such Interest Period divided by (B) one minus the LIBOR Reserve Requirement; provided, however, that if such rate is not available on Telerate then such offered rate shall be otherwise independently determined by the Lender from an alternate, substantially similar source available to the Lender or shall be calculated by the Lender by a substantially similar methodology as that theretofore used to determine such offered rate in Telerate. It is agreed that for purposes of this definition, Advance made hereunder shall be deemed to constitute Eurocurrency liabilities as defined in Regulation D and to be subject to the reserve requirements of Regulation D. LIBOR Reserve Requirement shall mean, on any day, that percentage (expressed as a decimal fraction) which is in effect on such date, as provided by the Federal Reserve System for determining the maximum reserve requirements generally applicable to financial institutions regulated by the Federal Reserve Board (including, without limitation, basic, supplemental, marginal and emergency reserves) under Regulation D with respect to Eurocurrency liabilities as currently defined as Regulation D, or under any similar or successor regulation with respect to Eurocurrency liabilities or Eurocurrency funding (or other category of liabilities which includes deposits by reference to which the interest rate on an Advance is determined). Each determination by the Lender of the LIBOR Reserve Requirement, shall, in the absence of manifest error, be conclusive and binding upon the Borrower. Lien means any mortgage, lien, pledge, charge, deed of trust, security interest, encumbrance or other type of preferential arrangement to secure or provide for the payment of any obligation of any Person, whether arising by contract, operation of law or otherwise (including, without limitation, the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement). Management Agreements means, collectively, all Hotel Property management agreements under which the Borrower or one of its Subsidiaries is named or acts as manager, as any such hotel management agreement may be amended, restated, supplemented or otherwise modified in accordance with the terms thereof. Material Adverse Change means a material adverse change in the business, financial condition, or results of operations of the Borrower, the Parent or any Guarantor taken as a whole, in each case since the date of the most recent financial statements of the Borrower or the Parent delivered to the Lender. Material Subsidiary means any Subsidiary of the Parent having assets or annual revenues in excess of $5,000,000, and Material Subsidiaries means all such Subsidiaries, collectively. 10 Maturity Date means three years from the Closing Date. Maximum Rate means the maximum nonusurious interest rate under applicable law. Merger means the merger of CapStar with and into AGH REIT and the merger of CapStar Hotel I and CapStar Hotel II with and into AGH OP pursuant to the Merger Agreement, and the other related transactions contemplated by the Merger Agreement. Merger Agreement means the Agreement and Plan of Merger among CapStar, AGH REIT, AGH OP and the other parties specified therein, dated March 15, 1998, as amended. MeriStar means MeriStar Hospitality Corporation, a Maryland corporation. Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Parent, the Borrower or any member of the Controlled Group is making or accruing an obligation to make contributions. Net Cash Proceeds means (a) the aggregate cash proceeds received by the Parent, the Borrower or any of their respective Subsidiaries (as applicable) in connection with any Asset Disposition or incurrence of Indebtedness, minus (b) the reasonable expenses (including, without limitation, taxes) of such Person in connection with such Asset Disposition or such incurrence of Indebtedness and (c) any amounts required to be repaid under existing Leases or Indebtedness. Net Income means, for any Person or Hotel Property, as applicable, for any period for which such amount is being determined, the net income of such Person or Hotel Property, as applicable (on a Consolidated basis), after taxes, as determined in accordance with GAAP, excluding, however, extraordinary items, including but not limited to (i) any net gain or loss during such period arising from the sale, exchange, or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business and (ii) any write-up or write-down of assets. Note means a promissory note of the Borrower payable to the order of the Lender, in substantially the form of the attached Exhibit A, evidencing indebtedness of the Borrower to the Lender resulting from Advances from the Lender, and Notes means all of such promissory notes. Notice of Borrowing means a notice of borrowing signed by a Responsible Officer of the Borrower. 11 Obligations means all Advances and other amounts payable by the Borrower to the Lender under the Credit Documents. Parent means MeriStar Hotels & Resorts, Inc., a Delaware corporation. PBGC means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. Permitted Hazardous Substances means (a) Hazardous Substances, petroleum and petroleum products which are (i) used in the ordinary course of business and in typical quantities for a property operated or managed by the Borrower and its Subsidiaries and (ii) generated, used and disposed of in accordance with all Legal Requirements and good industry practice and (b) non- friable asbestos to the extent (i) that no applicable Legal Requirements require removal of such asbestos from the property on which it is located and (ii) such asbestos is encapsulated in accordance with all applicable Legal Requirements. Permitted Asset Disposition means an Asset Disposition which occurs at a time in which no Default has occurred and is continuing and which would not cause a Default to occur upon the consummation of such Asset Disposition. Person means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, limited liability company, joint venture or other entity, or a government or any political subdivision or agency thereof or any trustee, receiver, custodian or similar official. Plan means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Parent, the Borrower or any member of the Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code. Property of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person. Registration Statement means the Registration Statement on Form S-4 (Registration No. 333-49611) filed with the Securities and Exchange Commission on April 7, 1998, as amended. Release shall have the meaning set forth in CERCLA or under any other Environmental Law. Repayment Event means the occurrence of any of the following: 12 (a) the incurrence by the Parent, the Borrower or any of their respective Subsidiaries of any Indebtedness after the date of this Agreement except: (i) the Obligations; and (ii) Indebtedness permitted pursuant to the provisions of Section 6.02. (b) the occurrence of an Asset Disposition after the date of this Agreement except Asset Dispositions for which the aggregate Net Cash Proceeds do not exceed $5,000,000; except for any Asset Disposition included in such calculation the Net Cash Proceeds which have been used to make an Investment in the Hospitality/Leisure Management Business within one year of the date of such Asset Disposition. Reportable Event means any of the events set forth in Section 4043(b) of ERISA. Response shall have the meaning set forth in CERCLA or under any other Environmental Law. Responsible Officer means the Chief Executive Officer, Chief Operating Officer, President, Executive Vice President or Chief Financial Officer of any Person. Restricted Payment means (a) any direct or indirect payment, prepayment, redemption, purchase, or deposit of funds or Property for the payment (including any sinking fund or defeasance), prepayment, redemption or purchase of Indebtedness not permitted by this Agreement, and (b) the making by any Person of any dividends or other distributions (in cash, property, or otherwise) on, or payment for the purchase, redemption or other acquisition of, any shares of any capital stock, any limited liability company interests or any partnership interests of such Person, other than dividends or distributions payable in such Person's stock, limited liability company interests or any partnership interests. Rolling Period means, as of any date, the four Fiscal Quarters ending immediately preceding such date. Senior Fixed Charge Ratio means, as of the end of any Rolling Period, a ratio of (a) the Parent's EBITDA for such Rolling Period to (b) Parent's Fixed Charges (which shall include Parent's Senior Interest Expense) for such Rolling Period. Senior Indebtedness means Total Indebtedness minus Subordinate Indebtedness. 13 Senior Indebtedness Leverage Ratio means the ratio on any date of (a) the Parent's Senior Indebtedness on such date to (b) the Parent's EBITDA on a Consolidated basis for the Rolling Period immediately preceding such date. Senior Interest Coverage Ratio means, as of the end of any Rolling Period, a ratio of (a) Parent's EBITDA for the Rolling Period to (b) Parent's Senior Interest Expense for such Rolling Period. Senior Interest Expense means for any Person for any period for which such amount is being determined Total Interest Expense minus interest expense on any Subordinate Indebtedness. Stock means shares of capital stock, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting, and includes, without limitation, common stock and preferred stock. Stock Equivalents means all securities (other than Stock) convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any stock, whether or not presently convertible, exchangeable or exercisable. Subordinate Indebtedness means Indebtedness of the Borrower, the Parent and their respective Subsidiaries which (a) shall not mature, become payable or require the payment of any principal amount thereof (or any amount in lieu thereof) or be mandatorily redeemable, pursuant to a sinking fund or otherwise redeemable at the option of the holder thereof, in any case in whole or in part, before the date that is 91 days after the Maturity Date and (b) shall be junior and subordinate to the Obligations and subject to an intercreditor agreement or subordination provisions which are in accordance with the then prevailing customary market terms and conditions. Subsidiary of a Person means any corporation, association, partnership or other business entity of which more than 50% of the outstanding shares of capital stock (or other equivalent interests) having by the terms thereof ordinary voting power under ordinary circumstances to elect a majority of the board of directors or Persons performing similar functions (or, if there are no such directors or Persons, having general voting power) of such entity (irrespective of whether at the time capital stock (or other equivalent interests) of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person. Termination Event means (a) the occurrence of a Reportable Event with respect to a Plan, as described in Section 4043 of ERISA and the regulations issued 14 thereunder (other than a Reportable Event not subject to the provision for 30- day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower or any of the Controlled Group from a Plan during a plan year in which it was a substantial employer as defined in Section 4001(a)(2) of ERISA, (c) the giving of a notice of intent to terminate a Plan under Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. Total Fixed Charge Ratio means, as of the end of any Rolling Period, a ratio of (a) the Parent's EBITDA for such Rolling Period to (b) Parent's Fixed Charges (which shall include Parent's Total Interest Expense) for such Rolling Period. Total Indebtedness of any Person means the sum of the following (without duplication): (a) all Indebtedness of such Person and its Subsidiaries, plus (b) the pro rata share of the Indebtedness of such Person's non- Consolidated Subsidiaries (including non-recourse Indebtedness), plus (c) to the extent not already included in the calculation of either of the preceding clauses (a) or (b), the aggregate amount of letters of credit for which such Person or any of its Subsidiaries would have a direct or contingent obligation to reimburse the issuers of such letters of credit upon a drawing under such letters of credit. Total Interest Coverage Ratio means, as of the end of any Rolling Period, a ratio of (a) the Parent's EBITDA for such Rolling Period to (b) Parent's Total Interest Expense for such Rolling Period. Total Interest Expense means, for any Person for any period for which such amount is being determined, the total interest expense (including that properly attributable to Capital Leases in accordance with GAAP) and all charges incurred with respect to letters of credit determined on a Consolidated basis in conformity with GAAP, plus (without duplication) capitalized interest of such Person and its Subsidiaries. Section 1.02 Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word from means from and including and the words to and until each means to but excluding. Section 1.03 Accounting Terms; Changes in GAAP. 1. All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP applied on a consistent basis. 2. Unless otherwise indicated, all financial statements, all calculations for compliance with covenants in this Agreement, and all calculations of any amounts to 15 be calculated under the definitions in Section 1.01 shall be based upon the Consolidated accounts of Parent and its Subsidiaries (as applicable) in accordance with GAAP. 3. If any changes in accounting principles after June 30, 1998 required by GAAP or the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or similar agencies results in a change in the method of calculation of, or affects the results of such calculation of, any of the financial covenants, standards or terms found in this Agreement, then the parties shall enter into and diligently pursue negotiations in order to amend such financial covenants, standards or terms so as to equitably reflect such change, with the desired result that the criteria for evaluating the financial condition of the Parent and its Subsidiaries (determined on a Consolidated basis) shall be the same after such change as if such change had not been made. Section 1.04 Miscellaneous. Article, Section, Schedule and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. ARTICLE II. ADVANCES Section 2.01 Advances. The Lender agrees, on the terms and conditions set forth in this Agreement, to make Advances to the Borrower from time to time on any Business Day up to 15 days prior to the Maturity Date in an aggregate amount not to exceed at any time outstanding an amount equal to the Commitment. Within the limits of the Commitment, the Borrower may from time to time prepay pursuant to Section 2.06 and reborrow under this Section 2.01. Advances are permitted under the facility; provided that: a. No Default which has not been cured or waived in writing by the Lender as set forth in Section 9.01 shall have occurred; and b. All representations and warranties are true, both before and after each advance under the Facility. 16 Section 2.02 Method of Borrowing. 1. Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing, given not later than 11:00 a.m. (New York, New York time) on the third Business Day before the date of the proposed Borrowing by the Borrower to the Lender, which shall give the Lender prompt notice on the day of receipt of such timely Notice of Borrowing of such proposed Borrowing by telecopier. Each Notice of Borrowing shall be in writing or by telecopier specifying the requested (i) date of such Borrowing, (ii) aggregate amount of such Borrowing (which, in any case, shall not be less than $1,000,000 or an integral multiple thereof), and (iii) the Interest Period for each such Advance. Upon fulfillment of the applicable conditions set forth in Article III, the Lender will make such funds available to the Borrower. 2. Certain Limitations. Except for Borrowings for the acquisition of new Leases or Management Agreements by the Borrower or its Subsidiary, the Borrower may not request Borrowings on more than four days in any calender month. 3. Notes. The indebtedness of the Borrower to the Lender resulting from Advances owing to the Lender shall be evidenced by a Note of the Borrower payable to the order of the Lender in substantially the form of Exhibit A. Section 2.03 Reduction of the Commitment. 1. Upon the occurrence of a Change in Control, then, in such event the Lender may, at its sole option upon written notice to the Borrower (a Termination Notice), declare the obligation of the Lender to make Advances to be terminated, whereupon the same shall forthwith terminate and the Commitment shall reduce to zero. 2. The Borrower may, upon at least two Business Days' prior notice to the Lender, permanently terminate in whole or permanently reduce ratably in part the Commitment of the Lender; provided, however, that (i) each partial reduction shall be in the aggregate amount of not less than $1,000,000 or an integral multiple of $100,000 in excess thereof, and (ii) no such reduction shall result in an overdraft status as provided in Section 2.06(c)(ii). 3. If the Borrower receives a commitment from a Financial Institution Lender for Financial Institution Senior Indebtedness, then, upon the funding of the first advance under such Financial Institution Senior Indebtedness, the Lender may, at its sole discretion, reduce the amount of its Commitment pro rata in an amount equal to the amount of the commitment for Financial Institution Senior Indebtedness received by the Borrower. Section 2.04 Repayment of Advances. The Borrower shall repay the outstanding principal amount of each Advance on the Maturity Date. 17 Section 2.05 Interest, Late Payment Fee. The Borrower shall pay interest on the unpaid principal amount of each Advance made by the Lender from the date of such Advance until such principal amount shall be paid in full, at a rate per annum (computed on the actual number of days elapsed, including the first day and excluding the last, based on a 360 day year) equal at all times during the Interest Period for such Advance to the lesser of (i) the LIBOR for such Interest Period plus the Applicable Margin and (ii) the Maximum Rate, payable in arrears on the last day of such Interest Period, and on the date such Advance shall be paid in full, and, with respect to an Advance having an Interest Period in excess of 30 days, the last day of each calendar month during such Interest Period excluding the month in which such Advance shall be paid in full; provided that during the continuance of an Event of Default, Advances shall bear interest at a rate per annum equal at all times to the lesser of (i) the rate required to be paid on such Advance immediately prior to the date on which such amount became due plus three percent (3%) and (ii) the Maximum Rate. 1. Usury Recapture. In the event the rate of interest chargeable under this Agreement or the Notes at any time is greater than the Maximum Rate, the unpaid principal amount of the Notes shall bear interest at the Maximum Rate until the total amount of interest paid or accrued on the Notes equals the amount of interest which would have been paid or accrued on the Notes if the stated rates of interest set forth in this Agreement had at all times been in effect. In the event, upon payment in full of the Notes, the total amount of interest paid or accrued under the terms of this Agreement and the Notes is less than the total amount of interest which would have been paid or accrued if the rates of interest set forth in this Agreement had, at all times, been in effect, then the Borrower shall, to the extent permitted by applicable law, pay the Lender for the account of the Lender an amount equal to the difference between (i) the lesser of (A) the amount of interest which would have been charged on the Notes if the Maximum Rate had, at all times, been in effect and (B) the amount of interest which would have accrued on the Notes if the rates of interest set forth in this Agreement had at all times been in effect and (ii) the amount of interest actually paid or accrued under this Agreement on the Notes. In the event the Lender ever receives, collects or applies as interest any sum in excess of the Maximum Rate, such excess amount shall, to the extent permitted by law, be applied to the reduction of the principal balance of the Notes, and if no such principal is then outstanding, such excess or part thereof remaining shall be paid to the Borrower. 2. Other Amounts Overdue. If any amount payable under this Agreement other than the Advances is not paid when due and payable, including without limitation, accrued interest, then such overdue amount shall accrue interest hereon due and payable on demand at a rate per annum equal to the LIBOR Rate plus three percent (3%), from the date such amount became due until the date such amount is paid in full. 3. Late Payment Fee. Subject to the provisions of Section 10.10, if any interest payable under this Agreement is not paid when due and payable (after taking into account any applicable grace period), then the Borrower will pay to the Lender 18 contemporaneously with the payment of such past due interest a late payment fee equal to an amount equal to the product of (i) such overdue interest times (ii) three percent (3%). Section 2.06 Prepayments. 1. Right to Prepay. The Borrower shall have no right to prepay any principal amount of any Advance except as provided in this Section 2.06. 2. Optional Prepayments. The Borrower may elect to prepay any of the Advances, after giving by 11:00 a.m. (New York, New York time) at least one Business Days' prior written notice to the Lender stating the proposed date and aggregate principal amount of such prepayment, and if applicable, the relevant Interest Period for the Advances to be prepaid. If any such notice is given, the Borrower shall prepay Advances comprising part of the same Borrowing in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, and shall also pay accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.07 as a result of such prepayment being made on such date; provided, however, that each partial prepayment shall be in an aggregate principal amount not less than $500,000. 3. Mandatory Prepayments. a. Change of Control. On the fifth Business Day following the Borrower's receipt of a Termination Notice pursuant to Section 2.03(a) hereof, the Borrower shall be required to prepay all outstanding Advances in full. b. Overdraft. On any date on which the outstanding principal amount of the Advances exceeds the aggregate Commitment, the Borrower agrees to make a prepayment of the Advances in the amount of such excess. c. Repayment Event. Upon the occurrence of any Repayment Event, the Borrower shall prepay Advances on the Business Day the Net Cash Proceeds from such Repayment Event are received by the Borrower or the Parent, as applicable, in an amount equal to the lesser of (A) the amount of the outstanding Advances on such Business Day and (B) 100% of the Net Cash Proceeds of such Repayment Event. If, in connection with an Asset Disposition which qualifies as a Repayment Event for which the Borrower has not used the Net Cash Proceeds to repay the Obligations, the Borrower has failed to make an Investment or Investments in the Hospitality/Leisure Management Business with such Net Cash Proceeds within one year from the date of such Asset Disposition, then the Borrower shall prepay Advances on the first anniversary of the Business Day such Net Cash Proceeds are received by the Borrower or the Parent, as applicable, in the amount equal to the lesser of (A) the amount of the outstanding Advances on such first anniversary and (B) 100% of the Net Cash Proceeds of such 19 Repayment Event which have not been used to make an Investment or investments in the Hospitality/Leisure Management Business. d. Accrued Interest. Each prepayment pursuant to this Section 2.06(c) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.07 as a result of such prepayment being made on such date. 4. Ratable Payments. Each payment of any Advance pursuant to this Section 2.06 or any other provision of this Agreement shall be made in a manner such that all Advances comprising part of the same Borrowing are paid in whole or ratably in part. 5. Effect of Notice. All notices given pursuant to this Section 2.06 shall be irrevocable and binding upon the Borrower. Section 2.07 Payments and Computations. 1. Payment Procedures. Except if otherwise set forth herein, the Borrower shall make each payment under this Agreement and under the Notes not later than 11:00 a.m. (New York, New York time) on the day when due in Dollars to the Lender at the location referred to in the Notes (or such other location as the Lender shall designate in writing to the Borrower) in same day funds. 2. Computations. All computations of interest based on the LIBOR shall be made by the Lender on the basis of a year of 360 days, in each case for the actual number of days (including the first day, but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Lender of an interest rate shall be conclusive and binding for all purposes, absent manifest error. 3. Non-Business Day Payments. Whenever any payment shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; provided, however, that if such extension would cause payment of interest on or principal of Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. 4. Application of Payments. Unless otherwise specified in Section 2.06 hereof, whenever any payment received by the Lender under this Agreement is insufficient to pay in full all amounts then due and payable under this Agreement and the Notes, such payment shall be distributed and applied by the Lender in the following order: first, to the payment of expenses due and payable under Section 2.09(c), to the Lender in accordance with the aggregate amount of such payments owed to the Lender; 20 and third, to the payment of all other amounts due and payable under this Agreement and the Notes. Section 2.08 Taxes. 1. No Deduction for Certain Taxes. Any and all payments by the Borrower shall be made, in accordance with Section 2.07, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of the Lender, taxes imposed on it, by the jurisdiction under the laws of which the Lender is organized or any political subdivision of the jurisdiction (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as Taxes). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable to the Lender, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08), the Lender receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Borrower shall make such deductions; and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Legal Requirements. 2. Other Taxes. In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Notes, or the other Credit Documents (hereinafter referred to as Other Taxes). 3. Indemnification. The Borrower indemnifies the Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 2.08) paid by the Lender and any liability (including interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. 4. Evidence of Tax Payments. The Borrower will pay prior to delinquency all Taxes and Other Taxes payable in respect of any payment. Within 30 days after the date of any payment of Taxes, the Borrower will furnish to the Lender, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing payment of such Taxes or Other Taxes. 21 ARTICLE III. CONDITIONS OF LENDING Section 3.01 Conditions Precedent to Initial Advance. The effectiveness of this Agreement and the obligation of the Lender to make any Advance hereunder are subject to the following conditions precedent being satisfied on or prior to August 3, 1998: 1. Documentation. The Lender shall have received counterparts of this Agreement executed by the Borrower, and the following duly executed by all the parties thereto, in form and substance satisfactory to the Lender: a. the Notes and the Guaranties; b. evidence reasonably satisfactory to the Lender that the Merger and the other transactions contemplated by the Merger Agreement and the Registration Statement (including the Lessee-Manager Purchase Agreement described therein) have been consummated in accordance with the terms of the Merger Agreement, all Legal Requirements and all corporate and partnership governance requirements; and c. such other documents, governmental certificates, agreements and lien searches as the Lender may reasonably request. 2. Representations and Warranties. The representations and warranties contained in Article IV hereof and the Guaranties shall be true and correct in all material respects. Section 3.02 Conditions Precedent for Each Borrowing. The obligation of the Lender to fund an Advance on the occasion of each Borrowing shall be subject to the further conditions precedent that on the date of such Borrowing: 1. the following statements shall be true (and each of the giving of the applicable Notice of Borrowing 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 such statements are true): 2. the representations and warranties contained in Article IV hereof and the Guaranties, as such representations and warranties may change based upon events or activities permitted by this Agreement, are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds from such Borrowing, as though made on and as of such date; and 22 b. no Default has occurred and is continuing or would result from such Borrowing or from the application of the proceeds therefrom. 2. the Lender shall have received such other approvals, opinions or documents deemed necessary or desirable by the Lender. ARTICLE IV. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants as follows: Section 4.01 Existence; Qualification; Partners; Subsidiaries. 1. The Borrower is a limited partnership duly organized, validly existing, and in good standing under the laws of Delaware and in good standing and qualified to do business in each jurisdiction where its ownership or lease of property or conduct of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on the Borrower. 2. Parent is a corporation duly organized, validly existing, and in good standing under the laws of Delaware and in good standing and qualified to do business in each jurisdiction where its ownership or lease of property or conduct of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on the Borrower. 3. Each Subsidiary of the Borrower is a corporation, limited partnership, general partnership or limited liability company duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and in good standing and qualified to do business in each jurisdiction where conduct of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on such Subsidiary. Section 4.02 Partnership and Corporate Power. The execution, delivery, and performance by the Borrower and each Guarantor of the Credit Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) are within such Persons' partnership, limited liability company and corporate powers, as applicable, (b) have been duly authorized by all necessary corporate, limited liability company and partnership action, as applicable, (c) do not contravene (i) such Person's certificate or articles, as the case may be, of incorporation or by-laws, operating agreement or partnership agreement, as applicable, or (ii) any law or any contractual restriction binding on or affecting any such Person, the contravention of which could reasonably be expected to cause a Material Adverse Change, and (d) will not result in or 23 require the creation or imposition of any Lien prohibited by this Agreement. At the time of each Borrowing, such Borrowing and the use of the proceeds of such Borrowing will be within the Borrower's partnership powers, will have been duly authorized by all necessary partnership action, (a) will not contravene (i) the Borrower's partnership agreement or (ii) any law or any contractual restriction binding on or affecting the Borrower, the contravention of which could reasonably be expected to cause a Material Adverse Change, and (b) will not result in or require the creation or imposition of any Lien prohibited by this Agreement. Section 4.03 Authorization and Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by the Borrower or any Guarantor of the Credit Documents to which it is a party or the consummation of the transactions contemplated thereby. Section 4.04 Enforceable Obligations. This Agreement, the Notes, and the other Credit Documents to which the Borrower is a party have been duly executed and delivered by the Borrower; each Guaranty and the other Credit Documents to which each Guarantor is a party have been duly executed and delivered by such Guarantor. Each Credit Document is the legal, valid, and binding obligation of the Borrower and each Guarantor which is a party to it enforceable against the Borrower and each such Guarantor in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law affecting creditors' rights generally and by general principles of equity (whether considered in proceeding at law or in equity). Section 4.05 Financial Statements and Registration Statement. The respective Consolidated balance sheets of the Parent and the respective related Consolidated statements of operations, shareholders' equity and cash flows, of the Parent contained in the Registration Statement, and the corresponding pro forma financial statements for the Borrower, fairly present the financial condition and results of operation in all material respects for the periods indicated, and such balance sheets and statements were prepared in accordance with GAAP, subject to year-end adjustments. Since the date of such statements, no Material Adverse Change has occurred. Section 4.06 True and Complete Disclosure. No representation, warranty, or other statement made by the Borrower (or on behalf of the Borrower) in this Agreement or any other Credit Document contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which they were made as of the date of this Agreement. 24 Section 4.07 Litigation. Except as set forth in Schedule 4.07, there is no pending or, to the best knowledge of the Borrower, threatened action or proceeding affecting the Borrower or the Parent or any of their respective Subsidiaries before any court, Governmental Authority or arbitrator in which the amount of the dispute is over $500,000 or, in the Borrower's good faith judgment, the anticipated loss is over $500,000 (provided that with respect to the giving of this representation after the date of this Agreement, the representation shall only be deemed to apply to those matters for which Lender would have been entitled to notice under Section 5.04(f)). Section 4.08 Use of Proceeds. 1. Advances. The proceeds of the Advances shall be used by the Borrower to (i) to make Investments permitted pursuant to the provisions of Section 6.05 and (ii) for general corporate purposes of the Borrower and its Subsidiaries. 2. Regulations. No proceeds of Advances will be used to purchase or carry any margin stock in violation of Regulations G, T, U or X of the Federal Reserve Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board). Section 4.09 Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended. Section 4.10 Taxes. All federal, state, local and foreign tax returns, reports and statements required to be filed (after giving effect to any extension granted in the time for filing) by the Parent, the Borrower or its Subsidiaries, or any member of a Controlled Group have been filed with the appropriate governmental agencies in all jurisdictions in which such returns, reports and statements are required to be filed, and where the failure to file could reasonably be expected to cause a Material Adverse Change, except where contested in good faith and by appropriate proceedings; and all taxes and other impositions due and payable (which are material in amount) have been timely paid prior to the date on which any fine, penalty, interest, late charge or loss (which are material in amount) may be added thereto for non-payment thereof except where contested in good faith and by appropriate proceedings. Proper and accurate amounts have been withheld by the Parent, the Borrower and all members of each Controlled Group from their employees for all periods to comply in all material respects with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law. Timely payment of all material sales and use taxes required by applicable law have been made by the Borrower and all other members of the Controlled Group, the failure to timely pay of which could reasonably be expected to cause a Material Adverse Change. The amounts shown on all tax returns to be due and payable have been paid in full or adequate provision therefor is included on the books of the appropriate member of the applicable Controlled Group. Section 4.11 Pension Plans. All Plans are in compliance in all material respects with all applicable provisions of ERISA. No Termination Event has occurred with respect to any Plan which could reasonably be expected to cause a Material Adverse Change, and each Plan has complied with and been administered in all material respects in accordance with applicable provisions of ERISA and the Code. No accumulated funding deficiency (as defined in Section 302 of ERISA) has occurred and there has 25 been no excise tax imposed under Section 4971 of the Code. No Reportable Event has occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has complied with and been administered in all material respects with applicable provisions of ERISA and the Code. Neither the Borrower, nor any member of a Controlled Group has had a complete or partial withdrawal from any Multiemployer Plan for which there is any material withdrawal liability. As of the most recent valuation date applicable thereto, neither the Borrower nor any member of a Controlled Group has received notice that any Multiemployer Plan is insolvent or in reorganization. Section 4.12 No Burdensome Restrictions; No Defaults. 1. Except in connection with Indebtedness which is (i) either permitted pursuant to the provisions of Section 6.02, or (ii) being repaid with the proceeds of the initial Borrowing, neither the Borrower nor any of its Subsidiaries is a party to any indenture, loan or credit agreement. Neither the Borrower, the Parent nor any of their respective Subsidiaries is a party to any agreement or instrument or subject to any charter or corporate restriction or provision of applicable law or governmental regulation which could reasonably be expected to cause a Material Adverse Change. Neither the Borrower, the Parent nor any of their Subsidiaries is in default under or with respect to (i) any contract, agreement, lease or other instrument which could reasonably be expected to cause a Material Adverse Change or (ii) any ground lease, participating lease, franchise agreement, license agreement or management agreement which could reasonably be expected to cause a Material Adverse Change, except as disclosed to the Lender in writing prior to the date such representation is deemed given. Neither the Borrower, the Parent nor any of their Subsidiaries has received any notice of default under any material contract, agreement, lease or other instrument which is continuing and which, if not cured, could reasonably be expected to cause a Material Adverse Change. 2. No Default has occurred and is continuing (or with respect to the giving of this representation after the date of this Agreement, as otherwise disclosed to the Lender in writing after the date of this Agreement and prior to the date such representation is deemed given). Section 4.13 Environmental Condition. 1. Except as disclosed in Schedule 4.14, to the knowledge of the Borrower, the Borrower and its Subsidiaries (or with respect to the giving of this representation after the date of this Agreement, as otherwise disclosed to the Lender in writing after the date of this Agreement and prior to the date such representation is deemed given)(i) have obtained all Environmental Permits material for the operation of their respective Properties and the conduct of their respective businesses; (ii) have been and are in material compliance with all terms and conditions of such Environmental Permits and with all other requirements of applicable Environmental Laws; (iii) have not received notice of any violation or alleged violation of any Environmental Law or 26 Environmental Permit; and (iv) are not subject to any actual or contingent Environmental Claim. To the knowledge of the Borrower (or with respect to the giving of this representation after the date of this Agreement, as otherwise disclosed to the Lender in writing after the date of this Agreement and prior to the date such representation is deemed given), the Borrower and its Subsidiaries are not subject to any actual or contingent Environmental Claim which the Borrower believes in good faith will involve cost or expense to the Borrower or its Subsidiaries in excess of $1,000,000 for any single Environmental Claim, or in excess of $10,000,000 for all such Environmental Claims in the aggregate. 2. Except as disclosed in Schedule 4.14, to the knowledge of Borrower, none of the present or previously owned or operated Property of the Borrower or of any of its present or former Subsidiaries, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified as a potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws which could reasonably be expected to cause a Material Adverse Change; (ii) is subject to a Lien, arising under or in connection with any Environmental Laws, that attaches to any revenues or to any Property operated by the Borrower or any of its Subsidiaries, wherever located; (iii) has been the site of any Release, use or storage of Hazardous Substances or Hazardous Wastes from present or past operations except for Permitted Hazardous Substances, which Permitted Hazardous Substances have not caused at the site or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for Response or (iv) none of the Improvements are constructed on land designated by any Governmental Authority having land use jurisdiction as wetlands. Section 4.14 Legal Requirements, Zoning, Utilities, Access. Except as set forth on Schedule 4.15, the use and operation of each Hotel Property as a commercial hotel with related uses constitutes a legal use under applicable zoning regulations (as the same may be modified by special use permits or the granting of variances) and complies in all material respects with all Legal Requirements, and does not violate in any material respect any material approvals, material restrictions of record or any material agreement affecting any Hotel Property (or any portion thereof). The Borrower and its Subsidiaries possess all certificates of public convenience, authorizations, permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names rights and copyrights (collectively Permits) required by Governmental Authority to operate the Hotel Properties, except for those Permits which if not obtained would not cause a Material Adverse Change. The Borrower and its Subsidiaries own and operate their business in material compliance with all applicable Legal Requirements. To the extent necessary for the full utilization of each Hotel Property in accordance with its current use, telephone services, gas, steam, electric power, storm sewers, sanitary sewers and water facilities and all other utility services are available to each Hotel Property, are adequate to serve each 27 such Hotel Property, exist at the boundaries of the Land and are not subject to any conditions, other than normal charges to the utility supplier, which would limit the use of such utilities. All streets and easements necessary for the occupancy and operation of each Hotel Property are available to the boundaries of the Land. Section 4.15 Existing Indebtedness. Except for the Obligations or as reflected in the financial statements contained in the Registration Statement, there is no Indebtedness of the Borrower or any of its Subsidiaries existing as of the Effective Date. No default or event of default, however defined, has occurred and is continuing under any such Indebtedness (or with respect to the giving of this representation after the date of this Agreement, as otherwise disclosed to the Lender in writing after the date of this Agreement and prior to the date such representation is deemed given). Section 4.16 Leases and Management Agreements. To the knowledge of the Borrower, the Leases and the Management Agreements are in full force and effect and no material defaults exist thereunder (or with respect to the giving of this representation after the date of this Agreement, as otherwise disclosed to the Lender in writing after the date of this Agreement and prior to the date such representation is deemed given). Copies of all material Leases and Management Agreements of the Borrower and its Subsidiaries have been delivered by the Borrower to the Lender. ARTICLE V. AFFIRMATIVE COVENANTS So long as any Note or any amount under any Credit Document shall remain unpaid, or the Lender shall have any Commitment hereunder, unless the Lender shall otherwise consent in writing, the Borrower agrees to comply with the following covenants. Section 5.01 Compliance with Laws, Etc. The Borrower will comply, and cause the Parent and each of its Subsidiaries to comply, in all material respects with all Legal Requirements. Section 5.02 Preservation of Existence; Separateness, Etc. 1. The Borrower will preserve and maintain, and cause the Parent and each of its Subsidiaries to preserve and maintain, its partnership, limited liability company or corporate (as applicable) existence, rights, franchises and privileges in the jurisdiction of its formation, and qualify and remain qualified, and cause the Parent and each such Subsidiary to qualify and remain qualified, as a foreign partnership or corporation as applicable in each jurisdiction in which qualification is necessary or desirable in view of its business and operations or the ownership of its properties, and, in 28 each case, where failure to qualify or preserve and maintain its rights and franchises could reasonably be expected to cause a Material Adverse Change. 2. The Parent Common Stock shall at all times be duly listed on the New York Stock Exchange, Inc. and (ii) the Parent shall timely file all reports required to be filed by it with the New York Stock Exchange, Inc. and the Securities and Exchange Commission. 3. The Borrower shall hold itself out, and shall continue to hold itself out, to the public and to its creditors as a legal entity, separate and distinct from all other entities, and shall continue to take all steps reasonably necessary to avoid misleading any other Person as to the identity of the entity with which such Person is transacting business. Section 5.03 Payment of Taxes, Etc. The Borrower will pay and discharge, and cause the Parent and each of its Subsidiaries to pay and discharge, before the same shall become delinquent (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or Property that are material in amount, prior to the date on which penalties attach thereto and (b) all lawful claims that are material in amount which, if unpaid, might by Legal Requirement become a Lien upon its Property; provided, however, that neither the Borrower, the Parent nor any such Subsidiary shall be required to pay or discharge any such tax, assessment, charge, levy, or claim (a) which is being contested in good faith and by appropriate proceedings, (b) with respect to which reserves in conformity with GAAP have been provided, (c) if such charge or claim does not constitute and is not secured by any choate Lien on any portion of any Hotel Property and no portion of any Hotel Property is in jeopardy of being sold, forfeited or lost during or as a result of such contest, (d) if the Lender could not become subject to any civil fine or penalty or criminal fine or penalty, in each case as a result of non-payment of such charge or claim and (e) if such contest does not, and could not reasonably be expected to, result in a Material Adverse Change. Section 5.04 Reporting Requirements. The Borrower will furnish to the Lender: 1. Quarterly Financials. As soon as available and in any event not later than 50 days after the end of each Fiscal Quarter of the Parent, the unaudited Consolidated balance sheets of the Parent and its Subsidiaries as of the end of such quarter and the related unaudited statements of income, shareholders' equity and cash flows of the Parent and its Subsidiaries for such Fiscal quarter and the period commenc ing at the end of the previous year and ending with the end of such Fiscal Quarter, and the corresponding figures as at the end of, and for, the corresponding periods in the preceding Fiscal Year, all duly certified with respect to such statements (subject to year-end audit adjustments) by a Responsible Officer of the Parent as having been prepared in 29 accordance with GAAP, together with a Compliance Certificate duly executed by a Responsible Officer of the Parent. 2. Annual Financials. As soon as available and in any event not later than 95 days after the end of each Fiscal Year of the Parent, a copy of the Consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Year and the related Consolidated statements of income, shareholders' equity and cash flows of the Parent and its Subsidiaries for such Fiscal Year, and the corresponding figures as at the end of, and for, the preceding Fiscal Year, and certified by the Company's independent certified public accountants of nationally recognized standing in an opinion, without qualification as to the scope, and including any management letters delivered by such accountants to the Parent in connection with such audit, together with a Compliance Certificate duly executed by a Responsible Officer of the Parent. 3. Securities Law Filings. Promptly and in any event within 15 days after the sending or filing thereof, copies of all proxy material, reports and other information which the Borrower, the Parent or any of their respective Subsidiaries sends to or files with the United States Securities and Exchange Commission or sends to all of the shareholders of the Parent or partners of the Borrower. 4. Defaults. As soon as possible and in any event within five days after the occurrence of each Default known to a Responsible Officer of the Parent, the Borrower or any of their respective Subsidiaries, a statement of an authorized financial officer or Responsible Officer of the Borrower setting forth the details of such Default and the actions which the Borrower has taken and proposes to take with respect thereto. 5. ERISA Notices. As soon as possible and in any event (i) within 30 days after the Parent, the Borrower or any member of a Controlled Group knows to know that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, (ii) within 10 days after the Parent, the Borrower or any member of a Controlled Group knows that any other Termination Event with respect to any Plan has occurred, a statement of the Chief Financial Officer of the Parent describing such Termination Event and the action, if any, which the Parent, the Borrower or such member of such Controlled Group proposes to take with respect thereto; (iii) within 10 days after receipt thereof by the Parent, the Borrower or any member of a Controlled Group from the PBGC, copies of each notice received by the Parent, the Borrower or any such member of such Controlled Group of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan; and (iv) within 10 days after receipt thereof by the Parent, the Borrower or any member of a Controlled Group from a Multiemployer Plan sponsor, a copy of each notice received by the Parent, the Borrower or any member of such Controlled Group concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA. 6. Environmental Notices. Promptly upon the knowledge of any Responsible Officer of the Borrower of receipt thereof by the Borrower or any of its 30 Subsidiaries, a copy of any form of notice, summons or citation received from the United States Environmental Protection Agency, or any other Governmental Authority concerning (i) violations or alleged violations of Environmental Laws, which seeks to impose liability therefor, (ii) any action or omission on the part of the Parent or the Borrower or any of their present or former Subsidiaries in connection with Hazardous Waste or Hazardous Substances which, based upon information reasonably available to the Borrower, could reasonably be expected to cause a Material Adverse Change or an Environmental Claim in excess of $10,000,000, (iii) any notice of potential responsibility under CERCLA, or (iv) concerning the filing of a Lien upon, against or in connection with the Parent, Borrower, their present or former Subsidiaries, or any of their leased or owned Property, wherever located. 7. Other Governmental Notices or Actions. Promptly and in any event within five Business Days after receipt thereof by the Parent, Borrower or any of their respective Subsidiaries, (i) a copy of any notice, summons, citation, or proceeding seeking to adversely modify in any material respect, revoke, or suspend any license, permit, or other authorization from any Governmental Authority, which action could reasonably be expected to cause a Material Adverse Change, and (ii) any revocation or involuntary termination of any license, permit or other authorization from any Governmental Authority, which revocation or termination could reasonably be expected to cause a Material Adverse Change. 8. Material Litigation. As soon as possible and in any event within five days of any Responsible Officer of the Borrower, the Parent or any of their respective Subsidiaries having knowledge thereof, notice of any litigation, claim or any other event which could reasonably be expected to cause a Material Adverse Change. 9. Other Information. Such other information respecting the business or Properties, or the condition or operations, financial or otherwise, of the Borrower, the Parent or any of their respective Subsidiaries, as the Lender may from time to time reasonably request. Section 5.05 Insurance. The Borrower will maintain, and cause each of its Subsidiaries to maintain, adequate insurance consistent with commercial practices in the industry. Section 5.06 Material Documents. The Borrower will not, nor will it permit any of its Subsidiaries to (a) amend the Borrower's partnership agreement in any material respect, (b) admit a new general partner to the Borrower, or (c) enter into any termination, material modification or amendment of the Intercompany Agreement and any other material agreement. Any termination, modification or amendment prohibited under this Section 5.06 without the Lender's written consent shall, to the extent permitted by applicable law, be void and of no force and effect. 31 ARTICLE VI. NEGATIVE COVENANTS So long as any Note or any amount under any Credit Document shall remain unpaid or the Lender shall have any Commitment, the Borrower agrees, unless the Lender shall otherwise consent in writing, to comply with the following covenants: Section 6.01 Liens, Etc. The Borrower, the Parent and their respective Subsidiaries will not create, assume, incur or suffer to exist, any Lien on or in respect of any of its Property whether now owned or hereafter acquired, or assign any right to receive income, except that the Borrower and its Subsidiaries may create, incur, assume or suffer to exist Liens: 1. securing the Obligations; 2. securing the Financial Institution Senior Indebtedness; 3. for taxes, assessments or governmental charges or levies on Property of the Borrower or any Guarantor to the extent not required to be paid pursuant to Sections 5.03; 4. imposed by law (such as landlords', carriers', warehousemen's and mechanics' liens or otherwise arising from litigation) (i) which are being contested in good faith and by appropriate proceedings, (ii) with respect to which reserves in conformity with GAAP have been provided, (iii) which have not resulted in any Hotel Property being in jeopardy of being sold, forfeited or lost during or as a result of such contest, (iv) neither the Lender nor the Borrower could become subject to any civil fine or penalty or criminal fine or penalty, in each case as a result of non-payment of such charge or claim and (v) such contest does not, and could not reasonably be expected to, result in a Material Adverse Change; 5. on leased personal property to secure solely the lease obligations associated with such property; Section 6.02 Indebtedness. The Borrower, the Parent and their respective Subsidiaries will not incur or permit to exist any Indebtedness other than the Obligations, the Financial Institution Senior Indebtedness and the following: 1. Indebtedness in an amount that does not cause a breach at any time of the covenants contained in Article VII; 2. Capital Leases in an amount in excess of $10,000,000; 32 3. Interest Rate Agreements; provided that (i) such agreements shall be unsecured, (ii) the dollar amount of indebtedness subject to such agreements and the indebtedness subject to Interest Rate Agreements in the aggregate shall not exceed the sum of the amount of the Commitment and the amount of the other Indebtedness of the Borrower or its Affiliates which bears interest at a variable rate, and (iii) the agreements shall be at such interest rates and otherwise in form and substance reasonably acceptable to the Lender. 4. Any of the following Indebtedness incurred by the Parent: a. indemnities for certain acts of malfeasance, misappropriation and misconduct and an environmental indemnity for the lender under Indebtedness permitted under to this Agreement; and b. guaranties of any obligations of the Borrower or its Subsidiaries permitted by this Agreement, including without limitation guaranties of Leases and Management Agreements. 5. extensions, renewals and refinancing of any of the Indebtedness specified in paragraphs (b) - (d) above so long as the principal amount of such Indebtedness is not thereby increased. Section 6.03 Agreements Restricting Distributions From Subsidiaries. Except as required by the Leases, the Borrower will not, nor will it permit any of its Subsidiaries to, enter into any agreement (other than a Credit Document) which limits distributions to or any advance by any of the Borrower's Subsidiaries to the Borrower. Section 6.04 Fundamental Changes; Asset Dispositions. Neither the Parent, the Borrower, nor any of their respective Subsidiaries will, (a) merge or consolidate with or into any other Person, unless (i) a Guarantor is merged into the Borrower and the Borrower is the surviving Person or a Subsidiary is merged into any Subsidiary, and (ii) immediately after giving effect to any such proposed transaction no Default would exist; (b) sell, transfer, or otherwise dispose of all or any of the such Person's material property except for a Permitted Asset Disposition, or dispositions or replacements of personal property in the ordinary course of business; (c) sell or otherwise dispose of any material shares of capital stock, membership interests or partnership interests of any Subsidiary; (d) except for sales of ownership interests permitted under this Agreement and the issuance of limited partnership interests in the Borrower in exchange for ownership interests in Subsidiaries and non- Consolidated Subsidiaries to the extent permitted pursuant to the provisions of Section 6.03, materially alter the corporate, capital or legal structure of any such Person; (e) liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) provided that nothing herein shall prohibit the Borrower from dissolving any Subsidiary which has no assets on the date of dissolution or (f) materially alter the character of their respective businesses from that 33 conducted as of the date of this Agreement or otherwise engage in any material business activity outside of the Hospitality/Leisure Management Business. Section 6.05 Investments, Loans, Future Properties. Neither the Parent nor the Borrower shall, or shall permit any of their respective Subsidiaries to, acquire by purchase or otherwise any business, property or fixed assets of any Person or any Hotel Property, make or permit to exist any loans, advances or capital contributions to, or make any Investments in (including without limitation, loans and advances to, and other Investments in, Subsidiaries) or purchase or commit to purchase any evidences of indebtedness of, stock or other securities, partnership interests, member interests or other interests in any Person, except (provided that after giving effect thereto there shall exist no Default) Investments in the Hospitality/Leisure Management Business; provided, however, that the Borrower shall be required to obtain the consent of the Lender prior to making an Investment in the Hospitality/Leisure Management Business in an amount that exceeds $50,000,000. Notwithstanding the foregoing, neither the Borrower, nor the Parent, nor their respective Subsidiaries shall make an Investment which would (a) cause a Default, or (b) cause or result in the Borrower or the Parent failing to comply with any of the financial covenants contained herein. Section 6.06 Affiliate Transactions. Except for the Intercompany Agreement, certain liquor license agreements and the transactions described in Section 6.04(i), the Borrower will not, and will not permit any of its Subsidiaries to, make, directly or indirectly: (a) any transfer, sale, lease, assignment or other disposal of any assets to any Affiliate of the Borrower which is not a Guarantor or any purchase or acquisition of assets from any such Affiliate except for sales of new personal property (i) which in any calendar year do not exceed $10,000,000 in the aggregate and (ii) for which the sales price is the actual cost to the party selling; or (b) any arrangement or other transaction directly or indirectly with or for the benefit of any such Affiliate (including without limitation, guaranties and assumptions of obligations of an Affiliate), other than in the ordinary course of business and at market rates. Section 6.07 Sale or Discount of Receivables. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable. Section 6.08 Restricted Payments. Neither the Parent, nor the Borrower, nor any of their respective Subsidiaries, will make any Restricted Payment; 34 ARTICLE VII. FINANCIAL COVENANTS So long as any Note or any amount under any Credit Document shall remain unpaid, or the Lender shall have any Commitment hereunder, unless the Lender shall otherwise consent in writing, the Borrower agrees to cause the Parent to comply with the following covenants: Section 7.01 Senior Interest Coverage Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999 a Senior Interest Coverage Ratio of not less than 2.5 to 1.0, and (b) for any Rolling Period thereafter, a Senior Interest Coverage Ratio of not less than 2.75 to 1.0. Section 7.02 Total Interest Coverage Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through December 31, 1999, a Total Interest Coverage Ratio of not less than 2.0 to 1.0 and (b) for any Rolling Period thereafter, a Total Interest Coverage Ratio of not less than 2.5 to 1.0. Section 7.03 Senior Fixed Charge Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999 a Senior Fixed Charge Ratio of not less than 2.0 to 1.0, (b) for the Rolling Periods ending on December 31, 1999 through September 30, 2000 a Senior Fixed Charge Ratio of not less than 2.5 to 1.0, and (c) for any Rolling Period thereafter, a Senior Fixed Charge Ratio of not less than 2.25 to 1.0. Section 7.04 Total Fixed Charge Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 to September 30, 1999, a Total Fixed Charge Ratio of not less than 1.75 to 1.0, (b) for the Rolling Periods ending on December 31, 1999 to September 30, 2000, a Total Fixed Charge Ratio of not less than 2.0 to 1.0, and (c) for any Rolling Period thereafter, a Total Fixed Charge Ratio of not less than 2.25 to 1.0. Section 7.05 Senior Indebtedness Leverage Ratio. The Parent shall not on any date permit the Senior Indebtedness Leverage Ratio to exceed (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999, 4.0 to 1.0, (b) for any Rolling Period thereafter, 3.5 to 1.0. Section 7.06 Leverage Ratio. The Parent shall not on any date permit the Leverage Ratio to exceed (a) prior to December 31, 1998 5.5 to 1, (b) from December 31, 1998 to June 30, 1999, 5.0 to 1.0, (c) from July 1, 1999 to June 30, 2000 4.5 to 1.0, and (d) after June 30, 2000 4.0 to 1.0. 35 ARTICLE VIII. SUBORDINATION Section 8.01 Agreement to Subordinate. The Lender agrees that Indebtedness for Borrowings under this Agreement represented by the Notes shall be subordinated in right of payment, to the extent and in the manner provided in this Article, to the prior payment in full of all Financial Institution Senior Indebtedness and that the subordination is for the benefit of the Financial Institution Lenders. Section 8.02 Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Borrower in a liquidation or dissolution of the Borrower or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Borrower or its Property: (a) the holders of Financial Institution Senior Indebtedness shall be entitled to receive payment in full in cash of the principal of and interest (including interest accruing after the commencement of any such proceeding) to the date of payment on the Financial Institution Senior Indebtedness before the Lender shall be entitled to receive any payment of principal of or interest on the Notes; and (b) until the Financial Institution Senior Indebtedness is paid in full in cash, any distribution to which the Lender would be entitled but for this Article shall be made to the holders of Financial Institution Senior Indebtedness as their interests may appear, except that the Lender may receive securities that are subordinated to Financial Institution Senior Indebtedness to at least the same extent as the Notes. Section 8.03 Default on Financial Institution Senior Indebtedness. The Borrower may not pay principal of or interest on the Notes and may not acquire any securities for cash or property other than capital stock of the Borrower if: (a) a default on Financial Institution Senior Indebtedness occurs and is continuing that permits holders of such Financial Institution Senior Indebtedness to accelerate its maturity; and (b) the default is the subject of judicial proceedings or the Borrower receives a notice of the default. If the Borrower receives any such notice, a similar notice received within nine months thereafter relating to the same default on the same issue of Financial Institution Senior Indebtedness shall not be effective for purposes of this Section. The Borrower may resume payments on the Notes and may acquire them when (1) the default is cured or waived, or (2) 20 days pass after the notice is given if the default is not the subject of judicial proceedings, if this Article otherwise permits the payment or acquisition at that time. 36 Section 8.04 Acceleration of Notes. If payment of the Notes is accelerated because of an Event of Default, the Borrower shall promptly notify holders of Financial Institution Senior Indebtedness of the acceleration. The Borrower may pay the Notes when 120 days pass after the acceleration occurs if this Article permits the payment at that time. Section 8.05 When Distribution Must Be Paid Over. If a distribution is made to the Lender that because of this Article should not have been made to it, the Lender shall hold it in trust for holders of Financial Institution Senior Indebtedness and pay it over to them as their interests may appear. Section 8.06 Notice by Borrower. The Borrower shall promptly notify the Lender of any facts known to the Borrower that would cause a payment of principal of or interest on Notes to violate this Article. Section 8.07 Subrogation. After all Financial Institution Senior Indebtedness is paid in full and until the Notes are paid in full, the Lender shall be subrogated to the rights of holders of Financial Institution Senior Indebtedness to receive distributions applicable to Financial Institution Senior Indebtedness to the extent that distributions otherwise payable to the Lender have been applied to the payment of Financial Institution Senior Indebtedness. A distribution made under this Article to holders of Financial Institution Senior Indebtedness which otherwise would have been made to the Lender is not, as between the Borrower and the Lender, a payment by the Borrower on Financial Institution Senior Indebtedness. Section 8.08 Relative Rights. This Article defines the relative rights of the Lender and holders of Financial Institution Senior Indebtedness. Nothing in this Indenture shall: (a) impair, as between the Borrower and the Lender, the obligation of the Borrower, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (b) affect the relative rights of the Lender and creditors of the Borrower other than holders of Financial Institution Senior Indebtedness; or (c) prevent the Lender from exercising its available remedies upon an Event of Default, subject to the rights of holders of Financial Institution Senior Indebtedness to receive distributions otherwise payable to the Lender. If the Borrower fails because of this Article to pay principal of or interest on a Note on the due date, the failure is still an Event of Default as provided elsewhere herein. 37 ARTICLE IX. EVENTS OF DEFAULT; REMEDIES Section 9.01 Events of Default. The occurrence of any of the following events shall constitute an Event of Default under any Credit Document: 1. Principal Payment. The Borrower or any Guarantor shall fail to pay any principal of any Note when the same becomes due and payable as set forth in this Agreement; 2. Interest or Other Obligation Payment. The Borrower or any Guarantor shall fail to pay any interest on any Note or any other amount payable hereunder or under any other Credit Document when the same becomes due and payable as set forth in this Agreement; provided, however, that the Borrower and the Guarantors will have a grace period of ten days after the payments covered by this Section 9.01(b) becomes due and payable for the first two defaults of such Persons collectively under this Section 9.01(b) in every calendar year; 3. Representation and Warranties. Any representation or warranty made or deemed to be made (i) by the Borrower in this Agreement or in any other Credit Document, (ii) by the Borrower (or any of its officers) in connection with this Agreement or any other Credit Document, or (iii) by the Parent or any Subsidiary in any Credit Document shall prove to have been incorrect in any material respect when made or deemed to be made; 4. Covenant Breaches. (i) The Borrower shall fail to perform or observe any covenant contained in Section 5.02, Article VI or Article VII of this Agree ment or the Borrower shall fail to perform or observe, or shall fail to cause any Guarantor to perform or observe any covenant in any Credit Document beyond any notice and/or cure period for such default expressly provided in such Credit Document or (ii) the Borrower or any Guarantor shall fail to perform or observe any term or covenant set forth in any Credit Document which is not covered by clause (i) above or any other provision of this Section 9.01, in each case if such failure shall remain unremedied for 30 days after the earlier of the date written notice of such default shall have been given to the Borrower or such Guarantor by the Lender or the date a Responsible Officer of the Borrower or any Guarantor has actual knowledge of such default, unless such default in this clause (ii) cannot be cured in such 30 day period and the Borrower is diligently proceeding to cure such default, in which event the cure period shall be extended to 90 days; 38 5. Cross-Defaults. (i) with respect to Indebtedness of the Borrower in excess of $5,000,000 or any amount of Financial Institution Senior Indebtedness (but excluding Indebtedness evidenced by the Notes) which is outstanding: (1) any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; (2) the Borrower, the Parent or any of their respective Subsidiaries shall fail to pay any principal of or premium or interest of any of such Indebtedness (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or (3) any other event shall occur or condition shall exist under any agreement or instrument relating to such Indebtedness, and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to permit the holders of such Indebtedness to accelerate the maturity of such Indebtedness; 6. Insolvency. The Borrower, the Parent or any of their respective material Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower, the Parent or any of their respective material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against the Borrower, the Parent or any of their respective material Subsidiaries, either such proceeding shall remain undismissed for a period of 60 days or any of the actions sought in such proceeding shall occur; or the Borrower, the Parent or any of their respective material Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this paragraph (e); 7. ERISA. (i) Any Person shall engage in any prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any accumulated funding deficiency (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is likely 39 to result in the termination of such Plan for purposes of Title IV of ERISA, unless such Reportable Event, proceedings or appointment are being contested by the Borrower in good faith and by appropriate proceedings, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v)the Borrower or any member of a Controlled Group shall incur any liability in connection with a withdrawal from a Multiemployer Plan or the insolvency (within the meaning of Section 4245 of ERISA) or reorganization (within the meaning of Section 4241 of ERISA) of a Multiemployer Plan, unless such liability is being contested by the Borrower in good faith and by appropriate proceedings, or (vi) any other event or condition shall occur or exist, with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could subject the Borrower or any Guarantor to any tax, penalty or other liabilities in the aggregate exceeding $10,000,000; 8. Guaranty. Any material provision of any Guaranty shall for any reason cease to be valid and binding on any Guarantor or any Guarantor shall so state in writing; 9. Environmental Condition. The terms and conditions of Section 4.14 of this Agreement shall for any reason cease to be valid and binding on any Person party thereto or any such Person shall so state in writing; or 10. Change in Management. Any of the following occur without the written consent of the Required Lenders: (a) a Change of Control occurs for either the Parent or the Borrower; (b) the Parent, and any wholly-owned Subsidiary of the Parent collectively owns less than 70% of the legal or beneficial interest in the Borrower; or (c) the Parent shall cease to employ either Paul W. Whetsell or Steven D. Jorns as chairman and chief executive officer of the Parent and, within 180 days following such occurrence for any reason, another person acceptable to the Lenders in their sole discretion is not employed as the Chairman and Chief Executive Officer of the Parent. Section 9.02 Optional Acceleration of Maturity; Other Actions. If any Event of Default (other than an Event of Default pursuant to paragraph (f) of Section 9.01) shall have occurred and be continuing, then, and in any such event: 1. the Lender (i) may, by notice to the Borrower, declare the obligation to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) may, by notice to the Borrower, declare the Notes, all interest thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable in full, without presentment, demand, protest or further notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower; and 40 2. the Lender may proceed to enforce its rights and remedies under the Credit Documents by appropriate proceedings. Section 9.03 Automatic Acceleration of Maturity. If any Event of Default pursuant to paragraph (f) of Section 9.01 shall occur, the obligation of the Lender to make Advances shall immediately and automatically be terminated and the Notes, all interest on the Notes, and all other amounts payable under this Agreement shall immediately and automatically become and be due and payable in full, without presentment, demand, protest or any notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower. ARTICLE X. MISCELLANEOUS Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement, the Notes, or any other Credit Document, nor consent to any departure by the Borrower or any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Lender, as specified in the particular provisions of the Credit Documents, and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given Section 10.02 Notices, Etc. All notices and other communications shall be in writing (including telecopy or telex) and mailed, telecopied, telexed, hand delivered or delivered by a nationally recognized overnight courier, if to the Borrower, at its address at 1010 Wisconsin Avenue, N.W., Suite 650, Washington, D.C. 20007, Attn: Mr. James C. Calder; if to the Lender, at its address at 1010 Wisconsin Avenue, N.W., Suite 650, Washington, D.C. 20007, Attn: Mr. John Emery; or, as to each party, at such other address or teletransmission number as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telecopied, telexed or hand delivered or delivered by overnight courier, be effective three days after deposited in the mails, when telecopy transmission is completed, when confirmed by telex answer-back or when delivered, respectively, except that notices and communications to the Lender pursuant to Article II or Article VIII shall not be effective until received by the Lender. Section 10.03 No Waiver; Remedies. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in this Agreement and the other Credit Documents are cumulative and not exclusive of any remedies provided by law. 41 Section 10.4 Costs and Expenses. The Borrower agrees to pay on demand all out-of-pocket costs and expenses of the Lender in connection with the preparation, execution, delivery, due diligence, administration, modification and amendment of this Agreement, the Notes and the other Credit Documents of the Obligations including, without limitation, all reasonable out-of-pocket costs and expenses, if any, of the Lender in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Credit Documents. Section 10.05 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Lender, and when the Lender shall have, as to the Lender, either received a counterpart hereof executed by the Lender or been notified by the Lender that the Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights or delegate its duties under this Agreement or any interest in this Agreement without the prior written consent of the Lender. Section 10.06 Indemnification. The Borrower shall indemnify the Lender and each of its affiliates, directors, officers, employees and agents from, and discharge, release, and hold each of them harmless against, any and all losses, liabilities, claims or damages to which any of them may become subject, insofar as such losses, liabilities, claims or damages arise out of or result from (i) any actual or proposed use by the Borrower or any Affiliate of the Borrower of the proceeds of any Advance, (ii) any breach by the Borrower or any Guarantor of any provision of this Agreement or any other Credit Document, (iii) any investigation, litigation or other proceeding (including any threatened investigation or proceeding) relating to the foregoing, or (iv) any Environmental Claim or requirement of Environmental Laws concerning or relating to the present or previously-owned or operated properties, or the operations or business, of the Parent, the Borrower or any of its Subsidiaries, and the Borrower shall reimburse the Lender, each affiliate and their respective directors, officers, employees and agents, upon demand for any reasonable out-of-pocket expenses (including legal fees) incurred in connection with any such investigation, litigation or other proceeding; and expressly including any such losses, liabilities, claims, damages, or expense incurred by reason of the Person being indemnified's own negligence, but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified. THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF THE LENDER, OR ANY OTHER PERSON BEING INDEMNIFIED. 42 Section 10.07 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 10.08 Survival of Representations, Indemnifications, etc. All representations, warranties contained in this Agreement or made in writing by or on behalf of the Borrower in connection herewith shall survive the execution and delivery of this Agreement and the Credit Documents, the making of the Advances and any investigation made by or on behalf of the Lender, none of which investigations shall diminish the Lender's right to rely on such representations and warranties. All obligations of the Borrower provided for in Sections 2.07, 2.10(c) and 9.06 shall survive any termination of this Agreement and repayment in full of the Obligations. Section 10.09 Severability. In case one or more provisions of this Agreement or the other Credit Documents shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not be affected or impaired thereby. 43 Section 10.10 Usury Not Intended. It is the intent of the Borrower and the Lender in the execution and performance of this Agreement and the other Credit Documents to contract in strict compliance with applicable usury laws, including conflicts of law concepts, governing the Advances of the Lender including such applicable laws of the State of New York and the United States of America from time to time in effect. In furtherance thereof, the Lender and the Borrower stipulate and agree that none of the terms and provisions contained in this Agreement or the other Credit Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or detention of money, interest at a rate in excess of the Maximum Rate and that for purposes hereof interest shall include the aggregate of all charges which constitute interest under such laws that are contracted for, charged or received under this Agreement; and in the event that, notwithstanding the foregoing, under any circumstances the aggregate amounts taken, reserved, charged, received or paid on the Advances, include amounts which by applicable law are deemed interest which would exceed the Maximum Rate, then such excess shall be deemed to be a mistake and the Lender shall credit the same on the principal of its Notes (or if such Notes shall have been paid in full, refund said excess to the Borrower). In the event that the maturity of the Notes is accelerated by reason of any election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the Maximum Rate and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the applicable Notes (or, if the applicable Notes shall have been paid in full, refunded to the Borrower). In determining whether or not the interest paid or payable under any specific contingencies exceeds the Maximum Rate, the Borrower and the Lender shall to the maximum extent permitted under applicable law amortize, prorate, allocate and spread in equal parts during the period of the full stated term of the Notes all amounts considered to be interest under applicable law at any time contracted for, charged, received or reserved in connection with the Obligations. The provisions of this Section shall control over all other provisions of this Agreement or the other Credit Documents which may be in apparent conflict herewith. Section 10.11 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER, THE LENDER, OR ANY INDEMNITEE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK. 44 Section 10.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. (B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE LENDER OR ANY INDEMNITEE SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (2) ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (B). (C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY WRITS, PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING THEREOF BY THE LENDER BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER ADDRESSED AS PROVIDED HEREIN. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THE LENDER TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR 45 AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE. (D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. Section 10.13 Knowledge of Borrower. For purposes of this Agreement, knowledge of the Borrower means the actual knowledge of any of the executive officers and all other Responsible Officers of the Parent. Section 10.14 Lender Not in Control. None of the covenants or other provisions contained in the Credit Documents shall or shall be deemed to, give the Lender the rights or power to exercise control over the affairs and/or management of the Borrower, any of its Subsidiaries or any Guarantor, the power of the Lender being limited to the right to exercise the remedies provided in the Credit Documents; provided, however, that if the Lender becomes the owner of any stock, or other equity interest in, any Person whether through foreclosure or otherwise, the Lender shall be entitled (subject to requirements of law) to exercise such legal rights as it may have by being owner of such stock, or other equity interest in, such Person. Section 10.15 Headings Descriptive. The headings of the several Sections and paragraphs of the Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Section 10.16 Time is of the Essence. Time is of the essence under the Credit ------ Documents. - ---------- [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -------------------------------------------- 46 EXECUTED as of the date first referenced above. - ----------------------------------------------- BORROWER: --------- MERISTAR H & R OPERATING COMPANY, L.P. -------------------------------------- By: MeriStar Hotels & Resorts, Inc., its general - ------------------------------------------------ partner - ------- By: - --- Name: Title: LENDER: MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner End of Filing EX-10.5.1 27 dex1051.txt EXHIBIT 10.5.1 Exhibit 10.5.1 AMENDMENT TO REVOLVING CREDIT AGREEMENT AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of February 29, 2000 (this Amendment), between MERISTAR H & R OPERATING COMPANY, L.P. (Borrower) and MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. (Lender). RECITALS A. Lender and Borrower are parties to that certain Revolving Credit Agreement, dated as of August 3, 1998 (the Credit Agreement). B. Borrower is entering into that certain Senior Secured Credit Agreement (the Senior Loan Agreement), of even date herewith, with Societe General, Southwest Agency, as arranger and administrative agent, Citibank/Salomon Smith Barney, syndication agent, Lehman Bothers, Inc. as documentation Agent, and the other lenders named therein (collectively, the Senior Lenders). C. Lender is entering into that certain Intercreditor Agreement (the Intercreditor Agreement), of even date herewith, with the Senior Lenders. D. Borrower and Lender desire to amend the Credit Agreement in certain respects. NOW, THEREFORE, Borrower and Lender agree as follows: 1. Section 1.01 of the Credit Agreement is hereby amended by amending the definitions of Applicable Margin, Commitment, Financial Institution Senior Indebtedness, Maturity Date, and Senior Indebtedness to read in their entirety as follows: Applicable Margin means 6.50%. Commitment means $50,000,000. Financial Institution Senior Indebtedness means the Indebtedness evidenced by the Senior Loan Agreement and any modification, extension, refinancing, or replacement thereof, provided that the maximum principle amount thereof shall not exceed $100,000,000. Maturity Date shall mean the date 91 days after the maturity date of the Financial Institution Senior Indebtedness, as the same may be extended from time to time. Senior Indebtedness shall mean the Financial Institution Senior Indebtedness. 2. Section 2.01 of the Credit Agreement is hereby amended by adding the words but no more often than once in any calendar month after the word Borrower in the second line thereof. 3. Section 2.06(b) of the Credit Agreement is hereby amended by (a) changing the amount of $500,000 to 1,000,000 in the last line thereof and adding at the end of such section: Notwithstanding the foregoing, Borrower may not make an optional prepayment more than once in any calendar month. 4. A new Section 2.09 is hereby added to the Credit Agreement to read as follows: Section 2.09 Unused Commitment Fee. Borrower shall pay to Lender an annual fee (payable in quarterly installments) for the unused portion (the Unused Portion) of the Commitment (based on the average daily amount outstanding during each Fiscal Quarter) in an amount equal to (a) .5%, if the Unused portion is less than 50% of the Commitment or (b) .375%, if the Unused Portion is equal to or greater than 50% of the Commitment. 5. Section 6.05 of the Credit Agreement is hereby amended by changing the amount of $50,000,000 to $25,000,000. 6. Article VII of the Credit Agreement is hereby amended in its entirety to read as follows: FINANCIAL COVENANTS So long as any Note or any amount under any Credit Document shall remain unpaid, or the Lender shall have any Commitment hereunder, unless the Lender shall otherwise consent in writing, the Borrower agrees to cause the Parent to comply with the following covenants: Section 7.01 Senior Interest Coverage Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999 a Senior Interest Coverage Ratio of not less than 2.5 to 1.0, (b) for the Rolling Period ending December 31, 1999 through December 31, 2001 a Senior Interest Coverage Ratio of not less than 2.75 to 1.0 and (c) for each Rolling Period thereafter a Senior Interest Coverage Ratio of not less than 3.25 to 1. Section 7.02 Total Interest Coverage Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through December 31, 2001, a Total Interest Coverage Ratio of not less than 2.0 to 1.0 and (b) for any Rolling Period thereafter, a Total Interest Coverage Ratio of not less than 2.5 to 1.0. Section 7.03 Senior Fixed Charge Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999 a Senior Fixed Charge Ratio of not less than 2.0 to 1.0, (b) for the Rolling Periods ending on December 31, 1999 through December 31, 2001, a Senior Fixed Charge Ratio of not less than 2.5 to 1.0, and (c) for any Rolling Period thereafter, a Senior Fixed Charge Ratio of not less than 1.5 to 1.0 Section 7.04 Total Fixed Charge Ratio. The Parent shall maintain at the end of each Rolling Period (a) for the Rolling Periods ending on September 30, 1998 to September 30, 1999, a Total Fixed Charge Ratio of not less than 1.75 to 1.0, (b) for the Rolling Periods ending on December 31, 1999 to December 31, 2001, a Total Fixed Charge Ratio of not less than 2.0 to 1.0, and (c) for any Rolling Period thereafter, a Total Fixed Charge Ratio of not less than 1.5 to 1.0. Section 7.05 Senior Indebtedness Leverage Ratio. The Parent shall not on any date permit the Senior Indebtedness Leverage Ratio to exceed (a) for the Rolling Periods ending on September 30, 1998 through September 30, 1999, 4.0 to 1.0, (b) at any time thereafter through December 31, 2001, 3.00 to one and (c) at any time thereafter, 1.50 to 1.0. Section 7.06 Leverage Ratio. The Parent shall not on any date permit the Leverage Ratio to exceed (a) prior to December 31, 1998 5.5 to 1, (b) from December 31, 1998 to June 30, 1999, 5.0 to 1.0, (c) from July 1, 1999 to September 30, 1999, 4.5 to 1.0, (d) from December 31, 1999 through December 31, 2001, 4.0 to 1 and (e) thereafter, 3.5 to 1. 7. Section 8.01 of the Credit Agreement is hereby amended in its entirety to read as follows: Agreement to Subordinate. The Lender agrees that Indebtedness for Borrowings under this Agreement represented by the Notes shall be subordinated in right of payment, to the extent and in the manner provided in the Intercreditor Agreement, to the prior payment in full of all Financial Institution Senior Indebtedness. The Lender further agrees that in connection with any replacement or refinancing of he Financial Institution Senior Indebtedness which is permitted by this Agreement, it shall enter into a new intercreditor or subordination agreement on terms substantially similar to the Intercreditor Agreement. 8. Sections 8.02 through 8.06, inclusive, are hereby deleted from the Credit Agreement. 9. Section 9.01(j) of the Credit Agreement is hereby amended by deleting clause (c) thereof. 10. Section 10.02 of the Credit Agreement is hereby amended by changing James C. Calder to Alex Lombardo. 11. As amended hereby, the Credit Agreement and each Credit Document (as defined in the Credit Agreement) is ratified and shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. MERISTAR H & R OPERATING COMPANY, L.P. By: MeriStar Hotels & Resorts, Inc., its general partner By: --- Name: Title: MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. By: MeriStar Hospitality Corporation, its general partner By: --- Name: Title: EX-10.6 28 dex106.txt EXHIBIT 10.6 Exhibit 10.6 TERM NOTE Amount: $13,069,000 Date: January 1, 2002 FOR VALUE RECEIVED, MERISTAR H&R OPERATING COMPANY, L.P. ("Maker"), a Delaware limited partnership, hereby promises to pay to MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P. or order ("Payee"), at 1010 Wisconsin Avenue, Washington, D.C. 20007, or at such other place as Payee shall from time to time designate, the principal amount of $13,069,000 together with interest on the unpaid principal balance hereof from time to time at the "Interest Rate" (as hereinafter defined). 1. Definitions. (a) "Revolving Credit Agreement" shall mean that certain Revolving Credit Agreement, dated as of August 3, 1998, as amended by Amendment to Revolving Credit Agreement, dated as of February 29, 2000, and Second Amendment to Revolving Credit Agreement, dated as of January ___, 2002. (b) "Senior Credit Agreement" shall mean that certain Senior Secured Credit Agreement, dated as of February 29, 2000, among Payee, Societe Generale, Southwest Agency, as arranger and administrative agent, Citibank/Salomon Smith Barney, as syndication agent, Lehman Brothers, Inc., as documentation agent, and the other lenders party thereto as amended by First Amendment to Senior Secured Credit Agreement, dated as of December 31, 2000, Second Amendment to Senior Secured Credit Agreement, dated as of April 6, 2001 and Third Amendment to Senior Secured Credit Agreement (the "Third Senior Amendment"), dated as of January ___, 2002. (c) "Interest Rate" shall mean a per annum rate equal to the lesser of (a) sum of (i) "LIBOR" (as defined in the Revolving Credit Agreement) determined as of the first day of each month during the term of this Note for a one-month period plus (ii) 6.50% and (b) the "Maximum Rate" (as defined in the Revolving Credit Agreement). (d) "Maturity Date" shall mean the Maturity Date as defined in the Revolving Credit Agreement. 2. Payments. (a) Subject to the provisions of Section 2(c) of this Note, Maker shall pay interest to Payee on the outstanding principal amount hereof at the Interest Rate in arrears on the last day of each calendar quarter commencing March 31, 2002 until the Maturity Date. (b) Maker shall repay the outstanding principal amount of this Note together with all accrued and unpaid interest thereon on the Maturity Date. (c) Maker and Payee acknowledge the provisions of paragraph 18 of the Third Senior Amendment amending clause (f) of Section 6.04 of the Senior Credit Agreement and agree that if Maker is prevented from paying any interest to Payee by virtue of such provisions that such unpaid interest shall accrue and be payable on the Maturity Date or such earlier date on which Maker may be permitted to pay the same pursuant to such provisions. 3. Prepayment. This Note and the indebtedness hereby evidenced may be prepaid, in whole or in part, together with accrued and unpaid interest thereon at the election of Maker without payment of premium or penalty, upon ten (10) days prior written notice to Payee. 4. Default; Acceleration. (a) An "Event of Default" shall occur under this Note if (I) Maker shall to make any payment of interest when due and such failure continues for a period of ten (10) days; (ii) Maker shall fail to pay the principal amount of this Note when due; or (iii) any "Event of Default" shall occur under the Revolving Credit Agreement. (b) Upon the occurrence and during the continuance of any Event of Default, Payee shall have the right upon written notice to the Maker to accelerate the repayment of this Note and the indebtedness hereby evidenced. 5. Default Rate. Upon the occurrence and during the continuance of any Event of Default, the unpaid principal balance of this Note shall bear interest at the lesser of (a) the Interest Rate plus 3% per annum and (b) the Maximum Rate. 6. Nature of Indebtedness. The indebtedness evidenced by this Note refinances and replaces the amount shown on the September 30, 2001 financial statements of MeriStar Hotels & Resorts, Inc., Maker's parent, as "Due to MeriStar Hospitality Corporation," Payee's parent. The indebtedness evidenced by this Note does not constitute an advance under, or any indebtedness pursuant to, the Revolving Credit Agreement. 7. Costs. In addition to, and not in lieu of, any other sums otherwise payable to Payee hereunder, Payee shall be entitled to reimbursement from Maker for all reasonable costs, expenses and fees (including reasonable attorney's fees) incurred by Payee in connection with the collection of this Note and/or the indebtedness hereby evidenced. 8. Waivers. Maker hereby waives presentment, demand, protest, notice of protest and notice of any other kind except for such notice as is expressly provided for hereunder. 9. Governing Law. This Note shall be governed by the laws of the State of New York. 10. Amendment; Waivers. No waiver or amendment of this Note may be made other than in writing executed by Payee and Maker. 11. No Usury. This Note is subject to the express condition that at no time shall Maker be obligated to pay any interest on the principal balance of this Note at a rate in excess of the Maximum Rate. If by the terms of this Note, Maker is obligated to pay interest at a rate in excess of the Maximum Rate, then the Interest Rate or Default Rate, as applicable, shall be deemed immediately reduced to the Maximum Rate and all previous payments in excess of the Maximum Rate shall be deemed to have been payments in reduction of principal and not on account of interest. All sums to be paid to Payee under this Note shall, to the extent permitted by law, be amortized, prorated, allocated and spread over the full term of this Note so that the rate of interest does not exceed the Maximum Rate from time to time in effect. IN WITNESS WHEREOF, Maker has executed this Note as of the date first written above. MERISTAR H & R OPERATING COMPANY, L.P. By: MeriStar Hotels & Resorts, Inc., its general partner By: ________________________________________ Name: Title: EX-10.7.1 29 dex1071.txt EXHIBIT 10.7.1 Exhibit 10.7.1 AMENDMENT TO THE MERISTAR HOSPITALITY CORPORATION INCENTIVE PLAN Pursuant to the approval by the Board of Directors of MeriStar Hospitality Corporation (the "Company") and the Company's shareholders at the Company's 2001 Annual Meeting, the MeriStar Hospitality Corporation Incentive Plan (the "Plan") is amended, effective May 24, 2001, as follows: All references to "ten (10%)" in Section 5.2 of the Plan are hereby deleted and replaced by "twelve and one-half (12.5%)". IN WITNESS WHEREOF, MeriStar Hospitality Corporation has caused this amendment to the Plan to be duly executed in its corporate name this 24th day of May, 2001. MERISTAR HOSPITALITY CORPORATION --------------------------------- Christopher L. Bennett VP, Legal and Secretary EX-10.8.1 30 dex1081.txt EXHIBIT 10.8.1 Exhibit 10.8.1 AMENDMENT TO THE MERISTAR HOSPITALITY CORPORATION NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN Pursuant to the approval by the Board of Directors of MeriStar Hospitality Corporation (the "Company") and the Company's shareholders at the Company's 2001 Annual Meeting, the MeriStar Hospitality Corporation Non-Employee Directors' Incentive Plan (the "Plan") is amended, effective May 24, 2001, as follows: The reference to "125,000" in Section 6.2 of the Plan is hereby deleted and replaced by "500,000". IN WITNESS WHEREOF, MeriStar Hospitality Corporation has caused this amendment to the Plan to be duly executed in its corporate name this 24th day of May, 2001. MERISTAR HOSPITALITY CORPORATION -------------------------------- Christopher L. Bennett VP, Legal and Secretary EX-10.10 31 dex1010.txt EXHIBIT 10.10 Exhibit 10.10 MERISTAR HOSPITALITY CORPORATION EMPLOYEE STOCK PURCHASE PLAN 2 ARTICLE I -- PURPOSE -------------------- 1.1. Purpose. ------- The Meristar Hospitality Corporation Stock Purchase Plan (the "Plan") is intended to provide a method whereby eligible employees of Meristar Hospitality Corporation (hereinafter referred to, unless the context otherwise requires, as the "Company") and any Affiliated Entity will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of Common Stock of the Company. ARTICLE II - DEFINITIONS ------------------------ 2.1. Affiliated Entity. ----------------- "Affiliated Entity" means Meristar Hotels & Resorts, Inc. ("Hotels & Resorts") and any corporation or partnership of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company,or any partnership in which the Company is the general partner. 2.2. Base Pay. -------- "Base Pay" means base salary paid in each Offer Period. Eligible compensation does not include overtime, bonuses, severance pay, incentive pay, shift premium differentials, pay in lieu of vacation, imputed income tax purposes, patent and award fees, awards and prizes, back pay awards, reimbursement of expenses and living allowances, educational allowances, expense allowances, disability benefits under any insurance program, fringe benefits, deferred compensation, compensation under the Company's stock plans, amounts paid for services as an independent contractor, or any other compensation excluded by the Board of Directors in its discretion. Compensation shall be determined before giving effect to any salary reduction agreement pursuant to a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code or any similar reduction agreement pursuant to any cafeteria plan (within the meaning of Section 125 of the Code). 2.3. Committee. --------- "Committee" means the individuals described in Article XI. 2.4. Common Stock. ------------ "Common Stock" means common stock, par value $.01 per share, of the Company. 3 2.5 Common Stock Account. -------------------- "Common Stock Account" means the account established with, and maintained by, the Custodian, for the purpose of holding Common Stock purchased pursuant to this Plan. 2.6 Custodian. --------- "Custodian" means the agent selected by the Committee to hold Common Stock purchased under the Plan. 2.7 Employee. -------- "Employee" means, subject to Section 3.2, any person employed by the Company whose customary employment is for twenty (20) or more hours per week for the Company or any Affiliated Entity or any employees of Hotels & Resorts who are officers, consultants or advisors to the Company and who are selected to participate by the Committee. Such selection must be pre- approved by the compensation committee of Hotels & Resorts, as provided in section 13.1. 2.8 Offer Date. ---------- "Offer Date" means the date described in Section 4.2. 2.9 Offer Period. ------------ "Offer Period" means the period described in Section 4.2. 2.10 Offering Termination Date. ------------------------- "Offering Termination Date" means the date described in Section 4.2. 2.11 Option Percentage. ----------------- "Option Percentage" means the amount determined annually by the Committee pursuant to Section 6.1. 2.12 Option Value. ------------ "Option Value" means the amount determined under Section 6.1. 2.13 Participant. ----------- "Participant" means any Employee who completes an authorization for payroll deductions on a form provided by the Company and files it with the Chief Financial Officer of the Company or his designee. 4 2.14 Payroll Deduction Account. -------------------------- "Payroll Deduction Account" means the bookkeeping entry established by the Company for each Participant pursuant to Section 5.2. 2.15. Plan Administrator. ------------------- "Plan Administrator" means the Company or any third party administrator designated by the Company. 2.16. Trading Day. ----------- "Trading Day" means a day on which shares of Common Stock are traded on the New York Stock Exchange (or such other exchange on which the Common Stock shall be principally traded). ARTICLE III -- ELIGIBILITY AND PARTICIPATION -------------------------------------------- 3.1 Initial Eligibility. ------------------- Any Employee who shall have completed ninety (90) days' employment and shall be employed by the Company or Hotels & Resorts on the date his participation in the Plan is to become effective shall be eligible to participate in Offerings (as hereinafter defined) under the Plan which commence on or after such ninety day period has concluded. 3.2. Leave Of Absence. ---------------- For purposes of participation in the Plan, a person on leave of absence shall be deemed to be an Employee for the first ninety (90) days of such leave of absence and such employee's employment shall be deemed to have terminated at the close of business on the 90th day of such leave of absence unless such employee shall have returned to regular full-time or part-time employment (as the case may be) prior to the close of business on such 90th day. Termination by the Company or Hotels & Resorts of any employee's leave of absence, other than termination of such leave of absence on return to full time or part time employment, shall terminate an employee's employment for all purposes of the Plan and shall terminate such employee's participation in the Plan and right to exercise any option. 3.3. Restrictions on Participation. ----------------------------- Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option under the Plan: (a) if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its parent or any Affiliated Entity; or (b) which permits his rights to purchase stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 in fair market value of the Common Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding. 3.4. Commencement of Participation. ----------------------------- 5 Subject to Section 8.2, an eligible Employee may become a Participant by completing an authorization for payroll deductions on the form provided by the Company and filing it with the office of the Chief Financial Officer of the Company (or his designee) on or before the first day of the month in which participation is to commence. Payroll deductions for a Participant shall become effective as of the first payroll period ending in the month in which participation commences and shall remain in effect until modified or revoked by the Participant pursuant to Section 5.3 or Article VIII. 3.5 Custodial Account. ----------------- As a condition to participation in this Plan, each Eligible Employee shall be required to hold shares of Common Stock purchased hereunder in a Common Stock Account and such Employee's decision to participate in the Plan shall constitute the appointment of the Custodian as custodial agent for the purpose of holding such shares of Common Stock. Such Common Stock Account will be governed by, and subject to, the terms and conditions of a written agreement with the Custodian. ARTICLE IV - OFFERINGS ---------------------- 4.1. Number of Shares to be Offered. ------------------------------ The maximum number of shares of Common Stock of the Company that may be purchased under the Plan is 500,000. Such shares may be treasury shares or authorized and unissued shares, as the Committee may determine in its discretion. The Company, by action of its Board of Directors upon the advice of the Committee and subject to stockholder approval, may increase the number of shares reserved under the Plan. 4.2. Offer Date. ---------- The Offer Date shall be the first Trading Day of every month and the Offer Period will last for the duration of that calendar month, ending on the last Trading Day of that month (the "Offering Termination Date"). Upon the Offer Date, the Company will issue to each Participant, an option to purchase, based upon the amount of the Employee's Base Pay to be reduced during the Offer Period, a number of shares of Common Stock (the "Offering") as determined and limited by Section 6.1. 6 ARTICLE V - PAYROLL DEDUCTIONS ------------------------------ 5.1. Amount of Payroll Deduction. --------------------------- At the time a Participant files his authorization for payroll deductions, he shall elect to have deductions made from his Base Pay on each payday during the time he is a Participant at the rate of 1, 2, 3, 4, 5, 6, 7 or 8% of his Base Pay paid during an Offer Period, except that there shall be a minimum authorization of $200 per calendar quarter. 5.2. Participant's Account. --------------------- All payroll deductions made for a Participant shall be credited to his Payroll Deduction Account pending the purchase of Common Stock in accordance with the Plan. The Participant's Payroll Deduction Account will consist of a bookkeeping entry in the Company's financial records. A Participant may not make any separate cash payment into such Payroll Deduction Account except when on leave of absence and then only as provided in Section 5.4. 5.3. Changes in Payroll Deductions. ----------------------------- A Participant may discontinue his participation in the Plan as described in Article VIII, but no other change can be made with regard to an Offer Period and, specifically, a Participant may not alter the amount of his payroll deductions for that Offer Period. Except as provided in Article VIII, a Participant may modify or revoke an authorization for payroll deductions only with respect to future Offer Periods. 5.4. Leave of Absence. ---------------- If a Participant goes on an approved leave of absence, during the 90-day period described in Section 3.2, such Participant shall have the right to elect: (a) to withdraw the balance in his of her Payroll Deduction Account pursuant to Section 8.1; (b) to discontinue contributions to the Plan but remain a Participant in the Plan; or (c) to remain a Participant in the Plan during such leave of absence, authorizing deductions to be made from payments by the Company or Hotels & Resorts to the Participant during such leave of absence and undertaking to make cash payments to the Company at the end of each payroll period to the extent that amounts payable by the Company to such Participant are insufficient to meet such Participant's authorized payroll deductions. Any payment made to the Company under this section will be reflected as a credit to the Participant's Payroll Deduction Account in accordance with Section 5.2. 7 ARTICLE VI--GRANTING OF OPTION ------------------------------ 6.1. Number of Option Shares. ----------------------- On each Offer Date, participating Employees shall be deemed to have been granted options to purchase a number of shares of Common Stock of the Company equal to the number of shares determined by dividing the amount of the employee's payroll deductions authorized to be made through the end of the Offer Period plus any carryovers, by the Option Value of the Common Stock of the Company. The Option Value for the Offer Period shall be the Option Percentage, multiplied by the lesser of the closing price of a share of Common Stock on the New York Stock Exchange (or such other exchange on which the Company's Common Stock shall be principally traded) on the first Trading Day of the Offer Period, or the closing of a share of Common Stock on the New York Stock Exchange (or such other exchange on which the Company's Common Stock shall be principally traded) on the Offering Termination Date. The Option Percentage shall be eighty-five percent (85%) upon the Effective Date of the Plan. The Committee, in its discretion, may amend the Option Percentage to any percentage between 85% and 100% from time to time as is deemed appropriate. 6.2. Option Price. ------------ The option price of Common Stock purchased with respect to an Offering shall be the lesser of: (a) the Option Percentage multiplied by the closing price of the Common Stock on the Offer Date; or (b) the Option Percentage multiplied by the closing price of the Common Stock on the Offering Termination Date. 6.3. Common Stock Valuation. ---------------------- If the Common Stock of the Company is not traded on a public market on any of the aforesaid dates for which closing prices of the Common Stock are to be determined, such closing price shall be deemed to be the fair market value of the Common Stock on that date, as determined by the Committee. 6.4. Maximum Number of Shares per Offer Period. ----------------------------------------- In no event may more than 1,000 shares of Common Stock be purchased by any one Participant in any one Offer Period. 8 ARTICLE VII -- EXERCISE OF OPTION 7.1. Automatic Exercise. ------------------ Unless a Participant gives written notice to the Plan Administrator as hereinafter provided, his option to purchase Common Stock with payroll deductions credited to his Payroll Deduction Account will be deemed to have been exercised automatically on the Offering Termination Date (as defined in Section 4.2) applicable to such offering, for the purchase of the number of whole and fractional shares of Common Stock which the accumulated payroll deductions and any carryovers in his Payroll Deduction Account at that time will purchase at the applicable option price (but not in excess of the number of shares for which options have been granted to the Employee pursuant to Article VI). Any amount credited to a Participant's Payroll Deduction Account which is not applied to purchase shares of Common Stock in an Offering pursuant to this Section shall, subject to the terms of the Plan, be used to purchase shares of Common Stock in the next succeeding Offering. 7.2. Fractional Shares. ----------------- Fractional shares (computed to 3 decimal places) may be credited to a Participant's Common Stock Account under the Plan but will not be distributed to the Participant. If a Participant receives a withdrawal of, or sells from his Common Stock Account, all whole shares credited to his Common Stock Account, he shall also receive a cash distribution representing the value (determined as of the withdrawal (or sale) date) of any fractional share credited to his Common Stock Account and such fractional share shall cease to be credited to such account. 7.3. Transfer of Option. ------------------ During a Participant's lifetime, options held by such Participant shall be exercisable only by that Participant. 7.4. Stock Held by Custodian. ----------------------- As promptly as practicable after the Offering Termination Date of each Offering, the Company will deliver to the Custodian certificates for the shares of Common Stock purchased on account of such Offering. 7.5. Restriction on Sale. ------------------- Shares of Common Stock purchased pursuant on an Offering Termination Date shall not be transferable by a Participant for a period of six months immediately following such Offering Termination Date, unless a Participant is terminating participation in the Plan, in which case such Participant may immediately sell his Shares of Common Stock purchased hereunder. 9 ARTICLE VII - WITHDRAWAL ------------------------ 8.1. In General. ---------- (a) Withdrawal of Payroll Deductions. By written notice to the -------------------------------- Plan Administrator at any time prior to two days prior to the Offering Termination Date applicable to any Offering, a Participant may elect to withdraw all (but not less than all) of the amount then credited to his Payroll Deduction Account. Payment of the amount credited to his Payroll Deduction Account will be made to him in cash promptly after receipt of his notice of withdrawal, and no further payroll deductions will be made from his pay unless such Participant again elects to participate, in the Plan (subject to Section 8.2) in accordance with Section 3.4. The Committee may, at its option, treat any attempt to borrow by an Employee on the security of his accumulated payroll deductions as an election to withdraw such payroll deductions. (b) Withdrawal of Common Stock. Subject to Section 7.5, by -------------------------- written notice to the Custodian, a Participant may elect to receive a distribution of some or all of the shares of Common Stock credited to his Common Stock Account. Certificates representing such whole shares of Common Stock (and cash representing any fractional share) shall be delivered to the Participant as soon as reasonably practicable following such Participant's election. The Custodian may charge Participants a reasonable fee (as agreed to by the Committee) for the delivery of share certificates in accordance with this Section 8.1. (c) Sale of Common Stock. By written notice to the Custodian, -------------------- a Participant may direct the Custodian to sell some or all of the whole shares of Common Stock credited to his Common Stock Account. The proceeds of any such sale shall be delivered to the Participant as soon as reasonably practicable following such sale. The Custodian may charge Participants a reasonable fee (but not more than the standard brokerage fee charged to the individuals by the Custodian in the ordinary course) for executing any such sale. 8.2. Effect of Withdrawals and Sales on Subsequent Participation. ----------------------------------------------------------- If a Participant withdraws shares of Common Stock from his Common Stock Account or directs the Custodian to sell any shares of Common Stock credited to his Common Stock Account, he will be deemed to have elected a withdrawal of all amounts credited to his Payroll Deduction Account, he will not be eligible to purchase any shares on the Offering Termination Date coincident or next following such election to withdraw or sell, and he will not be eligible to elect to participate in any Offering beginning within three months after the date of such election to withdraw or sell. If a Participant withdraws any amount credited to his Payroll Deduction Account, he will not be eligible to purchase any shares on the Offering Termination Date coincident or next following such election to withdraw or to elect to participate in any Offering beginning within three months after the date of his election to withdraw. It shall be the express responsibility of the Plan Administrator, and not the Custodian, to ensure compliance with the provisions of this Section 8.2 of the Plan. 8.3. Termination of Employment. ------------------------- (a) Payroll Deduction Account. Except as provided in Section ------------------------- 8.4, upon termination of the Participant's employment with the Company and all Affiliated Entities for any reason, including retirement, the amount credited to his Payroll Deduction Account will be deducted from his Payroll Deduction Account and paid to him, or, in the case of his death, to the person or persons entitled thereto under Section 12.1 and the option granted to him for such Offer Period shall automatically terminate. 10 (b) Common Stock Account. Upon termination of the Participant's -------------------- employment with the Company and all Affiliated Entities for any reason, including retirement, the number of whole shares credited to his Common Stock shall continue to be credited to his Common Stock Account until the Participant directs the Custodian to sell or distribute such shares. 8.4. Termination of Employment Due to Death. -------------------------------------- Upon termination of the Participant's employment on account of his death, his beneficiary (as defined in Section 12.1) shall have the right to elect, by written notice given to the Plan Administrator prior to two days before the Offering Termination Date, either: (a) to withdraw all of the payroll deductions credited to the Participant's Payroll Deduction Account under the Plan, in which case the Participant's option shall automatically expire; or (b) to exercise the Participant's option for the purchase of stock on the Offering Termination Date next following the date of the Participant's death for the purchase of the number of shares of stock which may be purchased with the amount credited to the Participant's Payroll Deduction Account at the date of the Participant's death (but not in excess of the number of shares for which options have been granted to the Employee pursuant to Article VI), and any excess credited to such Payroll Deduction Account will be paid to said beneficiary, without interest. In the event that no such written notice of election shall be timely received by the Plan Administrator, the beneficiary shall automatically be deemed to have elected, pursuant to paragraph (b), to exercise the Participant's option. ARTICLE IX - INTEREST; DIVIDENDS -------------------------------- 9.1. Payment of Interest. ------------------- No interest will be paid on any amounts deducted from a Participant's pay or credited to his Payroll Deduction Account. 9.2. Dividends --------- All cash dividends paid with respect to shares of Common Stock held in a participant's Common Stock Account shall be invested automatically in shares of Common Stock purchased at one-hundred percent (100%) of fair market value promptly following the receipt by the Custodian of such dividends. All non-cash distributions paid on Common Stock held in a Participant's Common Stock Account shall be paid to the Participant as soon as practicable following receipt thereof by the Custodian. 11 ARTICLE X -- STOCK ------------------ 10.1. Maximum Shares. -------------- If the total number of shares of Common Stock for which options are exercised on any Offering Termination Date in accordance with Article VI exceeds the maximum number of authorized shares remaining for purchase under Section 4.1, the Committee shall make a pro rata allocation (based on the amounts deducted from pay) of the shares of Common Stock available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance credited to Payroll Deduction Account of each Participant under the Plan shall be paid to him as promptly as possible. 10.2. Participant's Interest in Option Stock. -------------------------------------- The Participant will have no interest in any shares of stock covered by his option until such option has been exercised and shares of Common Stock have been credited to the Participant's Common Stock Account. 10.3. Registration of Stock. --------------------- Common Stock purchased under the Plan shall be held by the Custodian, as such, until distributed from Participants' Common Stock Accounts. Shares of Common Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant, or, if the Participant so directs by written notice to the Custodian, in the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship, to the extent permitted by applicable law. 10.4. Restrictions on Exercise. ------------------------ The Board of Directors may, in its discretion, require as conditions to the exercise of any option that the shares of Common Stock reserved for issuance upon the exercise of the option shall have been duly listed, upon official notice of issuance, upon a stock exchange, and that either: (a) a Registration Statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective; or (b) the Participant shall have represented as the time of purchase, in form and substance satisfactory to the Company, that it is his intention to purchase the shares for investment and not for resale or distribution. 12 ARTICLE XI - ADMINISTRATION --------------------------- 11.1. Appointment of Committee. ------------------------ The Board of Directors shall appoint a committee of two or more directors (the "Committee") to administer the Plan. No member of the Committee shall be an Employee eligible to purchase Common Stock under the Plan. 11.2. Authority of Committee. ---------------------- Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to appoint, remove and replace the Custodian, to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be conclusive. 11.3. Rules Governing the Administration of the Committee. --------------------------------------------------- The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select on of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable and in accordance with applicable law. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable. ARTICLE XII - MISCELLANEOUS --------------------------- 12.1 Designation of Beneficiary. -------------------------- A Participant may file a written designation of one or more beneficiaries who is to receive any shares of Common Stock issuable and/or cash payable after the Participant's death. Such designation of beneficiary may be changed by the Participant at any time by written notice delivered prior to the Participant's death to the Plan Administrator (or his delegee). Upon the death of a Participant, if the Custodian has received a valid designation of beneficiary and receives sufficient proof of such beneficiary's identity, the Custodian shall deliver such shares of Common Stock and/or cash as are credited to the Participant's Common Stock Account and/or Payroll Deduction Account to such beneficiary. In the event of the death of a Participant and in the absence of a living, validly designated beneficiary, the Custodian shall deliver such shares of Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Custodian), the Committee, in its discretion, may cause the Custodian to deliver such shares of Common Stock and/or cash to the spouse or to any one or more dependents of the Participant as the Committee may designate. No beneficiary shall prior to the death of the Participant by whom he has been designated, acquire any interest in any shares of Common Stock or cash credited to the Participant's Common Stock Account or Payroll Deduction Account under the Plan. 13 12.2. Transferability. --------------- Neither payroll deductions credited to a Participant's Payroll Deduction Account nor Common Stock credited to a Participant's Common Stock, nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Plan Administrator may treat such act as an election to withdraw such cash or shares of Common Stock in accordance with Section 8.1. 12.3. Use of Funds. ------------ All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions. 12.4. Adjustment Upon Changes in Capitalization. ----------------------------------------- (a) If, while any options are outstanding, the outstanding shares of Common Stock of the Company have increased, decreased, changed into, or been exchanged for a different number or kind of shares or securities of the Company without the receipt of consideration through reorganization, merger, recapitalization, reclassification, stock split, reverse stock split or similar transaction, appropriate and proportionate adjustments may be made by the Committee in the number and/or kind of shares which are subject to purchase under outstanding options and on the option exercise price applicable to such outstanding options. In addition, in any such event, the number and/or kind of shares which may be offered in the Offerings described in Article IV hereof shall also be proportionately adjusted. No adjustments shall be made for stock dividends. For the purposes of this Paragraph, any distribution of shares to shareholders in an amount aggregating 20% or more of the outstanding shares shall be deemed a stock split and any distributions of shares aggregating less than 20% of the outstanding shares shall be deemed a stock dividend. (b) Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or stock of the Company to another corporation, the holder of each option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such option for each share as to which such option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of the Common Stock was entitled to receive upon and at the time of such transaction. The Board of Directors shall take such steps in connection with such transactions as the Boars shall deem necessary to assure that the provisions of this Section 12.4 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securities and/or property as to which such holder of such option might thereafter be entitled to receive. 14 12.5. Amendment and Termination. ------------------------- The Board of Directors shall have complete power and authority to terminate or amend the Plan. No termination, modification, or amendment of the Plan may, without the consent of an Employee then having an option, adversely affect any rights of such Employee. 12.6. Effective Date -------------- The Plan shall become effective as of the first day after its adoption and approval by the Company through its Board of Directors (the "Effective Date"). 12.7. No Employment Rights. -------------------- The Plan does not, directly or indirectly, create in any employee or class of employees any right with respect to continuation of employment by the Company, and it shall not be deemed to interfere in any way with the Company's right to terminate, or otherwise modify, an employee's employment at any time. 12.8. Effect of Plan. -------------- The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of all Employees and all beneficiaries of Employees participating in the Plan, including, without limitation, each such Employee's estate and the executors, administrators or trustees thereof, heirs and legatees. 12.9. Governing Law. ------------- The law of the State of Delaware will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States. ARTICLE XIII - SPECIAL PARTICIPATION PROVISIONS ----------------------------------------------- 13.1. Hotels & Resorts Employees. Notwithstanding the powers of administration -------------------------- granted to the Committee under Article XI hereof, no employee of Hotels & Resorts shall be selected to participate in this Plan, and no payroll deductions forms shall be filed and effective as set forth in Section 3.4, unless and until the compensation committee of Hotels & Resorts consents to such participation and the sale of Common Stock to such Hotels & Resorts employee. EX-12 32 dex12.txt EXHIBIT 12 Exhibit 12 MERISTAR HOSPITALITY CORPORATION Statement Regarding Computation of Ratios
Year Ended December 31, ------------------------------------------------------------- 1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- Income before minority interests, income tax expense and extraordinary items (1) $ 40,488 $ 69,528 $ 116,667 $ 111,650 $ (42,053) Fixed charges: Interest expense 21,024 64,378 100,398 117,524 122,376 Interest capitalized 442 5,182 12,540 8,613 6,098 Amortization of debt expense 920 1,635 3,143 3,951 4,651 Preferred distributions to minority interests 488 650 574 574 574 Rent deemed as interest 26 11 - - ------------------------------------------------------------------ Total fixed charges 22,900 71,856 116,655 130,662 133,699 ------------------------------------------------------------------ Income before minority interest, income tax expense, extraordinary items and fixed charges (excluding capitalized interest and preferred distributions to minority interests) 62,458 135,552 220,208 233,125 84,974 Divided by fixed charges 22,900 71,856 116,655 130,662 133,699 Ratio of earnings to fixed charges 2.73 1.89 1.89 1.78 0.64
(1) This amount is before minority interests since the minority interests relate to majority-owned subsidiaries that have fixed charges. EX-21 33 dex21.txt EXHIBIT 21 EXHIBIT 21 JURISDICTION OF INCORPORATION OR NAME ORGANIZATION - -------------------------------------------------------------------------------- 183 Hotel Associates, Ltd. Texas 2780 Atlanta Limited Partnership Texas 2929 Williams Limited Liability Company Delaware 3100 Glendale Joint Venture Ohio 339742 B.C. Ltd. British Columbia, Canada 339743 B.C. Ltd. British Columbia, Canada 455 Meadowlands Associates, Ltd Texas 75 Arlington Heights Limited Partnership, L.P. Delaware AGH 2780 Atlanta L.L.C. Delaware AGH 75 Arlington Heights L.L.C. Delaware AGH DFW South L.L.C. Delaware AGH O'Hare International L.L.C. Delaware AGH Portland/Shelton L.L.C. Delaware AGH PSS I, Inc. Delaware AGH Secaucus L.L.C. Delaware AGH UPREIT L.L.C. Delaware BA Parkway Associates II, L.P. Delaware BCHI Acquisition, L.L.C. Delaware CapStar Albuquerque Company, L.L.C. Delaware CapStar AP Partners, L.P. Delaware CapStar C.S. Company, L.L.C. Delaware CapStar Chicago Company, L.L.C. Delaware CapStar Columbia Company, L.L.C. Maryland CapStar Cross Keys Company, L.L.C. Maryland CapStar Dallas Partners, L.P. Delaware CapStar Detroit Airport Company, L.L.C. Delaware CapStar Englewood Company, L.L.C. Delaware CapStar Forrestal Company, L.L.C. New Jersey CapStar Frazer Company, L.L.C. Delaware CapStar Georgetown Company, L.L.C. Delaware CapStar Hartford Company, L.L.C. Connecticut CapStar Hotel (Surrey), Inc. British Columbia, Canada CapStar Hotel (Calgary Airport), Inc. Bristish Columbia, Canada CapStar Houston SW Partners, L.P. Delaware CapStar Indianapolis Company, L.L.C. Delaware CapStar Jekyll Company, L.L.C. Delaware CapStar KC Company, LLC Delaware CapStar Lafayette Company, L.L.C. Delaware CapStar Lexington Company, L.L.C. Delaware CapStar Louisville Company, L.L.C. Delaware CapStar Medallion Austin Partners, L.P. Delaware CapStar Medallion Dallas Partners, L.P. Delaware CapStar Medallion Houston Partners, L.P. Delaware CapStar Mesa Company, L.L.C. Delaware CapStar Midland Partners, L.P. Delaware CapStar Mockingbird Partners, L.P. Delaware CapStar Morristown Company, L.L.C. Delaware CapStar National Airport Company, L.L.C. Delaware CapStar Oklahoma City Company, L.L.C. Delaware CapStar Roland Park Company, L.L.C. Maryland CapStar Sacramento Company, L.L.C. Delaware CapStar San Francisco Company, L.L.C. Delaware CapStar San Pedro Company, L.L.C. Delaware CapStar St. Louis Company, L.L.C. Delaware CapStar Tucson Company, L.L.C. Delaware CapStar Washington Company, L.L.C. Delaware CapStar Westchase Partners, L.P. Delaware CapStar Windsor Locks Company, L.L.C Delaware Centennial Hotel Ltd. British Columbia, Canada Cocoa Beach Hotels, Ltd. Florida DFW South Corporation Delaware DFW South I Limited Partnership Texas Durham I-85 Limited Partnership Delaware EquiStar Arlington Partners, L.P. Delaware EquiStar Atlanta GP Company, L.L.C. Delaware EquiStar Atlanta LP Company, L.L.C. Delaware EquiStar Ballston Company, L.L.C. Delaware EquiStar Bellevue Company, L.L.C. Delaware EquiStar Charlotte Company, L.L.C. Delaware EquiStar Cleveland Company, L.L.C. Delaware EquiStar Colorado Company, L.L.C. Delaware EquiStar Irvine Company, L.L.C. Delaware EquiStar Latham Company, L.L.C. Delaware EquiStar Salt Lake Company, L.L.C. Delaware EquiStar Schaumburg Company, L.L.C. Delaware EquiStar Somerset Company, L.L.C. Delaware EquiStar Virginia Company, L.L.C. Delaware Hotel Columbia Company (Maryland GP) Maryland Lake Buena Vista Partners, Ltd. Florida Lenat Development Company, Ltd. Texas Lepercq Atlanta Renaissance Partners, L.P. Delaware Madison Motel Associates, L.L.P. Wisconsin Madison Washington Associates Wisconsin MCV Venture, L.L.C. Kentucky MDV Limited Partnership Texas MeriStar Acquisition Company, L.L.C. Delaware MeriStar Austin SPE Corp. Delaware MeriStar Austin SPE, L.L.C. Delaware MeriStar Colorado Corporation Delaware MeriStar Cathedral City, L.P. Delaware MeriStar Del Ray, L.L.C. Delaware MeriStar Hospitality Corporation Maryland MeriStar Hospitality Operating Partnership, L.P. Delaware MeriStar Hospitality Finance Corp. Delaware MeriStar Hospitality Finance Corp. II Delaware MeriStar Hospitality Finance Corp. III Delaware MeriStar Hotel (Burnaby), L.L.C. British Columbia, Canada MeriStar Hotel (Calgary Airport), L.L.C. Alberta, Canada MeriStar Hotel Lessee, Inc. Delaware MeriStar Hotel (Surrey), L.L.C. British Columbia, Canada MeriStar Hotel (Vancouver), L.L.C. British Columbia, Canada MeriStar LAJV, L.P. Delaware MeriStar Lexington SPE Corp. Delaware MeriStar Lexington SPE, L.L.C. Delaware MeriStar LP, Inc. Nevada MeriStar Madison SPE Corp. Delaware MeriStar Madison SPE, LLC Delaware MeriStar Marco Island Company, L.L.C. Delaware MeriStar PA SPE Corp. Delaware MeriStar PA SPE, L.L.C. Delaware MeriStar Plantation Shopping Center Company, L.L.C. Delaware MeriStar Safety Harbor Company, L.L.C. Delaware MeriStar Sanibel Beach Company, L.L.C. Delaware MeriStar Sanibel Golf Company, L.L.C. Delaware MeriStar Sanibel Inn Company, L.L.C. Delaware MeriStar Santa Barbara, L.P. Delaware MeriStar Seaside Inn Company, L.L.C. Delaware MeriStar Secured Holdings, L.L.C. Delaware MeriStar Shirley's Parcel Company, L.L.C. Delaware MeriStar Song of the Sea Company, L.L.C. Delaware MeriStar SPE California Corp. Delaware MeriStar SPE Colorado Corp. Delaware MeriStar SPE Corp. Delaware MeriStar SPE Leasing Corp. Delaware MeriStar SPE, L.L.C. Delaware MeriStar SPE North Carolina Corp. Delaware MeriStar SPE Wisconsin Corp. Delaware MeriStar SS Plantation Company, L.L.C. Delaware MeriStar Sundial Beach Company, L.L.C. Delaware MeriStar West Loop, L.P. Delaware Metrotown Overseas Holdings, Inc. British Columbia, Canada Mt. Arlington New Jersey, L.L.C. Delaware Portland/Shelton Corp. Delaware Portland/Shelton, L.L.C. Delaware Westchase SPE Corp. Delaware Westchase SPE, L.L.C. Delaware EX-23 34 dex23.txt EXHIBIT 23 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors MeriStar Hospitality Corporation: We consent to incorporation by reference in the registration statement (No. 333-60463) on Form S-8 (MeriStar Hospitality Corporation Incentive Plan), the registration statement (No. 333-60465) on Form S-8 (MeriStar Hospitality Corporation Non-employee Director's Incentive Plan), the registration statement (No. 333-66229) on Form S-3, and the registration statement (No. 333-37888) on Form S-8 (MeriStar Hospitality Corporation Employee Stock Purchase Plan) of our report dated January 28, 2002, with respect to the consolidated balance sheets of MeriStar Hospitality Corporation and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of operations, stockholder's equity, and cash flows for each of the years in the three-year period ended December 31, 2001, and the related financial statement schedule, which report appears in the December 31, 2001 annual report on Form 10-K of MeriStar Hospitality Corporation. /s/ KPMG LLP Washington, D.C. March 5, 2002 -----END PRIVACY-ENHANCED MESSAGE-----