Exhibit 10.k
$304,788,924.58
SECOND AMENDED AND RESTATED LOAN AGREEMENT
Dated as of April 7, 1994
Among
COURTYARD BY MARRIOTT LIMITED PARTNERSHIP,
as Borrower
-- --------
and
THE BANKS NAMED HEREIN,
as Banks
-- -----
and
CITIBANK, N.A.,
as Agent
-- -----
Exhibit 10.k
T A B L E O F C O N T E N T S
---------------------------------
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 Certain Defined Terms..............................
1.02 Computation of Time Periods........................
1.03 Accounting Terms...................................
ARTICLE II
AMENDMENT AND RESTATEMENT; REPAYMENT
OF THE LOANS
2.01 Amendment and Restatement;
Consolidation of Loans..........................
2.02 Repayment..........................................
2.03 Extensions.........................................
2.04 Prepayments........................................
2.05 Interest...........................................
2.06 Minimum Amount of Eurodollar Rate
Advances; Maximum Number of
Interest Periods................................
2.07 Conversion of Multistate Advances..................
2.08 Increased Costs, Etc...............................
2.09 Payments and Computations..........................
2.10 Taxes..............................................
2.11 Sharing of Payments, Etc...........................
2.12 Non-Recourse.......................................
ARTICLE III
CONDITIONS PRECEDENT
3.01 Conditions Precedent...............................
3.02 Determinations Under Section 3.01..................
ARTICLE IV
RELEASE OF HOTELS
4.01 Release............................................
4.02 Conditions to Release..............................
4.03 Release of Secondary Hotels........................
4.04 Defined Terms Used in this Article.................
Section Page
------- ----
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties of the
Borrower........................................
ARTICLE VI
COVENANTS OF THE BORROWER
6.01 Affirmative Covenants...............................
6.02 Negative Covenants..................................
6.03 Reporting Requirements..............................
ARTICLE VII
EVENTS OF DEFAULT
7.01 Events of Default...................................
7.02 Cure of Certain Events of Default by
Host Marriott and Marriott
International...................................
7.03 Events of Default with Respect to Marriott
International, Host Marriott and their
Subsidiaries....................................
7.04 Specific Performance................................
ARTICLE VIII
THE AGENT
8.01 Authorization and Action............................
8.02 Agent's Reliance, Etc...............................
8.03 Citibank and Affiliates.............................
8.04 Lender Credit Decision..............................
8.05 Indemnification.....................................
8.06 Successor Agents....................................
ARTICLE IX
MISCELLANEOUS
9.01 Amendments, Etc....................................
9.02 Notices, Etc.......................................
9.03 No Waiver; Remedies................................
9.04 Costs and Expenses.................................
9.05 Right of Set-off...................................
9.06 Binding Effect.....................................
9.07 Assignments and Participations.....................
9.08 Obligations Several................................
9.09 Headings...........................................
9.10 Severabiity of Provisions..........................
Section Page
------- ----
9.11 Consents of the Lenders Associated with
Reorganization and Amendment and
Restatement.....................................
9.12 Agreement of Lenders Not to Object
and Waiver......................................
9.13 Governing Law......................................
9.14 Execution in Counterparts..........................
9.15 Confidentiality....................................
9.16 Consent of Jurisdiction............................
9.17 Release............................................
9.18 Waiver of One Action Rule, Etc.....................
9.19 Waiver of Jury Trial, Etc..........................
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT is dated as of April
7, 1994 among Courtyard by Marriott Limited Partnership, a Delaware limited
partnership (the "Borrower"), the banks (the "Banks") listed on the signature
-------- -----
pages hereof, and Citibank, N.A. ("Citibank"), as agent (together with any
successor appointed pursuant to Article VIII, the "Agent") for the Lenders
hereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, Citibank, The First National Bank of Chicago
("FNBC"), Bankers Trust Company, Bank of America National Trust and Savings
----
Association, The Bank of Nova Scotia, First Interstate Bank of California and
Security Pacific National Bank (such banks being the "Original Banks"), and
--------------
Citibank and FNBC as agents for the Original Banks, entered into two Loan
Agreements, each dated as of August 14, 1986 (as amended prior to the
effectiveness of the 1988 Loan Agreements referred to in paragraph (2) below,
the "1986 Loan Agreements"), in which the Original Banks agreed to make loans to
--------------------
the Borrower in an aggregate principal amount not in excess of $373,149,000.
(2) The Borrower, the Original Banks other than Security Pacific
National Bank (the "1988 Banks"), and Citibank and FNBC, as agents for the 1988
----------
Banks, subsequently entered into two Amended and Restated Loan Agreements, each
dated as of June 15, 1988 (the "1988 Loan Agreements"), which among other things
--------------------
amended and restated the 1986 Loan Agreements, changed the maturity date of the
loans made by the Original Banks under the 1986 Loan Agreements to June 15, 1993
and provided for the assignment by Security Pacific National Bank of its
interest in the loans made by it to the Borrower under the 1986 Loan Agreements
to certain of the 1988 Banks. Citibank subsequently assigned to The Sumitomo
Trust & Banking Co. Ltd., New York Branch ("Sumitomo") a portion of Citibank's
--------
interest in the loans governed by the l988 Loan Agreements.
(3) In March 1993, FNBC resigned as agent under the 1988 Loan
Agreements and assigned its interest in the loans thereunder to Citibank.
Citibank continued to act as agent for the remaining 1988 Banks and Sumitomo
(the "1988 Lenders").
------------
(4) The Banks consist of the 1988 Lenders and certain financial
institutions that have purchased participation interests in the 1988 Loan
Agreement governing loans to the Borrower in the aggregate principal amount of
$322,050,133 (the "1988 Multistate Loan Agreement"). The Borrower did not make
------------------------------
on the June 15, 1993 maturity date the payments required under the 1988 Loan
Agreements. The Borrower has requested that the Banks consent to the
Reorganization (as defined in Section 1.01) of Marriott Corporation and extend
the maturity date of the loans governed by the 1988 Loan Agreements. The Banks
have agreed to the Borrower's request on the terms and conditions set forth
herein and in the $48,360,075.42 Second Amended and Restated Loan Agreement
dated as of the date hereof among the Borrower, the Banks and the Agent (the
"California Loan Agreement"). This Agreement, among other things, amends and
--------------------------
restates the 1988 Multistate Loan Agreement, consolidates the loans governed
thereby, extends the maturity date of such loans and provides for the assignment
by certain Banks of part of their interest in the Multistate Advances (as
defined in Section 2.01) owing to them to the Banks that previously purchased
participation interests in the 1988 Multistate Loan Agreement. The California
Loan Agreement, among other things, amends and restates the 1988 Loan Agreement
governing loans to the Borrower in the aggregate principal amount of $51,098,867
(the "1988 California Loan Agreement"), consolidates the loans governed thereby,
------------------------------
extend the maturity date of such loans and provides for the assignment by
certain 1988 Lenders of part of their interest in the advances
-2-
governed by the California Loan Agreement to certain financial institutions that
purchased participations from such 1988 Lenders in the 1988 California Loan
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree that,
subject to the satisfaction of the conditions precedent set forth in Article
III, the 1988 Multistate Loan Agreement is, on and as of the Closing Date (as
defined in Section 1.01), amended and restated in its entirety as set forth
below.
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 (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Additional Interest" has the meaning specified in Section 2.05(b).
-------------------
"Adjusted Multistate Amount" means, for each Lender, the unpaid
--------------------------
principal amount of the Multistate Advances owing to such Lender from time to
time plus, on and after the date, if any, that all or any Additional Interest
----
owing to such Lender is not paid when due pursuant to Section 2.05(b), the
amount equal to such unpaid Additional Interest on such date.
"Adjusted Operating Profit" means, for any period, Operating Profit of
-------------------------
the Hotels for such period under the Hotel Lease plus the sum of the following
----
(without duplication) during such period: (a) the Net Cash Proceeds from the
execution of all easements benefiting or affecting the Hotel Properties; (b) all
interest and other amounts earned by the Borrower in respect of (i) funds in the
Borrower Operating Account (including the proceeds of all investments and
reinvestments of such funds, interest and other amounts), (ii) funds in all
other accounts (excluding the FF&E Reserve Account and accounts containing funds
relating only to the Connecticut Hotel) of the Borrower (including the proceeds
of all investments and reinvestments of such funds, interest and other amounts),
(iii) all investments in Cash Equivalents and (iv) all other securities, if any,
held for investment; (c) the amount, if any, of the net proceeds of any
insurance paid directly to the Borrower on account of damage or destruction to
any part of a Hotel (including any personal property therein) that is not used
by the Borrower to repair or replace the damaged or destroyed Hotel (including
personal property) pursuant to Section 15.01A of the Hotel Lease, not used to
reimburse other Persons for amounts advanced by them for the repair or
replacement of the damaged or destroyed Hotel (including personal property) or
not deposited in the FF&E Reserve Account to replenish amounts withdrawn from
the FF&E Reserve Account to repair or replace the damaged or destroyed Hotel
(including personal property); and (d) any refunds of ground rent paid by any
International Ground Lessor to the Borrower or the Tenant to the extent such
refund is not included in Gross Revenues (as defined in the Hotel Lease) in
calculating Operating Profit.
"Adjusted Partnership Costs" has the meaning specified in Section
--------------------------
6.02(q).
"Administrative Holdback Amount" means $169,200, which is the
------------------------------
Borrower's estimate of Partnership Costs payable by it from five days prior to
the Closing Date through the end of the Cumulative Tenant Period with the
Payment Date of August 1, 1994.
-3-
"Affiliate" means, as to any Person, any other Person that, (a)
---------
directly or indirectly, controls, is controlled by or is under common control
with such Person, (b) is a director or officer of such Person or of an Affiliate
of such Person and (c) is an Affiliate of any such director or officer. For
purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 10% or more of
the Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by contract or otherwise. For purposes of this definition, all shares of
stock, partnership interests or similar interests in a corporation, partnership
or other Person owned by a spouse, sibling, parent, child or grandchild of an
individual, by any such relative of a spouse of such individual or by any
relative of such individual or spouse who makes his or her home with such
individualor spouse shall be deemed to be owned by that individual.
"Agent" has the meaning specified in the recital of parties to this
-----
Agreement.
"Agent's Account" means the account of the Agent maintained by the
---------------
Agent at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Account No.
▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇.
"Aggregate Recapture Amount" means, for any Tenant Fiscal Year, the
--------------------------
sum of the Excess Earnings Recapture on which the Borrower's payments under
Section 2.04(b)(i) were based for each Cumulative Tenant Period included in such
Tenant Fiscal Year. For purposes of calculating the Aggregate Recapture Amount,
if Excess Earnings Recapture for any Cumulative Tenant Period is a negative
number, the Excess Earnings Recapture for such Cumulative Tenant Period shall be
deemed to equal zero dollars.
"Amended MI Revolver" means the MI Revolver as in effect on the
-------------------
Closing Date and as amended from time to time thereafter in accordance with its
terms.
"Annual Interest Payments" has the meaning specified in Section 4.04.
------------------------
"Annual Loan Coverage of the Remaining Hotels" has the meaning
--------------------------------------------
specified in Section 4.04.
"Annualized Recapture Amount" has the meaning specified in Section
---------------------------
6.03(d)(ii).
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means (a) for Base Rate Advances, the applicable
-----------------
percentage per annum set forth below and (b) for Eurodollar Rate Advances, the
applicable percentage per annum set forth below corresponding to the period in
which the first day of the Interest Period for such Eurodollar Rate Advance
occurs.
Base Rate
Advance Eurodollar Rate
Applicable Advance Applicable
Period Margin Margin
------ ------ ------
Closing Date through June 15, 1996 0.50% 1.50%
June 16, 1996 through June 15, 1997 0.75% 1.75%
From and after June 16, 1997 1.00% 2.00%
-4-
"Asset Transfer Date" means October 8, 1993, on which date the
-------------------
Reorganization occurred.
"Asset Transfers" means the transfer by Marriott Corporation to
---------------
Marriott International of the stock of certain Marriott Corporation Subsidiaries
principally engaged in the lodging and senior living services management, golf
management, timeshare resort development and operation, food service and
facilities management and other contract services businesses and certain other
transfers to allocate the assets and liabilities related thereto to Marriott
International and assets and liabilities related to the ownership of hotels and
senior living facilities and the operation of restaurants, cafeterias, gift
shops and related facilities at airports, stadiums, arenas and tourist
attractions and on highway systems to Marriott Corporation, as required by the
terms of the Distribution Agreement.
"Assigning Bank" means a 1988 Lender that is, on the Closing Date,
--------------
selling and assigning a portion of its rights and obligations under this
Agreement (including, without limitation, a portion of the Multistate Advances
owing to it) and the other Multistate Loan Documents pursuant to Section 2.01 to
another Bank that has purchased prior to the date hereof a participation
interest in the 1988 Multistate Loans of the 1988 Lender making the sale and
assignment.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
accordance with Section 9.07 and substantially in the form of Exhibit C.
"Assuming Participant" means a Bank that purchased prior to the
--------------------
Closing Date a participation interest in the 1988 Multistate Loans owing to an
Assigning Bank and that is, on the Closing Date, in exchange for the retransfer
of such participation interest to such Assigning Bank, (a) acquiring a portion
of the rights and obligations of such Assigning Bank under this Agreement
(including, without limitation, a portion of the Multistate Advances owing to
the Assigning Bank) and the other Multistate Loan Documents pursuant to Section
2.01 and (b) assuming such portion of the rights and obligations of such
Assigning Bank under this Agreement and the other Multistate Loan Documents
pursuant to Section 2.01.
"Attornment Agreement" means the Subordination, Nondisturbance and
--------------------
Attornment Agreement in substantially the form of Exhibit P, as amended from
time to time in accordance with its terms.
"Authorized Accounting Officer" means the chief accounting officer of
-----------------------------
the General Partner, or one of his or her duly authorized representatives who,
as set forth in a written notice from such chief accounting officer to the
Agent, is duly authorized to act on behalf of such chief accounting officer in
connection herewith.
"Authorized Representative" means any duly authorized representative
-------------------------
of the General Partner who, as set forth in a written notice from the Borrower
to the Agent, is authorized by the Borrower to act in connection herewith.
"Backup Debt Service Guaranty" means the Backup Debt Service Guaranty
----------------------------
in substantially the form of Exhibit K, as amended from time to time in
accordance with its terms.
"Backup Guaranteed Obligations" has the meaning specified in the
-----------------------------
Backup Debt Service Guaranty.
-5-
"Bankruptcy Code" means the U.S. Bankruptcy Code, 11 U.S.C. (S)(S) 101
---------------
et seq., together with all amendments, modifications and replacements as the
same may exist on any relevant date.
"Banks" has the meaning specified in the recital of parties to this
-----
Agreement.
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the highest
of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per
annum, plus (ii) the rate obtained by dividing (A) the latest three-week
----
moving average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States money
market banks, such three-week moving average (adjusted to the basis of a
year of 360 days) being determined weekly on each Monday (or, if such day
is not a Business Day, on the next succeeding Business Day) for the three-
week period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be suspended
or terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of recognized
standing selected by Citibank, by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such three-week period by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited to,
any emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including (among
other liabilities) three-month U.S. dollar non-personal time deposits in
the United States, plus (iii) the average during such three-week period of
----
the annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar deposits
of Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means a Multistate Advance that bears interest as
-----------------
provided in Section 2.05(a)(ii).
"Base Release Price" means, with respect to a Hotel, the dollar amount
------------------
specified as the "Base Release Price" opposite such Hotel on Schedule 4.01.
"Borrower" has the meaning specified in the recital of parties to this
--------
Agreement.
"Borrower Accounting Period" means each accounting period of four
--------------------------
consecutive weeks having the same beginning and ending dates as the General
Partner's corresponding four week accounting period except that the last
Borrower Accounting Period in a Borrower Fiscal Year may be longer than four
consecutive weeks when and to the extent necessary to conform the Borrower's
accounting system to the calendar. The first and last day of each Borrower
Accounting Period between January 1, 1994 and December 31, 1999 are set forth on
Schedule 1.01A.
"Borrower Accounting Quarter" means three (or, in the case of the last
---------------------------
Borrower Accounting Quarter for a Borrower Fiscal Year, four) consecutive
Borrower Accounting Periods, ending on the last day of the third, sixth, ninth
and last Borrower Accounting Period in each
-6-
Borrower Fiscal year. The first and last day of each Borrower Accounting
Quarter between January 1, 1994 and December 31, 1999 are set forth on Schedule
1.01.
"Borrower Operating Account" has the meaning specified in the
--------------------------
Multistate Security Agreement.
"Borrower Fiscal Year" means the calendar year.
--------------------
"Borrower Material Adverse Change" means any material adverse change
--------------------------------
in the business, condition (financial or otherwise), operations, performance,
properties (including the Hotel Properties and the respective interest of the
Borrower therein) or prospects of the Borrower or the General Partner.
"Borrower Material Adverse Effect" means a material adverse effect on
--------------------------------
(a) the business, condition (financial or otherwise), operations, performance,
properties (including the Hotel Properties and the respective interest of the
Borrower therein) or prospects of the Borrower or the General Partner, (b) the
rights and remedies of the Agent or the Lender under any Multistate Loan
Document or Related Document to which the Borrower or the General Partner is or
is to be a party or the priority of any Multistate Mortgage or other Lien
granted by the Borrower in favor of the Lenders or (c) the ability of the
Borrower or the General Partner to perform its Obligations under any Multistate
Loan Document or Related Document to which it is or is to be a party.
"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 Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
"California Advance" has the meaning specified in the California Loan
------------------
Agreement.
"California Base Advance" means a California Advance that bears
-----------------------
interest as provided in Section 2.05(a)(ii) of the California Loan Agreement.
"California Assignment of Leases" has the meaning specified in the
-------------------------------
California Loan Agreement.
"California Borrowing" has the meaning specified in the California
--------------------
Loan Agreement.
"California Collateral Documents" has the meaning specified in the
-------------------------------
California Loan Agreement.
"California Eurodollar Advance" means a California Advance that bears
-----------------------------
interest as provided in Section 2.05(a)(i) of the California Loan Agreement.
"California Loan Agreement" has the meaning specified in the
-------------------------
Preliminary Statements.
"California Loan Documents" has the meaning specified in the
-------------------------
California Loan Agreement.
"California Mortgages" has the meaning specified in the California
--------------------
Loan Agreement.
"California Obligations" has the meaning specified in Section 2.11.
----------------------
"California Required Lenders" means the "Required Lenders" as defined
---------------------------
in the California Loan Agreement.
-7-
"California Withheld Amount" has the meaning specified in the
--------------------------
California Loan Agreement.
"Capitalized Leases" has the meaning specified in clause (e) of the
------------------
definition of Indebtedness.
"Cash Equivalents" means any of the following, to the extent owned by
----------------
the Borrower free and clear of all Liens and having a maturity of not greater
than 90 days from the date of acquisition thereof: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) certificates of
deposit of or time deposits with any commercial bank that (i) is a Lender or a
member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (c), (iii) is organized
under the laws of the United States or any State thereof and (iv) has combined
capital and surplus of at least $1,000,000,000 or (c) commercial paper in an
aggregate amount of no more than $250,000 per issuer outstanding at any time,
issued by any corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent grade) by ▇▇▇▇▇'▇
Investors Services, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Corporation.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980.
"Chain Services" has the meaning specified in the Hotel Lease.
--------------
"Citibank" has the meaning specified in the Preliminary Statements.
--------
"Closing Date" means the first date on which the conditions set forth
------------
in Article III have been satisfied.
"Closing Date MI Revolver" means the MI Revolver as in effect on the
------------------------
Closing Date.
"CMC" means Courtyard Management Corporation, a Delaware corporation.
---
"Combined Advances" means the Multistate Advances and the California
-----------------
Advances.
"Combined Loan Documents" means the Multistate Loan Documents and the
-----------------------
California Loan Documents.
"Combined Obligations" has the meaning specified in Section 2.11.
--------------------
"Computer Lease" means a lease or other agreement under which the
--------------
Borrower leases (including the license, if any, of operating software therefor)
computer equipment located in a Hotel.
"Confidential Information" means (a) information that the Borrower
------------------------
furnishes to the Agent or any Lender in a writing designated as confidential
with a reference to Section 9.15 hereof and (b) any financial information
regarding the Borrower and the Hotel Properties, including projections of the
operating results of the Hotels, that the Borrower furnishes to the Agent or any
Lender, but in each case does not include any such information that is or
becomes generally available to the public or that is or becomes available to the
Agent or such Lender from a source other than the Borrower or any Affiliate
thereof.
"Connecticut Hotel" means the Borrower's hotel in Windsor,
-----------------
Connecticut.
-8-
"Connecticut Hotel Documents" means (a) the Loan Agreement dated as of
---------------------------
February 9, 1988 among the Borrower, Citibank and FNBC as amended after the
Closing Date due to the termination of the 1986 Management Agreement and (b) the
Loan Documents referred to in such Loan Agreement.
"Consolidated" means, with respect to any Person, the consolidation of
------------
the accounts of such Person and its Subsidiaries in accordance with generally
accepted accounting principles as in effect from time to time in the United
States of America.
"Conversion", "Convert" and "Converted" each refers to a conversion of
---------- ------- ---------
Multistate Advances of one Type into Multistate Advances of the other Type
pursuant to Section 2.07.
"Corresponding California Borrowing" has the meaning specified in
----------------------------------
paragraph (c) of the definition of Interest Period.
"CPI" means the CPI-U (a) using 1982-1984 as the standard reference
---
base period equal to 100 or (b) if the CPI-U ceases to be issued with the
reference base period referred to in clause (a) for any time period for which
the CPI is to be determined hereunder, using for the CPI-U for the time period
for which such reference base period is not used the standard reference base
period for such time period times a conversion factor that will convert such
CPI-U to a value corresponding to a 1982-1984 base period equal to 100. As used
in this definition, "CPI-U" means the Consumer Price Index, All Items for All
-----
Urban Consumers, U.S. City Average.
"CPI Adjustment Factor" means, for any Tenant Fiscal Year for which
---------------------
maximum permitted Partnership Costs are being determined pursuant to Section
6.02(q), (a) 100 percent plus the percentage increase in the CPI announced for
November of the immediately preceding Tenant Fiscal Year over the CPI announced
for December of 1993 or (b) if the percentage increase referred to in clause (a)
is a negative number, one (1).
"Cumulative Difference" has the meaning specified in Section
---------------------
2.04(b)(ii).
"Cumulative Tenant Period" means, at any Payment Date, the three or
------------------------
four (as the case may be) consecutive Tenant Accounting Periods ending with the
Tenant Accounting Period that ends on the date that is closest to, but at least
thirty (30) days before, such Payment Date. Notwithstanding the preceding
sentence, (a) the first Cumulative Tenant Period hereunder shall begin on
February 26, 1994 and shall end on ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the Cumulative Tenant
Period for the February 1, 1997 Payment Date shall end with (and include) the
Tenant Accounting Period ending January 3, 1997 and (c) the Cumulative Tenant
Period for the February 1, 1998 Payment Date shall end with (and include) the
Tenant Accounting Period ending January 2, 1998. The first and last day of each
Cumulative Tenant Period through June 18, 1999 is set forth on Schedule 1.01B.
"Current Ground Rent" means, at any time, all rent due and payable
-------------------
under the International Ground Leases the payment of which has not been
deferred. The term "Current Ground Rent" does not include Deferred Ground Rent.
-------------------
"Current Year" has the meaning specified in Section 4.04.
------------
"Debt and Tenant Chance Guaranty" means the Debt and Tenant Change
-------------------------------
Guaranty in substantially the form of Exhibit S, as amended from time to time in
accordance with its terms.
"Debt Service Guaranty" means the Amended and Restated Debt Service
---------------------
Guaranty in substantially the form of Exhibit J, as amended from time to time in
accordance with its terms.
-9-
"Default" means any Event of Default or any Potential Default.
-------
"Deferred Ground Rent" means, at any time, all rent payable under the
--------------------
International Ground Leases the payment of which has been deferred by the
Borrower in accordance with Section 6.01(s).
"Deferred Incentive Management Fees" means, without duplication, all
----------------------------------
of the following as in existence and calculated as of December 31, 1993: (a) all
"Deferred Incentive Management Fees" referred to in the 1986 Management
Agreement, (b) all "Base Management Fees" and "Courtyard Management Fees"
referred to in the 1986 Management Agreement and treated as "Deferred Incentive
Management Fees" pursuant to Section 5.02E thereof and (c) all other "Incentive
Management Fees" (excluding in each case those referred to in clauses (a) and
(b) above) accrued through December 31, 1993 on the Tenant's financial records.
"Deferred Purchase Note" means the Deferred Purchase Note of the
----------------------
Borrower payable to the order of Marriott Corporation in the principal amount of
$79,947,000 and issued by the Borrower pursuant to the Purchase Agreement as
partial payment for the sale of the Hotels and the Connecticut Hotel by Marriott
Corporation to the Borrower.
"Determined Libor Rate" means a rate equal to 3.56% per annum, which
---------------------
would be the Determined Libor Rate (as defined in the Forbearance Agreement) for
a one month Interest Period commencing on March 18, 1994.
"Distribution" means the special dividend transaction consisting of a
------------
distribution to shareholders of Host Marriott, on a share-for-share basis, of
all outstanding shares of common stock of Marriott International, as set forth
in the Proxy Statement.
"Distribution Agreement" means the Distribution Agreement dated as of
----------------------
September 15, 1993 between Marriott Corporation and Marriott International.
"Distribution Documents" means the Distribution Agreement, the
----------------------
Employee Benefits Allocation Agreement, the Tax Sharing Agreement, the ▇▇▇▇▇
Allocation Agreement, the Host Marriott Lodging Management Agreements, the
Consolidation Agreement, the Senior Living Services Lease Agreements, the
Philadelphia Mortgage, the Host Consulting Agreement, the Assignment and License
Agreement, the Noncompetition Agreement and the Transitional Services
Agreements, as each such agreement is defined in the Proxy Statement if not
otherwise defined herein, and each other agreement governing the Asset Transfers
and the Distribution.
"Dollars" and the sign "$" each means lawful currency of the United
-------
States of America.
"Domestic Lending Officer" means, with respect to any Lender, the
------------------------
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule 2.01B or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify in writing to the Borrower and the Agent.
"Eligible Assignee" means (a) a commercial bank organized under the
-----------------
laws of the United States, or any State thereof, and having total assets in
excess of $1,000,000,000, any holding company thereof and any Affiliate having
total assets in excess of $1,000,000,000 of any such holding company; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$500,000,000, any holding company thereof and any Affiliate having total assets
in excess of $500,000,000 of any such holding company; (c) a commercial or
consumer finance company (whether a corporation, partnership, trust or other
entity) that is engaged in making, purchasing or otherwise investing in
commercial loans
-10-
in the ordinary course of its business, having total assets in excess of
$50,000,000 and whose debt is rated "BBB" or better by Standard & Poor's
Corporation, "Baa" or better by ▇▇▇▇▇'▇ Investors Service, Inc., or rated in one
of the top four categories of any other nationally recognized rating agency; (d)
any Person organized under the laws of the United States, or any state thereof,
that is organized as a mutual fund or registered investment company and having
total assets in excess of $50,000,000; and (e) any other Person approved by the
Agent and the Borrower, which approvals will not be unreasonably withheld;
provided, however, that neither an Affiliate of the Borrower nor an Affiliate of
-------- -------
the Tenant shall qualify as an Eligible Assignee under this definition.
"Environmental Action" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any federal, state or local law, rule,
-----------------
regulation, order, writ, judgment, injunction, decree or determination relating
to the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Toxic Substances Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Occupational Safety
and Health Act.
"Environmental Permit" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" of any Person means any other Person that for
---------------
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"Estimated Unpaid Transaction Costs" means $535,266.85, which is the
----------------------------------
Borrower's estimate of Transaction Costs, excluding those paid on or before the
Closing Date.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its Eurodollar Lending Office opposite its
name on Schedule 2.01B or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify in writing to the Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
---------------
Rate Advances comprising part of the same Multistate Borrowing, an interest rate
per annum equal to the rate per annum obtained by dividing (a) the rate per
annum at which deposits in U.S. dollars are offered by the principal office of
the Reference Bank in London, England 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 in an amount substantially equal to the greeter of (i)
$5,000,000 and (ii) the sum of
-11-
such Reference Bank's Eurodollar Rate Advance comprising part of such Multistate
Borrowing to be outstanding during such Interest Period and such Reference
Bank's California Eurodollar Advance comprising part of the California Borrowing
to be outstanding during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage, if any, for such Interest Period. Notwithstanding the
preceding sentence, "Eurodollar Rate" means, if the Borrower selects in April
---------------
1994 the Interest Period of longer than three months described in the second
parenthetical of the definition of "Interest Period", for purposes of
calculating the Eurodollar Rate for that Interest Period only clause (a) of the
preceding sentence shall be modified prior to the words "by the principal office
of the Reference Bank" to read "the rate per annum at which deposits in U.S.
dollars would be offered as determined by the Reference Bank in its discretion."
"Eurodollar Rate Advance" means a Multistate Advance that bears
-----------------------
interest as provided in Section 2.05(a)(i).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period
----------------------------------
for any Eurodollar Rate Advance comprising part of the same Multistate
Borrowing, the reserve percentage applicable two Business Days before the first
day of such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for the Reference
Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar
Rate Borrowings is determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 7.01.
-----------------
"Excess Earnings Recapture" means, for any period, Adjusted Operating
Profit for such period less the sum of (a) payments of principal (including
----
under Section 2.02, 2.03 and 2.04(a) of this Agreement and of the California
Loan Agreement), interest and other Obligations of the Borrower under the
Combined Loan Documents paid by the Borrower during such period pursuant to the
Combined Loan Documents (excluding (i) payments of principal and interest made
in such period pursuant to Section 2.04(b)(i) hereof and of the California Loan
Agreement to the extent related to prior periods, (ii) payments of principal and
interest made in such period pursuant to Section 2.04(b)(ii) hereof and of the
California Loan Agreement to the extent related to prior periods, (iii) payments
of principal and interest made in such period pursuant to Article IV of this
Agreement and the California Loan Agreement in connection with the release of a
Hotel Property, (iv) for purposes of the calculation of Excess Earnings
Recapture made for the second Cumulative Tenant Period hereunder, payments of
principal, interest, fees and expenses paid by the Borrower on the Closing Date
pursuant to this Agreement and the California Loan Agreement and (v) to the
extent not included in (iv) payments to the Agent made in such period of
proceeds of sales of Multistate Collateral to the extent such proceeds are not
included in Gross Revenues), (b) payments of Partnership Costs for such period
(excluding payments of Partnership Costs made after the Closing Date until such
Partnership Costs exceed the Administrative Holdback Amount), (c) Current Ground
Rent paid by the Borrower or the Tenant to the international Ground Lessors
during such period in accordance with this Agreement and (d) for purposes of the
calculation of Excess Earnings Recapture made for the second Cumulative Tenant
Period hereunder, Transaction Costs paid by the Borrower after the Closing Date
during such period. Notwithstanding the preceding sentence, there shall not be
deducted from Adjusted Operating Profit in calculating Excess Earnings Recapture
(x) the payment described in the last sentence of Section 2.04(b)(i) of this
Agreement and of the California Loan Agreement made on account of Transaction
Costs or (y) the payment described in Section 6.01(j) of this Agreement and of
the California Loan Agreement. As used in this definition, "Transaction Costs"
-----------------
means the fees and expenses incurred by the Borrower in connection with the
preparation, negotiation, execution and delivery on the Closing
-12-
Date of the Combined Loan Documents, including without limitation (1) the fees
and expenses of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., (2) the fees and expenses of local
counsel to the Borrower, (3) the cost of obtaining good standing certificates
and other documents certified by governmental entities and required to be
delivered hereunder on the Closing Date and (4) the fees, expenses and premiums
charged by title insurance companies and other search companies for the
provision pursuant to this Agreement and the California Loan Agreement of title
insurance on the Hotel Properties and the recording, filing and retrieval of the
documents required to be recorded, filed and retrieved by this Agreement and the
California Loan Agreement.
"Exchange Offer" means the offer made by Marriott Corporation pursuant
--------------
to which holders of certain notes of Marriott Corporation had the right to
exchange their notes for a combination of cash and common stock of Host Marriott
and new senior notes issued by a Subsidiary of Host Marriott.
"Exculpated Parties" has the meaning specified in section 2.12.
------------------
"Extension Notice" has the meaning specified in Section 2.03(c).
----------------
"Excluded Period" means, with respect to any additional amount payable
---------------
under Section 2.08(a) or 2.08(b), the period ending 120 days prior to the
applicable Lender's delivery of a certificate referenced in Section 2.08(a) or
2.08(b), as applicable, with respect to such additional amount.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Interest" means any Mortgaged Interest in which the Borrower (or,
------------
in the case of the Hotel in Fairfax (Fair Oaks), Virginia, the Courtyard by
Marriott Limited Partnership Land Trust) has a fee simple interest in the entire
Hotel Property.
"FF&E" means all furniture, fixtures, furnishings and equipment
----
acquired or to be acquired in connection with the operation of a Hotel Property,
including without limitation all such furniture, fixtures, equipment and
furnishings acquired after the date hereof and all replacements thereof.
"FF&E Lease" means (a) a lease (other than a TV System Lease,
----------
Telephone Lease or Computer Lease) to the Borrower or the Tenant of any FF&E
that is customarily leased in the hotel industry in the United States and on
payment terms (including amount and time of payment) not materially more
favorable to the lessor thereof than payment terms customary in the hotel
industry in the United States for similar leases, (b) one or more other leases
(other than a TV System Lease, Telephone Lease, Computer Lease or lease
described in clause (a)) of any FF&E, including without limitation any
Capitalized Lease, the Borrower's or Tenant's payment Obligations under which do
not exceed $2,000 per Hotel per Tenant Fiscal Year and $100,000 in the aggregate
per Tenant Fiscal Year and (c) any lease (other than a TV System Lease,
Telephone Lease, Computer Lease or lease described in clause (a) or clause (b))
to the Borrower or the Tenant of any other FF&E that is approved by the Agent.
"FF&E Reserve" means the "Repair and Equipment Reserve" or "Reserve"
------------
as defined in Section 8.02 of the Hotel Lease.
-13-
"FF&E Reserve Account" has the meaning specified in the Multistate
--------------------
Security Agreement.
"Financial Statements" means the financial statements of the Borrower
--------------------
furnished to the Agent or the Lenders from time to time, including, without
limitation, those furnished by the Borrower pursuant to Section 6.03 hereof.
"FIRREA" means the Federal Financial Institutions Reform, Recovery and
------
Enforcement Act of 1989, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"FNBC" has the meaning specified in the Preliminary Statements.
----
"Forbearance Agreement Rate" means the Forbearance Agreement dated
--------------------------
December 15, 1993 among the Borrower, the 1988 Lenders and Citibank as agent for
the 1988 Lenders.
"Forbearance Agreement Rate" means an interest rate equal to 5.06% per
--------------------------
annum, which equals the Determined Libor Rate plus 1.50%.
----
"Foreign Lender" has the meaning specified in Section 2.10(g).
--------------
"GAAP" has the meaning specified in Section 1.03.
----
"General Partner" means CBM One Corporation, a Delaware corporation.
---------------
"Governmental Authority" means any nation, state or other political
----------------------
subdivision or instrumentality of such nation or state and any entity (including
any public agency or unincorporated association) exercising executive,
legislative, judicial, regulatory or administrative functions of government.
"Gross Revenues" has the meaning specified in the Hotel Lease.
--------------
"Ground Lease" means an International Ground Lease or a Third Party
------------
Ground Lease.
"Ground Lease Amendment" means a First Amendment to Ground Lease in
----------------------
substantially the form of Exhibit I amending an International Ground Lease.
"Ground Lessor" means an International Ground Lessor or a Third Party
-------------
Ground Lessor.
"Guarantee" has the meaning specified in the Closing Date MI Revolver
---------
(with all defined terms used in the MI Revolver in connection with the
definition of "Guarantee" having the respective meanings set forth in the
---------
Closing Date MI Revolver).
"Guaranteed Obligations" has the meaning specified in the Debt Service
----------------------
Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
-------------------
natural or synthetic gas, asbestos in any form, urea formaldehyde foam
insulation and radon gas, (b) any substances defined as or included in the
definition of "hazardous substances" "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants" or "pollutants," or synonymous words under
any
-14-
Environmental Law and (c) any other substance exposure to which is regulated
under any Environmental Law.
"Host Event" has the meaning specified in Section 7.03(b).
----------
"Host Material Adverse Effect" has the meaning specified in Section
----------------------------
5(c) of the Debt Service Guaranty.
"Host Marriott" means Host Marriott Corporation, a Delaware
-------------
corporation formerly named Marriott Corporation.
"Host Marriott Indemnity Agreement" means the Indemnity Agreement in
---------------------------------
substantially the form of Exhibit R, as amended from time to time in accordance
with its terms.
"Host Subordinated Notes" has the meaning specified in the Debt
-----------------------
Service Guaranty.
"Hotel" means a Courtyard by Marriott hotel identified on Schedule
-----
5.01(z) and further described on Schedule 5.01(aa), all FF&E of such hotel and
all improvements on the Land on which such hotel is located, in each case
whether now existing or hereafter acquired, and all alterations and additions
thereto, including all fixtures and appurtenances now or hereafter attached to
such improvements or to the Land; provided that such hotel and, FF&E
--------
improvements shall cease to be included in the term "Hotel" for purposes of this
Agreement and the other Multistate Loan Documents from and after such time as
the "Hotel Property" which includes such hotel is released from its Multistate
Mortgage, Multistate Assignment of Leases and the other Multistate Collateral
Documents encumbering such Hotel Property pursuant to Article IV.
Notwithstanding any such release, (a) all calculations made and payments
required or permitted to be made for any period by reference to any Hotel or
Hotel Property (including without limitation Excess Earnings Recapture) shall
include the released Hotel or Hotel Property, as the case may be, up to the time
during such period when the Hotel Property was so released and (b) all reports,
financial statements and other information covering one or more Hotels for any
period during which the Hotel Property is released shall include such Hotel
Property up to the time of its release. In addition, the foregoing proviso and
the provisos in the definition of "Land" shall not limit or otherwise affect any
----
obligations of the Borrower or any other Loan Party to indemnify, hold harmless
or otherwise reimburse the Agent or any Lender on account of any matter
involving the Hotel, the Land on which it is located, the Multistate Loan
Documents or the transactions contemplated hereby.
"Hotel Lease" means the Lease Agreement in substantially the form of
-----------
Exhibit M, as amended from time to time in accordance with its terms and with
the terms of the Attornment Agreement.
"Hotel Lease Guaranty" means the Hotel Lease Guaranty in substantially
--------------------
the form of Exhibit Q, as amended from time to time in accordance with its
terms.
"Hotel Property" means a Hotel and the Land underlying it (without
--------------
regard to whether the Land is owned or leased by the Borrower) and all easements
and appurtenances relating to such Land.
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness of such Person for borrowed money, (b) all Obligations of such
Person for the deferred purchase price of property or services (other than trade
payables not overdue by more than 60 days incurred in the ordinary course of
such Person's business), (c) all Obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all Obligations of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by
-15-
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (e) all Obligations of such Person as lessee under leases that
have been or should be, in accordance with GAAP, recorded as capital leases
("Capitalized Leases") and including, in the case of the Borrower, all
------------------
Obligations of the Borrower under FF&E Leases, (f) all Obligations, contingent
or otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all Obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any capital stock of or
other ownership or profit interest in such Person or any other Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of Redeemable Preferred Stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (h) all Obligations of
such Person in respect of interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other similar agreements, (i) all Indebtedness of others
referred to in clauses (a) through (h) above to the extent guaranteed directly
or indirectly in any manner by such Person, or in effect (and to the extent)
guaranteed directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (j) the
amount of all indebtedness referred to in clauses (a) through (h) above that is
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness.
"Indemnified Party" has the meaning specified in Section 9.04(b).
-----------------
"Initial Excess Cash Amount" means the product of (a) $2,704,019.64
--------------------------
and (b) 86.30604209%. The Borrower's calculation of the dollar amount specified
in clause (a) is set forth in Schedule 1.01C.
"Interest Period" means, for each Eurodollar Rate Advance comprising
---------------
part of the same Multistate Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance
into a Eurodollar Rate Advance, and ending on the last day of the period
selected by the Borrower pursuant to the provisions below 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. The duration of each such Interest
Period shall be one, two or three months, as the Borrower may select, upon
notice received by the Agent not later than 11:00 A.M. (New York City time) on
the third Business Day prior to the first day of such Interest Period (except
that the Borrower may select in April 1994 an Interest Period longer than three
months that ends on or before the August l, 1994 Payment Date); provided,
--------
however, that:
-------
(a) the Borrower may not select any Interest Period that ends
after any principal repayment installment date unless, after giving effect
to such selection, the aggregate principal amount of Base Rate Advances and
Eurodollar Rate Advances having Interest Periods that end on or prior to
such principal repayment installment date shall be at least equal to the
aggregate principal amount of Multistate Advances due and payable on or
prior to such date;
(b) subject to the limitations of Section 2.06 and paragraph (c)
below, the Borrower may, on any Business Day, divide any existing
Multistate Borrowing comprised
-16-
of Eurodollar Rate Advances into two or more new Multistate Borrowings
consisting of Base Rate Advances, Eurodollar Rate Advances or both, each
such new Multistate Borrowing having a principal amount as designated by
the Borrower and all such new Multistate Borrowings collectively having an
aggregate principal amount equal to the aggregate principal amount of such
existing Multistate Borrowing, provided, however, that if the date of such
-------- -------
division is not the last day of the then existing Interest Period therefor,
the Borrower shall compensate the Lenders therefor under Section 9.04(d);
(c) the Borrower may not select any Interest Period for
Eurodollar Rate Advances comprising part of the same Multistate Borrowing
unless (i) the Borrower selects an Interest Period (as defined in the
California Loan Agreement) under the California Loan Agreement for
California Eurodollar Advances comprising part of the same California
Borrowing (such California Borrowing being the "Corresponding California
------------------------
Borrowing") with the same beginning and ending dates as the Interest Period
---------
for such Eurodollar Rate Advances and (ii) the aggregate outstanding
principal amount of the California Eurodollar Advances with such
corresponding Interest Period (as defined in the California Loan Agreement)
shall be equal on the date the Borrower selects the Interest Period for
such Eurodollar Rate Advances hereunder to (x) the aggregate outstanding
principal amount of the California Advances on such date multiplied by (y)
a fraction, the numerator of which is the aggregate outstanding principal
amount of such Eurodollar Rate Advances on such date and the denominator of
which is the aggregate outstanding principal amount of all Multistate
Advances on such date. For example, the Borrower may not select an Interest
Period for Eurodollar Rate Advances comprising twenty-two (22) percent of
the Multistate Advances unless the Borrower selects an Interest Period (as
defined in the California Loan Agreement) for California Eurodollar
Advances comprising twenty-two (22) percent of the California Advances with
the same beginning and ending dates as the Interest Period for such
Eurodollar Rate Advances;
(d) 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, however, that if such extension would cause the last day of such
-------- -------
Interest Period to occur in the nest following calendar month, the last day
of such Interest Period shall occur on the next preceding Business Day; and
(e) whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial calendar
month by the number of months equal to the number of months in such
Interest Period, such Interest Period shall end on the last Business Day of
such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"International Ground Lease" means a ground lease between an
--------------------------
International Ground Lessor, as landlord, and the Borrower, as tenant, granting
the Borrower a leasehold interest on the Land on which a Hotel is located;
provided that with respect to the Hotels in Illinois and Virginia "International
-------- -------------
Ground Lease" means a ground lease between an International Ground Lessor, as
------------
landlord, and a Land Trust, as tenant, granting such Land Trust a leasehold
interest on the Land on which a Hotel is located.
"International Ground Lessor" means Host Restaurants, Inc., Casa ▇▇▇▇▇
---------------------------
of Maryland, Inc., Newark Properties, Inc. or Essex House Condominium
Corporation, as applicable and, if any after the Closing Date, their successors
and assigns.
-17-
"International Subordinated A Notes" has the meaning specified in the
----------------------------------
Backup Debt Service Guaranty.
"International Subordinated Notes" has the meaning specified in the
--------------------------------
Subordination Agreement.
"Inventory" means all Inventory referred to in Section l(b) of the
---------
Multistate Security Agreement.
"Investment" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs
Indebtedness of the types referred to in clauses (i) and (j) of the definition
of "Indebtedness" in respect of such Person.
------------
"Knowledge," "Knows" or "Known". The Borrower or the General Partner
--------- ----- -----
has "Knowledge" of or "Knows" of a particular event or other matter, or an event
or other matter is "Known" to the Borrower or the General Partner, when it is
brought to the attention of (i) the President (or, when such position is not
filled, the Person acting in such capacity) of the General Partner, (ii) any
other Designated Executive Officer of the General Partner who in the ordinary
course of his or her responsibilities handles matters relating to the operation
of the Hotel Properties or the administration of any of the Combined Loan
Documents or (iii) any Designated Executive Officer of Host Marriott. Any Loan
Party other than the Borrower or the General Partner has "Knowledge" of or
"Knows" of a particular event or other matter, or any event or other matter is
"Known" to such Loan Party, when it is brought to the attention of any
Designated Executive Officer of such Loan Party. As used in this definition,
"Designated Executive Officer" of any Loan Party means the persons holding the
----------------------------
following positions at such Loan Party, or, when any of such positions is not
filled, acting in such capacity, (a) in the case of the General Partner, the
president, each vice president, each treasurer, the chief accounting officer and
each director of the General Partner, (b) in the case of Host Marriott, the
president, the chief executive officer, the general counsel, the executive vice
president - treasury, the senior vice president - legal, the senior vice
president - treasury, the chief financial officer, each vice president in the
treasury department, each vice president in the legal department, the chief
financial officer and the controller, in each case in this clause (b) who in the
ordinary course of his or her responsibilities handles matters relating to the
operation of the Hotel Properties or the administration of any of the Combined
Loan Documents and (c) in the case of Marriott International, the Tenant and
each International Ground Lessor, the president, the chief executive officer,
any vice president who in the ordinary course of his or her responsibilities
handles matters relating to the operation of the Hotel Properties or the
administration of any of the Combined Loan Documents, the chief financial
officer, each treasurer or assistant treasurer, the chief accounting officer and
the controller. Designated Executive Officer of each of the Borrower, the
General Partner and Host Marriott also means the Persons holding from time to
time the positions other than those listed above for such Loan Party as set
forth in a notice from the Agent to such Loan Party when the Agent reasonably
believes that the Persons holding such other positions in the ordinary course of
their responsibilities handle matters relating to the operation of the Hotel
Properties or the administration of any of the Combined Loan Documents.
"Land" means the parcel of land on which a Hotel is located, which
----
parcel consists of approximately the acreage identified, and is located as
described, on Schedule 5.01(aa) hereto, provided that such parcel of land shall
--------
cease to be included in the term "Land" for purposes of this Agreement and the
other Multistate Loan Documents from and after such time as the Hotel Property
which includes such parcel of land is released from its Multistate Mortgage and
Multistate Assignment of Leases pursuant to Article IV. References in this
Agreement to "Land" on which a
-18-
Hotel n is located-, to the Land "underlying" a Hotel and phrases with similar
meanings shall mean such entire parcel of land.
"Land Trusts" means each of (a) LaSalle National Bank, as Trustee
-----------
under that certain land trust agreement dated December 9, 1986 known as Trust
No. 1118000, (b) the Virginia Beach Courtyard by Marriott Limited Partnership
Land Trust, (c) the Richmond Courtyard by Marriott Limited Land Trust, (d) the
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Courtyard by Marriott Limited Partnership Land Trust, (e) the
Hampton Beach Courtyard by Marriott Limited Partnership Land Trust and (f) the
Courtyard by Marriott Limited Partnership Land Trust.
"Leasehold Interest" means any Mortgaged Interest in which the
------------------
Borrower (or a Land Trust for the benefit of the Borrower) has a leasehold
interest in the Land.
"Lenders" means the Banks listed on the signature pages hereof and
-------
each Eligible Assignee that shall become a party hereto pursuant to Section
9.07.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Loan Parties" means the Borrower, Host Marriott, Marriott
------------
International, the General Partner, the Tenant and each International Ground
Lessor.
"▇▇▇▇▇ Allocation Agreement" means the agreement between Marriott
--------------------------
International and Host Marriott pursuant to which Marriott International assumed
certain obligations evidenced by Host Marriott's outstanding Liquid Yield Option
Notes due 2006, as described in the Proxy Statement.
"Margin Stock" has the meaning specified in Regulation U.
------------
"Marriott Corporation" means Marriott Corporation, a Delaware
--------------------
corporation now named Host Marriott Corporation.
"Marriott International" means Marriott International, Inc., a
----------------------
Delaware corporation.
"Marriott International Indemnity Agreement" means the Marriott
------------------------------------------
International Indemnity Agreement in substantially the form of Exhibit E hereto,
as amended from time to time in accordance with its terms.
"Material Adverse Change" means any material adverse change in the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties (including the Hotel Properties and the respective interest of any
Loan Party therein) or prospects of any Loan Party.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties (including the Hotel Properties and the respective interest of the
Borrower or the Tenant therein) or prospects of the Borrower, the General
Partner, the Tenant or Marriott International, (b) the rights and remedies of
the Agent or any Lender under any Multistate Loan Document or Related Document
or the priority of any Multistate Mortgage or other Lien in favor of the Lenders
or (c) the ability, of any Loan Party to perform its Obligations under any
Multistate Loan Document or Related Document to which it is or is to be a party.
-19-
"Material Contract" means, with respect to any Person, each contract
-----------------
to which such Person is a party involving aggregate consideration payable to or
by such Person of $2,000,000 or more in any year or otherwise material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person.
"Material Subsidiary" of any Person means, at any time, a Subsidiary
-------------------
of such Person having (a) at least 10% of the total Consolidated assets of such
Person and its Subsidiaries (determined as of the last day of the most recent
fiscal quarter of such Person) or (b) at least 5% of the Consolidated revenues
of such Person and its Subsidiaries for the Rolling Period ending on the last
day of the most recent fiscal quarter of such Person.
"Material Term" means, with respect to the Hotel Lease, any term or
-------------
provision of the Hotel Lease (a)(i) that directly or indirectly affects any
amount payable to the Borrower or the Tenant thereunder (including amounts that
the Tenant is entitled to retain out of Operating Profit), (ii) that directly or
indirectly affects any amount payable by the Tenant to Marriott International,
Host Marriott or the Ground Lessors thereunder, (iii) that affects the date the
Tenant is required to pay any amounts to the Borrower thereunder or affects the
requirement that the Tenant pay any specified amount to the Borrower by
depositing it in the Borrower Operating Account or (iv) that affects the timing
or content of the budgets, operating results and other information to be
provided by the Tenant thereunder or (b) the failure of the Borrower or the
Tenant to perform which could impair the value of the interest or rights of the
Borrower thereunder or impair the rights or interests of the Agent or any Lender
with respect thereto. Without limiting the preceding sentence, each of the
following provisions of the Hotel Lease is a Material Term: (1) the definition
of "Deductions" (including the defined terms used therein); (2) the definitions
of "Gross Revenues", Operating Profit", "Refinancing Proceeds" and "Sale
Proceeds"; (3) Section 2.03; (4) Article IV (including the defined terms used
therein); (5) Article V (including the defined terms used therein); (6) Article
VII through Article IX; (7) Section 10.01 and Section 10.02; (8) Article XI; (9)
Article XII; (10) Article XIII; (11) Section 14.01A and Section 14.01C; (12)
Article XV; (13) Article XVI; (14) Article XVIII; and (15) Article XIX.
"Memorandum" means the private placement memorandum dated July 15,
----------
1986, issued in connection with the sale of 1,150 units of limited partnership
interests in the Borrower.
"Memorandum of Ground Lease" has the meaning specified in Section
--------------------------
3.01(k)(xiii).
"MI Debt" means "Indebtedness" as defined in the Closing Date MI
------- ------------
Revolver (with all defined terms used in the Closing Date MI Revolver in
connection with the definition of "Indebtedness". having the respective meanings
------------
set forth in the Closing Date MI Revolver).
"MI Guaranty" means the MI Guaranty in substantially the form of
-----------
Exhibit N, as amended from time to time in Accordance with its terms.
"MI Revolver" means the $1,000,000,000 Credit Agreement dated as of
-----------
August 25, 1993 among Marriott International, the Lenders party thereto,
Citibank as Administrative Agent, Citibank, The Bank of Nova Scotia, Chemical
Bank and The First National Bank of Chicago as Managing Agents and The Bank of
Nova Scotia as Letter of Credit Agent.
"MI Senior Credit Facility" means, at any time of determination, the
-------------------------
agreement, if any, in effect at such time between Marriott International and one
or more commercial banks, funds (if any) and other institutional lenders (if
any) party thereto for which both (a) such banks, funds and other lenders have
binding commitments under such agreement (whether or not Marriott International
shall have then borrowed all amounts available to it under such agreement) to
lend to Marriott International at the time of determination and from time to
time on a revolving basis United States dollars in an aggregate amount at any
time outstanding at least equal to
-20-
$250,000,000 and (b) Marriott International's payment obligations thereunder are
not subordinated to any other Indebtedness of Marriott International; provided
--------
that if at the time of determination, there shall be more than one agreement
satisfying the preceding requirements of this definition, MI Senior Credit
Facility shall mean the agreement under which the lenders party thereto have
binding commitments to lend Marriott International in the aggregate the largest
dollar amount.
"Mortgaged Interest" means, at any time, (a) as to each Hotel located
------------------
(in whole or part) on Land owned by an International Ground Lessor, all right,
title and interest of the Borrower (or a Land Trust) and such International
Ground Lessor in such Hotel and the Land underlying it and (b) as to each other
Hotel, all right, title and interest of the Borrower (or in the case of the
Hotel in Fairfax (Fair Oaks), Virginia, the Courtyard by Marriott Limited
Partnership Land Trust) in such Hotel and the Land underlying it.
"Multiemployer Plan" of any Person means a multiemployer plan, as
------------------
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" of any Person means a single employer plan,
----------------------
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Multistate Advance" has the meaning specified in Section
------------------
2.01(a)(iii).
"Multistate Assignment of Leases" means the Assignment of Leases and
-------------------------------
Rents in substantially the form of Exhibit O-1 (for Multistate Primary Hotels)
or O-2 (for Multistate Secondary Hotels), as amended from time to time in
accordance with its terms.
"Multistate Borrowing" means a borrowing consisting of Multistate
--------------------
Advances of the same Type and, in the case of Eurodollar Rate Advances, having
Interest Periods of the same duration commencing on the same date.
"Multistate Closing Payment" means the $8,630,604.21 payment of
--------------------------
principal in respect of 1988 Multistate Loan A, which payment is to be made by
the Borrower on the Closing Date.
"Multistate Collateral" means all "Collateral" referred to in the
---------------------
Multistate Collateral Documents and all other property that is subject to any
Lien in favor of the Agent or the Lenders securing any Obligations of the
Borrower under any of the Multistate Loan Documents including, without
limitation, all "Collateral" referred to in the Multistate Security Agreement
and the Hotel Properties subject to Liens in favor of the Agent or the Lenders
pursuant to the Multistate Mortgages.
"Multistate Collateral Documents" means the Multistate Security
-------------------------------
Agreement, the Multistate Mortgages and the Multistate Assignments of Leases.
"Multistate Loan Documents" means this Agreement, the Multistate
-------------------------
Notes, the Debt Service Guaranty, the Backup Debt Service Guaranty, the Debt and
Tenant Change Guaranty, the MI Guaranty, the Hotel Lease Guaranty, the
Subordination Agreement, the Host Marriott Indemnity Agreement, the Marriott
International Indemnity Agreement, the Attornment Agreement and the Multistate
Collateral Documents.
-21-
"Multistate Mortgage Amendments" means the Multistate Primary Hotel
------------------------------
Mortgage Amendments and the Multistate Secondary Hotel Mortgage Amendments.
"Multistate Mortgages" means the 1986 Multistate Mortgages, each as
--------------------
amended by, as set forth in Section 3.01(k)(xii), a Multistate Primary Hotel
Mortgage Amendment or a Multistate Secondary Hotel Mortgage Amendment, and as
further amended from time to time in accordance with their respective terms.
"Multistate Note" means a promissory note of the Borrower payable to
---------------
the order of any Lender in substantially the form of Exhibit A hereto,
evidencing the indebtedness of the Borrower to such Lender in respect of the
Multistate Advances.
"Multistate Obligations" has the meaning specified in Section 2.11.
----------------------
"Multistate Primary Hotel" means a Hotel located outside the State of
------------------------
California.
"Multistate Primary Hotel Mortgage Amendment has the meaning specified
-------------------------------------------
in Section 3.01(k)(xii).
"Multistate Secondary Hotel" means a Hotel located within the State of
--------------------------
California.
"Multistate Secondary Hotel Mortgage Amendment" has the meaning
---------------------------------------------
specified in Section 3.01(k)(xii).
"Multistate Secondary Hotel Property" means a Hotel Property located
-----------------------------------
within the State of California.
"Multistate Security Agreement" means the Amended and Restated
-----------------------------
Security Agreement in substantially the form of Exhibit D, as amended from time
to time in accordance with its terms.
"Multistate Withheld Amount" has the meaning specified in Section
--------------------------
2.04(b)(iv).
"Net Cash Proceeds" means with respect to any sale, lease, transfer or
-----------------
other disposition of any asset by any Person, including the granting of any
easement, the aggregate amount of cash received from time to time by or on
behalf of such Person in connection with such transaction after deducting
therefrom only (a) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal fees, finders' fees and other similar fees and
commissions and (b) the amount of taxes payable in connection with or as a
result of such transaction (in each case referred to in clauses (a) and (b), to
the extent not deducted or to be deducted from Gross Revenues under the Hotel
Lease in calculating Operating Profit).
"1986 California Loan Agreement" means the Loan Agreement dated as of
------------------------------
August 14, 1986, as amended prior to the effectiveness of the 1988 California
Loan Agreement, among the Borrower, the Original Banks and Citibank and FNBC as
agents for the Original Banks, in which the Original Banks agreed to make loans
to the Borrower in an aggregate principal amount not in excess $51, 098,867.
"1986 Loan Agreements" has the meaning specified in the Preliminary
--------------------
Statements.
"1986 Management Agreement" means the Management Agreement dated as of
-------------------------
August 14, 1986 between CMC and the Borrower, as amended by amendments dated
January 1, 1988, July 1, 1989 and January 1, 1992.
-22-
"1986 Multistate Loan Agreement" means the 1986 Loan Agreement
------------------------------
governing loans to the Borrower in an aggregate outstanding principal amount not
to exceed $322,050,133.
"1986 Multistate Loan Documents" means the 1986 Multistate Loan
------------------------------
Agreement and the other Loan Documents (as defined in the 1986 Multistate Loan
Agreement).
"1986 Multistate Mortgages" means the deeds of trust, trust deeds,
-------------------------
mortgages, leasehold mortgages and leasehold deeds of trust originally securing
the loans governed by the 1986 Multistate Loan Agreement, as amended by
amendments executed in connection with the 1988 Multistate Loan Agreement.
"1988 Banks" has the meaning specified in the Preliminary Statements.
----------
"1988 California Loan Agreement" has the meaning specified in the
------------------------------
Preliminary Statements.
"1988 California Loans" has the meaning specified in the California
---------------------
Loan Agreement.
"1988 Lenders" has the meaning specified in the Preliminary
------------
Statements.
"1988 Loan Agreements" has the meaning specified in the Preliminary
--------------------
Statements.
"1988 Multistate Loan A" means, collectively, the loans to the
----------------------
Borrower in the aggregate outstanding principal amount of $140,807,444.59
governed prior to the Closing Date by the 1988 Multistate Loan Agreement and
defined therein as "Loan A".
"1988 Multistate Loan Agreement" has the meaning specified in the
------------------------------
Preliminary Statements.
"1988 Multistate Loan B" means, collectively, the loans to the
----------------------
Borrower in the aggregate outstanding principal amount of $172,612,084.20
governed prior to the Closing Date by the 1988 Multistate Loan Agreement and
defined therein as "Loan B".
"1988 Multistate Loan Documents" means the 1988 Multistate Loan
------------------------------
Agreement and the other Loan Documents (as defined in the 1988 Multistate Loan
Agreement).
"1988 Multistate Loans" means, collectively, the loans to the Borrower
---------------------
governed prior to the Closing Date by the 1988 Multistate Loan Agreement, and
consisting of 1988 Multistate Loan A and 1988 Multistate Loan B.
"1994 Mortgage Policies" has the meaning specified in Section
----------------------
3.01(k)(xii)(B).
"1994 Mortgage Policy" has the meaning specified in Section
--------------------
3.01(k)(xii)(B).
"Obligations" means, with respect to any Person, any obligation of
-----------
such Person of any kind, including, without limitation, any liability of such
Person on any claim, whether or not the right of any creditor to payment in
respect of such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 7.01(l) or Section 7.01(m).
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Multistate Loan Documents include (a) the obligation of such
Loan Party to pay principal, interest, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by such Loan Party
under any Multistate
-23-
Loan Document and (b) the obligation of such Loan Party to reimburse any amount
in respect of any of the foregoing that any Lender, may elect to pay or advance
on behalf of such Loan Party in accordance with the rights granted to any Lender
under any applicable Multistate Loan Document.
"Open Year" has the meaning specified in Section 5.01(t).
---------
"Operating Profit" has the meaning specified in the Hotel Lease.
----------------
"Original Banks" has the meaning specified in the Preliminary
--------------
Statements.
"Other Taxes" has the meaning specified in Section 2.10(b).
-----------
"Partnership Costs" means, for any period and without duplication,
-----------------
administrative and general expenses of the Borrower in connection with the
operation of the Borrower to the extent not deducted under the Hotel Lease from
Gross Revenues in calculating Operating Profit and to the extent not for
services to be provided by the Tenant under the Hotel Lease in exchange for the
Base Management Fee or the Courtyard Management Fee (each as defined in the
Hotel Lease), including, without limitation, (i) costs of postage, (ii) amounts
paid to third parties for the provision of investor services, printing of
documents for distribution to the limited partners of the Borrower, legal
services, accounting services and audits, (iii) amounts payable to Host
Marriott, its Subsidiaries and Marriott International on account of the
provision of legal services, audits, joint venture and fixed asset accounting
services and the vice president allocation for the provision of services to the
Borrower by management of Host Marriott and (iv) bank fees.
"Partnership Documents" means (a) the Amended and Restated Agreement
---------------------
of Limited Partnership of the Borrower dated August 26, 1986 and (b) the
certificates of limited partnership or foreign limited partnership of the
Borrower, filed or recorded in the appropriate Secretary of State or other
offices in the State of Delaware, State of Maryland and all States in which a
Hotel is located.
"Payment Date" means each February 1, May 1, August 1 and November 1.
------------
"Performance Operating Profit" means, for any period, (a) Operating
----------------------------
Profit of the Hotels for such period under the Hotel Lease minus (b) all rent
------
payable (whether or not deferred) under the International Ground Leases during
such period.
"Performance Operating Profit of the Remaining Hotels" has the meaning
----------------------------------------------------
specified in Section 4.04:
"Permitted Exceptions" means, as to each Hotel Property, (a) any real
--------------------
estate taxes that are not yet due and payable, (b) any Lien securing any
obligations to the Lenders under the California Loan Documents and the
Multistate Loan Documents and (c) any other matter affecting title to a Hotel
Property set forth as an exception in the respective 1994 Mortgage Policy to
which the Lenders have consented.
"Permitted Liens" means (a) easements for utilities, access or other
---------------
services that benefit or serve a Hotel Property and do not, and will not, render
title to the Hotel Property encumbered thereby unmarketable, materially
adversely affect the use of such property for its present purposes or,
individually or combined with all other easements benefiting or affecting the
Hotel Properties, have a Material Adverse Effect and (b) such of the following
as to which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced: (i) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid under
Section 6.01(b) hereof; (ii) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of
-24-
business securing obligations which are being contested in good faith and by
appropriate proceedings and with respect to which (A) the Borrower shall be in
compliance with the Section titled "Mechanic's and Other Liens" of the
Multistate Mortgage (including the notice requirements of such Section) covering
the property subject to such Liens or (B) if any Lien is on property of the
Borrower not covered by any Multistate Mortgage, the Borrower shall promptly
have notified the Agent of its contest of such Lien and, upon request of the
Agent, have established an escrow or posted other security acceptable to the
Agent in an amount estimated by the Agent to be adequate to cover the payment of
such Lien and a reasonable additional amount to cover possible interest, costs
and penalties; (iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations; and (iv) Permitted Exceptions.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Philadelphia Mortgage" means the mortgage financing agreement between
---------------------
Marriott Corporation and Marriott International, pursuant to which Marriott
International is providing first mortgage financing for the Philadelphia
Convention Center hotel to be constructed by Host Marriott, as described in the
Proxy Statement.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Potential Default" means any event that would constitute an Event of
-----------------
Default but for the requirement that notice be given or time elapse or both.
"Preferred Stock" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"Proxy Statement" means the definitive Proxy Statement distributed to
---------------
shareholders of Marriott Corporation dated June 19, 1993.
"Purchase Agreement" means the Purchase Agreement dated August 14,
-------------------
1986 between Marriott Corporation, as seller, and the Borrower, as purchaser,
pursuant to which the Borrower purchased the Hotels and the Connecticut Hotel,
as previously amended and as it may be further amended in accordance with its
terms, this Agreement and The California Loan Agreement.
"Real Property Laws" means (a) all present and future laws,
------------------
ordinances, rules, regulations and requirements, foreseen or unforeseen,
ordinary or extraordinary, of any Governmental Authority having or claiming
jurisdiction over any of the Hotel Properties or any part thereof or interest
therein, (b) all orders, rules and regulations of any national or local board of
-fire underwriters or other body exercising similar functions, foreseen or
unforeseen, ordinary or extraordinary, (c) all building permits, restrictions of
record and agreements and (d) all requirements of policies of public liability,
fire and other insurance at any time in force with respect to the Hotel
Properties or any part thereof, that, in each case referred to in the preceding
part of this definition, are applicable to (i) any of the Hotel Properties or
any part thereof or interest therein, including to the use, condition, operation
of, or conduct of the business of, any of the Hotel Properties or any part
thereof or (ii) the owners, tenants, subtenants or occupants of the Hotel
Properties or any part thereof, whether or not any of the foregoing shall
mandate structural changes or improvements or shall interfere with the use or
enjoyment of the Hotel Properties or any part thereof.
-25-
"Redeemable" means, with respect to any capital stock, Indebtedness or
----------
other right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon the occurrence of a condition
not solely within the control of the issuer or (b) is redeemable at the option
of the holder.
"Reference Bank" means Citibank.
--------------
"Register" has the meaning specified in section 9.07(c).
--------
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"Related Documents" means the Hotel Lease, the Purchase Agreement and
-----------------
the Ground Leases.
"Release Price" has the meaning specified in Section 4.02(c).
-------------
"Remaining Hotels" has the meaning specified in Section 4.04.
----------------
"Reorganization" means the Asset Transfers, the Distribution and the
--------------
Exchange Offer, as described in the Reorganization Documents, pursuant to which,
among other things, (a) all the issued and outstanding shares of capital stock
of CMC were transferred by Host Marriott to Marriott International, such that
CMC became a wholly owned Subsidiary of Marriott International and (b) all the
issued and outstanding shares of capital stock of each International Ground
Lessor were transferred by a direct or indirect wholly owned Subsidiary of Host
Marriott to the direct or indirect wholly owned Subsidiary of Marriott
International set forth opposite such International Ground Lessor's name on
Schedule 9.11.
"Reorganization Documents" means the Distribution Documents and the
------------------------
Prosy Statement.
"Required Lenders" means at any time Lenders owed or holding at least
----------------
51` of the aggregate principal amount of the Multistate Advances outstanding at
such time.
"Retroactive Period" has the meaning specified in Section 2.08(c).
------------------
"Rolling Period" means, in respect of any fiscal quarter, such fiscal
--------------
quarter and the three preceding fiscal quarters.
"Scheduled Maturity Date" means, at any time of determination, June
-----------------------
15, 1997, unless the final scheduled principal payment date of the Multistate
Advances has at or prior to the time of determination been extended pursuant to
Section 2.03(a) or Section 2.03(b), in which event "Scheduled Maturity Date"
shall mean the final scheduled principal payment date then applicable to the
Multistate Advances determined in accordance with such Section.
"Single Employer Plan" of any Person means a single employer plan, as
--------------------
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of
-26-
liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Persons property would
constitute an unreasonably small capital.
"Subordination Agreement" means the Consolidated, Subordinating
-----------------------
Amended and Restated Subordination Agreement in substantially the form of
Exhibit L, as amended from time to time in accordance with its terms.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, trust or estate of which (or in which) more than 50% of (a) the issued
and outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such partnership or joint venture or (c)
the beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries.
"Sumitomo" has the meaning specified in the Preliminary Statements.
--------
"Taxes" has the meaning specified in Section 2.10(a).
-----
"Telephone Lease" means a lease to the Borrower or the Tenant of the
---------------
telephones and for other telecommunications systems and equipment located in a
Hotel.
"Tenant" means CMC and any permitted assignee thereof that shall be
------
assigned the rights and assume the duties of the Tenant pursuant to Section
18.01 of the Hotel Lease.
"Tenant Accounting Period" means each period of four consecutive weeks
------------------------
having the same beginning and ending dates as CMC's corresponding four week
accounting periods, except that the last Tenant Accounting Period in a calendar
year may be longer than four consecutive weeks when and to the extent necessary
to conform CMC's accounting system to the calendar. The first and last day of
each Tenant Accounting Period between January 1, 1994 and December 31, 1999 are
set forth on Schedule 1.01A.
"Tenant Accounting Quarter" means three (or in the case of the last
-------------------------
Tenant Accounting Period for a Tenant Fiscal Year, four) consecutive Tenant
Accounting Periods, ending on the last day of the third, sixth, ninth and last
Tenant Accounting Period in each Tenant Fiscal Year. The first and last day of
each Tenant Accounting Quarter between January 1, 1994 and December 31, 1999 are
set forth on Schedule 1.01A.
"Tenant Fiscal Year" means the 52-week or 53-week period ending at
------------------
midnight on the Friday closest to December 31 in the Tenant's Fiscal Year; the
new Tenant Fiscal Year begins on the Saturday immediately following said Friday.
The first and last day of each Tenant Fiscal Year for Tenant Fiscal Year 1994
through Tenant Fiscal Year 1999 are set forth on Schedule 1.01A.
"Third Party Ground Leases" means (a) the Sublease Agreement dated
-------------------------
April 5, 1983 between Crow-Atlanta Retail, Ltd., as sublandlord, and Marriott
Corporation, as subtenant, as assigned by Marriott Corporation to the Borrower
by an assignment dated August 19, 1986, relating to part of the Land on which
the Atlanta (Northlake), Georgia Hotel is located and (b) the Ground Lease dated
May 6, 1985, between A.E. Properties, Ltd., as landlord, and Marriott
Corporation, as
-27-
tenant, as assigned by Marriott Corporation to the Borrower by an assignment
dated December 9, 1986, relating to the Land on which the San Francisco (San
Bruno), California Hotel is located.
"Third Party Ground Lessors" means A.E. Properties Inc. and Crow-
--------------------------
Atlanta Retail, Ltd. Transaction Costs. has the meaning specified in the
definition of "Excess Earnings Recapture".
"Transferred Multistate Interest" has the meaning specified in clause
-------------------------------
(i) of Section 2.01(b).
"TV System Lease" means a lease or other agreement under which the
---------------
Borrower or the Tenant leases or is otherwise provided with equipment (excluding
television sets) customarily leased in the hotel industry in the United States
and on payment terms (including amount and time of payment) not materially more
favorable to the lessor thereof than payment terms customary in the hotel
industry in the United States for similar leases for the transmission into Hotel
rooms of televised programming, regardless of whether such lease or other
agreement provides the Borrower or the Tenant with a right or option to purchase
such equipment.
"Type" refers to the distinction between Multistate Advances bearing
----
interest at the Base Rate and Multistate Advances bearing interest at the
Eurodollar Rate.
"Voting Stock" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
------------
ERISA.
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.
----------------
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles consistent
with those applied in the preparation of the financial statements referred to in
Section 5.01(f) ("GAAP").
ARTICLE II
AMENDMENT AND RESTATEMENT; REPAYMENT OF THE LOANS
SECTION 2.01. Amendment and Restatement Consolidation of Loans.
------------------------------------------------
(a) Column B of Schedule 2.01A sets forth opposite the name of each
1988 Lender the aggregate outstanding principal amount of the loans owing to
such 1988 Lender included in the 1988 Multistate Loans immediately prior to the
Closing Date. On the Closing Date, (i) the aggregate outstanding principal
amount of the loans owing to each 1988 Lender included in 1988 Multistate Loan A
will be ratably reduced by the amount of the Multistate Closing Payment set
forth opposite such 1988 Lender's name in Column C of Schedule 2.01A, (ii) the
Borrower will
-28-
pay in satisfaction of interest accrued on the 1988 Multistate Loans (prior to
giving effect to the payment described in clause (i)) from March 18, 1994 to the
Closing Date interest at the Forbearance Agreement Rate and (iii) the loans
owing to each 1988 Lender included in 1988 Multistate Loan A (as reduced by the
payment described in clause (i)) and 1988 Multistate Loan B will be consolidated
into a single set of loans which shall remain outstanding as advances
("Multistate Advances"), consisting of a Multistate Borrowing comprised of Base
Rate Advances in a principal amount equal to the amount set forth opposite such
1988 Lender's name in Column D of Schedule 2.01A. Simultaneously with such
consolidation, each Assigning Bank is assigning to each Assuming Participant set
forth in Column E of Schedule 2.01A opposite such Assigning Bank's name the
interests in and to all of such Assigning Bank's rights and obligations under
this Agreement (including, without limitation, the Multistate Advances owing to
it) which represent the respective percentage interest set forth opposite such
Assuming Participant's name in such Column E of all outstanding rights and
obligations of the Assigning Bank under this Agreement. Each such assignment is
being effected as set forth in Section 2.01(b). Immediately after giving effect
to the payments, consolidations and assignments described in this Section
2.01(a), the aggregate outstanding principal amount of the Multistate Advances
owing to each Bank on the Closing Date will be the amount set forth opposite
such Bank's name on Schedule 2.01B.
(b) (i) Subject to the satisfaction of the conditions precedent set
forth in Article III, on and as of the Closing Date each Assigning Bank hereby
sells and assigns to each Assuming Participant set forth opposite such Assigning
Bank's name in Column E of Schedule 2.01A, and such Assuming Participant
purchases and assumes from such Assigning Bank, the interests in and to all of
the Assigning Bank's rights and obligations under this Agreement which represent
the respective percentage interest set forth opposite such Assuming
Participant's name in Column F of all outstanding rights and obligations under
this Agreement, including, without limitation, such interest in the Multistate
Advances owing to the Assigning Bank (collectively, the "Transferred Multistate
----------------------
Interest"). From and after the Closing Date, each such Assuming Participant
--------
shall, to the extent of its Transferred Multistate Interest, have the rights and
obligations of a Lender hereunder and the Assigning Bank shall, to the extent of
the aggregate Transferred Multistate Interests sold and assigned by it,
relinquish its rights and be released from its obligations hereunder. In
consideration of the Banks entering into this Agreement, the Borrower consents
to each such sale and assignment and, without limiting such consent, agrees that
from and after the Closing Date each Assigning Bank shall, to the extent of the
aggregate Transferred Multistate Interests sold and assigned by it, be released
from its obligations under this Agreement.
(ii) On and as of the Closing Date, each Assigning Bank: (A)
represents to each Assuming Participant to whom the Assigning Bank is selling
and assigning a Transferred Multistate Interest that such Assigning Bank is the
legal and beneficial owner of the Transferred Multistate Interest being sold and
assigned to such Assuming Participant, subject only to the participation
interest in the 1988 Multistate Loan Agreement previously granted to such
Assuming Participant, and that such Transferred Multistate Interest is free and
clear of any adverse claim; (B) except for the representations and agreements of
such Assigning Bank in this Section 2.01(b), makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Multistate Loan Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Multistate Loan Documents or any other instrument or document
furnished pursuant thereto; and (C) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under any Multistate Loan Document or any other instrument or
document furnished pursuant thereto. In addition, on and as of the Closing Date
each Assuming Participant agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
-29-
(iii) Each Assuming Participant and the Assigning Bank from whom the
Assuming Participant is acquiring its Transferred Multistate Interest agree that
in consideration of the sale and assignment by the Assigning Bank the Assuming
Participant shall transfer to the Assigning Bank as of the Closing Date for
cancellation as of such date the participation interest in the 1988 Multistate
Loan Agreement previously granted to the Assuming Participant.
SECTION 2.02. Repayment.
The Borrower shall repay to the Agent for the ratable account of the
Lenders the aggregate outstanding principal amount of the Multistate Advances
(a) on or before each of the dates listed below included in each twelve (12)
month period commencing on each May 2 (beginning with May 2, 1994) and ending on
the immediately succeeding May 1, by a cumulative aggregate amount from the
beginning of such period and through such date at least equal to the amount set
forth opposite such date and (b) on June 15, 1997, subject to Section 2.03(a),
by an amount equal to the aggregate outstanding principal amount of the
Multistate Advances.
Payment Date Amount
------------ -------------
August 1, 1994 $1,510,355.74
November 1, 1994 3,020,711.48
February 1, 1995 4,531,067.22
May 1, 1995 6,041,422.96
August 1, 1995 1,510,355.74
November 1, 1995 3,020,711.48
February 1, 1996 4,531,067.22
May 1, 1996 6,041,422.96
August 1, 1996 1,510,355.74
November 1, 1996 3,020,711.48
February 1, 1997 4,531,067.22
May 1, 1997 6,041,422.96
SECTION 2.03. Extensions.
----------
(a) If (i) Performance Operating Profit for the period from Tenant
Fiscal Year 1994 through Tenant Fiscal Year 1996 is at least equal to the amount
set forth on Schedule 2.03 opposite the entry "Initial Extension -- Cumulative
Performance Operating Profit. for that period or (ii) if Performance Operating
Profit for Tenant Fiscal Year 1996 is at least equal to the amount set forth on
Schedule 2.03, opposite the entry "Initial Extension -- Twelve Month Performance
Operating Profit" for that period, the Borrower may, by written notice to the
Agent no later than March 15, 1997 and subject to the provisions of Section
2.03(c), extend the date for the final scheduled principal payment of the
Multistate Advances to June 15, 1998, provided that (A) no Default shall have
--------
occurred and be continuing from the time the Borrower notifies the Agent of such
proposed extension through the final scheduled principal payment date set forth
in Section 2.02 and (B) the Borrower shall extend the date for the final
scheduled principal payment of the California Advances to June 15, 1998 pursuant
to Section 2.03(a) of the California Loan Agreement. In the event of such
extension, no payment shall be due on June 15, 1997 and the Borrower shall repay
to the Agent for the ratable account of the Lenders the aggregate outstanding
principal amount of the Multistate Advances (x) on or before each of the dates
listed below included in the period commencing on May 2, 1997 and ending on May
1, 1998, by a cumulative aggregate amount from the beginning of such period and
through such date at least equal to the amount set forth
-30-
opposite such date below and (y) on June 15, 1998, subject to Section 2.03(b),
by an amount equal to the aggregate outstanding principal amount of the
Multistate Advances.
Payment Date Amount
------------ ------
August 1, 1997 $1,510,355.74
November 1, 1997 3,020,711.48
February 1, 1997 4,531,067.22
May 1, 1998 6,041,422.96
(b) If (i) the date for the final scheduled principal payment of the
Multistate Advances has been extended pursuant to Section 2.03(a) and (ii) (A)
Performance Operating Profit for the period from Tenant Fiscal Year 1994 through
Tenant Fiscal Year 1997 is at least equal to the amount set forth on Schedule
2.03 opposite the entry "Second Extension -- Cumulative Performance Operating
Profit" for that period or (B) Performance Operating Profit for Tenant Fiscal
Year 1997 is at least equal to the amount set forth on Schedule 2.03(a) opposite
the entry "Second Extension Twelve Month Performance Operating Profit" for that
period, the Borrower may, by written notice to the Agent no later than March 15,
1998 and subject to the provisions of Section 2.03(c), further extend the date
for the final scheduled principal payment of the Multistate Advances to June 15,
1999, provided that (x) no Default shall have occurred and be continuing from
--------
the time the Borrower notifies the Lender of such extension through the final
scheduled principal payment date determined pursuant to Section 2.03(a) and (y)
the Borrower shall extend the date for the final scheduled payment of the
California Advances to June 15, 1999 pursuant to Section 2.03(b) of the
California Loan Agreement. In the event of such extension, no payment shall be
due on June 15, 1998 and the Borrower shall repay to the Agent for the ratable
account of the Lenders the aggregate outstanding principal amount of the
Multistate Advances (x) on or before each of the dates listed below included in
the period commencing on May 2, 1998 and ending on May 1, 1999 by a cumulative
aggregate amount from the beginning of such period and through such date at
least equal to the amount set forth opposite such date below and (y) on June 15,
1999, by an amount equal to the aggregate outstanding principal amount of the
Multistate Advances.
Payment Date Amount
------------ ------
August 1, 1998 $1,510,355.74
November 1, 1998 3,020,711.48
February 1, 1998 4,531,067.22
May 1, 1999 6,041,422.96
(c) Each notice given by the Borrower pursuant to Section 2.03(a) or
2.03(b) (an "Extension Notice") shall be accompanied by (i) a certificate of an
----------------
Authorized Accounting Officer stating that no Default has occurred and is
continuing and (ii) a schedule in the form attached to Schedule 2.03 of the
computations showing the Borrower's satisfaction of the applicable Performance
Operating Profit amount described in Section 2.03(a) or Section 2.03(b), as the
case may be, entitling it to extend the date for the final scheduled principal
payment of the Multistate Advances. In addition, if the Borrower provides an
Extension Notice pursuant to Section 2.03(a) or 2.03(b), as the case may be, the
Borrower shall provide to the Agent on the date on which the final scheduled
payment of the Multistate Advances would be due but for the extension to which
such Extension Notice relates, a certificate of an Authorized Accounting Officer
stating that no Default has occurred and is continuing from the date of such
Extension Notice through such date.
(d) For purposes of Section 2.02 and Section 2.03, repayments of the
outstanding principal amount of the Multistate Advances made by the Borrower on
any date after a date
-31-
specified in this Section as a date by which the aggregate outstanding principal
amount of the Multistate Advances are to be repaid as a result of the
application of Section 2.09(d) shall be credited toward the payment obligations
of the Borrower for the period ending on or before the specified date, and not
toward the payment obligations of the Borrower for a period commencing after
such specified date. In addition, for purposes of determining the Borrower's
satisfaction of its repayment obligations under Section 2.02 and Section 2.03,
prepayments of the aggregate outstanding principal amount of the Multistate
Advances shall be credited toward the Borrower's repayment obligations set forth
in such Sections to the extent such prepayments are to be applied in the order
of maturity of the Multistate Advances pursuant to Section 2.04(b)(iii).
SECTION 2.04. Prepayments. (a) Optional.
------------
The Borrower may, upon at least five (5) Business Days' notice to the
Agent in substantially the form of Exhibit B, and if such notice is given the
Borrower shall, prepay the outstanding aggregate principal amount of the
Multistate Advances comprising part of the same Multistate Borrowing in whole or
ratably in part, in an amount determined in accordance with clause (iv) below,
together with accrued interest to the date of such prepayment on the aggregate
principal amount prepaid; provided, however, that (i) the Borrower shall on the
-------- -------
same day also prepay an outstanding principal amount of the California Advances
comprising part of the same California Borrowing in whole or ratably in part
pursuant to Section 2.04(a) of the California Loan Agreement, together with
accrued interest to the date of such prepayment (determined in accordance with
the California Loan Agreement), (ii) each partial prepayment of the Combined
Advances shall be in an aggregate principal amount of $500,000 or an integral
multiple of $100,000 in excess thereof, (iii) no prepayment of a Eurodollar Rate
Advance shall be made other than on the last day of an Interest Period therefor
and (iv) the aggregate outstanding principal amount of the Multistate Advances
shall be paid by an amount equal to the product of (x) the aggregate principal
prepayment of the Combined Advances pursuant to this Section and Section 2.04(a)
of the California Loan Agreement made on such day and (y) a fraction, the
numerator of which is the aggregate outstanding principal amount of the
Multistate Advances on the date of prepayment (before giving effect to such
prepayment) and the denominator of which is the aggregate outstanding principal
amount of the Combined Advances on the date of prepayment (before giving effect
to such prepayment and the prepayment of the California Advances described in
Section 2.04(a) of the California Loan Agreement).
(b) Mandatory. (i) Subject to Section 2.04(b)(iv) below, the Borrower
---------
shall, on each Payment Date make a payment in an amount equal to (x) the product
of (1) the applicable amount set forth in clauses (A) through (D) below and (2)
a fraction, the numerator of which is the aggregate outstanding principal amount
of the Multistate Advances on the date of prepayment (before giving effect to
such prepayment) and the denominator of which is the aggregate outstanding
principal amount of the Combined Advances on the date of prepayment (before
giving effect to such prepayment and the prepayment required by Section
2.04(b)(i) of the California Loan Agreement) minus (y) the amount of interest
-----
accrued and not yet due and payable on the date of prepayment on Eurodollar Rate
Advances and California Eurodollar Advances:
(A) Whether or not either (1) a Potential Default consisting of
the nonpayment by the Borrower of any principal or interest due and payable
under this Agreement or the California Loan Agreement or (2) an Event of
Default shall have occurred and be continuing on such Payment Date, from
the Closing Date until (but not including) the Payment Date following the
Cumulative Tenant Period in which the aggregate outstanding principal
amount of the Combined Advances on the last day of such Cumulative Tenant
Period is less than or equal to $300 million, an amount equal to 100% of
Excess Earnings Recapture for the applicable Cumulative Tenant Period;
-32-
(B) Unless either (1) a Potential Default consisting of the
nonpayment by the Borrower of any principal or interest due and payable
under this Agreement or the California Loan Agreement or (2) an Event of
Default shall have occurred and be continuing on such Payment Date (other
than the nonpayment on such Payment Date of the amount due on such Payment
Date under this Section 2.04(b)(i) and under Section 2.04(b)(i) of the
California Loan Agreement provided that the Borrower Operating Account
--------
contains on Such Payment Date an amount at least equal to the aggregate
amount so due), from the Payment Date following the Cumulative Tenant
Period in which the aggregate outstanding principal amount of the Combined
Advances on the last day of such Cumulative Tenant Period is less than or
equal to $300 million until (but not including) the Payment Date following
the Cumulative Tenant Period in which the aggregate outstanding principal
amount of the Combined Advances on the last day of such Cumulative Tenant
Period is less than or equal to $250 million, an amount equal to 80% of
Excess Earnings Recapture for the applicable Cumulative Tenant Period;
(C) Unless either (1) a Potential Default consisting of the
nonpayment by the Borrower of any principal or interest due and payable
under this Agreement or the California Loan Agreement or (2) an Event of
Default shall have occurred and be continuing on such Payment Date (other
than the nonpayment on such Payment Date of the amount due on such Payment
Date under this Section 2.04(b)(i) and under Section 2.04(b)(i) of the
California Loan Agreement provided that the Borrower Operating Account
contains on such Payment Date an amount at least equal to the aggregate
amount 60 due), from and after the Payment Date following the Cumulative
Tenant Period in which the aggregate outstanding principal amount of the
Combined Advances on the last day of such Cumulative Tenant Period is less
than or equal to $250 million, an amount equal to 75% of Excess Earnings
Recapture for the applicable Cumulative Tenant Period; and
(D) So long as either (1) a Potential Default consisting of the
nonpayment by the Borrower of any principal or interest due and payable under
this Agreement or the California Loan Agreement or (2) an Event of Default shall
have occurred and be continuing on such Payment Date (other than the nonpayment
on such Payment Date of the amount due on such Payment Date under this Section
2.04(b)(i) and under Section 2.04(b)(i) of the California Loan Agreement
provided that the Borrower Operating Account contains on such Payment Date an
--------
amount at least equal to the aggregate amount so due), an amount equal to 100%
of Excess Earnings Recapture for the applicable Cumulative Tenant Period.
Amounts paid pursuant to this Section 2.04(b)(i) shall be applied first to
-----
interest due on such Payment Date pursuant to Section 2.05 and second as a
------
prepayment of the aggregate outstanding principal amount of the Multistate
Advances comprising the same Multistate Borrowings. In addition to the payment
described above, on the November 1, 1994 Payment Date the Borrower will pay to
the Agent an amount equal to the product of (y) the excess of the Estimated
Unpaid Transaction Costs over the Transaction Costs paid by the Borrower after
the Closing Date and (z) the fraction described in subclause (2) of clause (s)
of the beginning of this Section, which payment will be applied in accordance
with the Preceding sentence.
(ii) If the schedule delivered by the Borrower pursuant to Section
6.03(d)(ii) contains a calculation of the Annualized Recapture Amount for the
Tenant Fiscal Year then ended that exceeds the Aggregate Recapture Amount for
such Tenant Fiscal Year, the Borrower shall, no later than the time it delivers
such schedule, make a payment in an amount equal to (s) the product of (A) the
amount equal to (1) such excess amount multiplied by (2) the percentage
(determined in accordance with Section 2.04(b)(i)(A) through 2.04(b)(i)(D))
applicable to the payment for the fourth Cumulative Tenant Period included in
the Tenant Fiscal Year and (B) a fraction, the numerator of which is the
aggregate outstanding principal amount of the Multistate Advances on the date of
payment (before giving effect to such payment) and the denominator of which is
the aggregate outstanding principal amount of the Combined Advances on the date
of payment (before giving effect to such payment and the payment required by
Section 2.04(b)(ii) of the California Loan
-33-
Agreement) minus (y) the amount of interest accrued and not yet due and payable
-----
on the Eurodollar Rate Advances on the date the Borrower makes such payment.
Amounts paid pursuant to the preceding sentence shall be applied first to
accrued and unpaid interest on the Multistate Advances other than the Eurodollar
Rate Advances with Interest Periods ending after the date the Borrower makes
such payment and second as a prepayment of the aggregate outstanding principal
------
amount of the Multistate Advances comprising the same Multistate Borrowings. If
the schedule delivered by the Borrower pursuant to Section 6.03(d)(ii) contains
a calculation of the Annualized Recapture Amount for the Tenant Fiscal Year that
is less than the Aggregate Recapture Amount for such Tenant Fiscal Year (the
excess of the Aggregate Recapture Amount over the Annualized Recapture Amount
being the "Cumulative Difference"), the Borrower shall receive a credit against
---------------------
the payments of principal of the Multistate Advances nest due under Sections
2.02, 2.03 and 2.04(b)(i) (and if such payment is less than the amount of such
credit, the unused amount of such credit shall be applied against the payments
of principal thereafter due under Sections 2.02, 2.03 and 2.04(b)(i), as the
case may be, until such credit shall be fully applied) equal to (s) the
aggregate amount that the Borrower paid under Section 2.04(b)(i) in respect of
Excess Earnings Recapture for the Cumulative Tenant Periods included in the
Tenant Fiscal Year then ended less (y) the aggregate amount that the Borrower
would have paid under Section 2.04(b)(i) if Excess Earnings Recapture for the
Cumulative Tenant Periods included in the Tenant Fiscal Year then ended were
reduced (in inverse order of payment until the Cumulative Difference shall have
been fully applied) by the Cumulative Difference. The preceding sentence shall
not affect the Borrowers obligation to make any other payment described in this
Agreement, including, without limitation, the payments of interest described in
Section 2.05. An example of the calculation of the credit described in the
second preceding sentence is set forth on Schedule 2.04(b)(ii).
(iii) All prepayments of the aggregate outstanding principal amount
of the Multistate Advances made under Section 2.04(a), Section 4.02 and Section
4.03 shall be made together with accrued and unpaid interest to the date of such
prepayment on the principal amount of the Multistate Advances prepaid. In
addition, all prepayments of the aggregate outstanding principal amount of the
Multistate Advances under this Section 2.04 and under Section 4.02 and Section
4.03 shall be applied ratably to the Multistate Advances in the inverse order of
maturity; provided that, notwithstanding the preceding portion of this sentence,
--------
such prepayments (excluding payments made under Section 2.04(b)(ii)) shall be
applied in the order of maturity during the twelve month period beginning on May
2, 1994 and ending on May 1, 1995 and during each successive twelve month period
beginning on each May 2 thereafter and ending on the immediately succeeding May
1, until such time during each such period as the Borrower shall have repaid or
prepaid the Multistate Advances in an aggregate principal amount equal to
$6,041,422.96.
(iv) Not Notwithstanding Section 2.04(b)(i), with respect to the
payments due under such Section on any Payment Date, if the Borrower reasonably
believes it will have insufficient Adjusted Operating Profit and other funds to
make the payments of interest due under this Agreement during the period
commencing after such Payment Date and ending on the immediately following
Payment Date, the Borrower may withhold from the payment otherwise due under
Section 2.04(b)(i) on such Payment Date an amount (the "Multistate Withheld
-------------------
Amount") that the Borrower believes when combined with the Borrower's
------
anticipated Adjusted Operating Profit will enable it to make the payments of
interest due during such period; provided that the Borrower also withholds the
--------
California Withheld Amount under Section 2.04(b)(iv) of the California Loan
Agreement. The Multistate Withheld Amount shall not exceed the interest payments
that the Borrower believes will be due and payable under this Agreement through
the next succeeding Payment Date, and the Multistate Withheld Amount shall be
used by the Borrower solely to pay interest due under this Agreement on or
before such Payment Date. In the event that the Borrower does not use the
entire Multistate Withheld Amount for such purposes on or before such Payment
Date, the Borrower shall pay the entire remaining amount to the Agent, together
with any other amount due under Section 2.04(b)(i), on such Payment Date and
such remaining amount shall be applied as set forth in Section 2.04(b)(i),
provided that in the event the Borrower then reasonably
--------
-34-
believes it will need to withhold any amounts under this Section 2.04(b)(iv) for
interest due on or before the then next succeeding Payment Date, the Borrower
may retain all or such portion of the remaining amount as is necessary toward
the new Multistate Withheld Amount. The Multistate Withheld Amount shall be
deposited in the Borrower Operating Account. Nothing in this Section 2.04(b)(iv)
shall limit the Borrower's other obligations under this Agreement, including the
Borrower's obligation to pay principal under Sections 2.02 and 2.03, interest on
each Payment Date and the Borrower's agreement to defer rent payable under the
International Ground Leases.
SECTION 2.05. Interest.
--------
(a) Ordinary Interest. The Borrower shall pay interest on the unpaid
-----------------
principal amount of each Multistate Advance owing to each Lender from the
Closing Date until such principal amount shall be paid in full, at the following
rates per annum:
(i) Eurodollar Rate Advances. During such periods as such
------------------------
Multistate Advance is a Eurodollar Rate Advance, at a rate per annum equal
at all times during each Interest Period to the sum of (A) the Eurodollar
Rate for such Interest Period for such Multistate Advance plus (B) the
Applicable Margin in effect on the first day of such Interest Period,
payable in arrears on the last day of such Interest Period or, if earlier,
on the date such Eurodollar Rate Advance shall be Converted or paid in
full. If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent
will forthwith so notify the Borrower and the Lenders and (1) each such
Eurodollar Rate Advance shall continue to be a Eurodollar Rate Advance with
a one month Interest Period commencing on the last day of the Interest
Period then ending, provided that, after giving effect to such new Interest
--------
Period, the aggregate principal amount of all Base Rate Advances and
Eurodollar Rate Advances having Interest Periods that end on or prior to
any principal repayment installment date shall be at least equal to the
aggregate principal amount of the Multistate Advances due and payable on or
prior to such date or (2) if the proviso in the preceding clause (1) is not
-------
satisfied, each such Eurodollar Rate Advance shall on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance.
(ii) Base Rate Advances. During such periods as such Multistate
------------------
Advance is a Base Rate Advance, at a rate per annum equal at all times to
the sum of (i) the Base Rate in effect from time to time plus (ii) the
Applicable Margin in effect from time to time, payable quarterly in arrears
on each Payment Date and on the date such Base Rate Advance shall be
Converted or paid in full.
(b) Additional Interest. The Borrower shall pay additional interest
-------------------
("Additional Interest") as specified in this Section 2.05(b) on the adjusted
-------------------
Multistate Amount owing to each Lender from the Closing Date until such Adjusted
Multistate Amount shall be paid in full on (and only on) the first to occur of
(i) the Scheduled Maturity Date (if extended pursuant to Section 2.03(a) or
Section 2.03(b), as so extended) if the Multistate Notes, all interest thereon
and all other amounts payable under this Agreement have not been paid in full on
or before such date and (ii) the date the Multistate Notes become due and
payable under Section 7.01. Additional Interest shall be calculated at the rate
-equal to 1/2 of one percent per annum.
(c) Default Interest. Upon the occurrence and during the continuance
----------------
of a Default, the Borrower shall pay interest on (i) the unpaid principal amount
of each Multistate Advance owing to each Lender, payable in arrears on the dates
referred to in Section 2.05(a)(i) or Section 2.05(a)(ii) above, as applicable,
at a rate per annum equal at all times to (A) during such time as such
Multistate Advance is a Eurodollar Rate Advance 3.5% above the Eurodollar Rate
for
-35-
such Interest Period for such Multistate Advance and (B) during such time as
such Multistate Advance is a Base Rate Advance 2.5% per annum above the Base
Rate and (ii) the amount of any interest, fee or other amount payable hereunder
which is not paid when due (including without limitation Additional Interest),
from the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2.5% per annum above the Base Rate.
(d) Limitation on Interest. No provision of this Agreement or any
----------------------
Multistate Note shall require the payment or permit the collection of interest
in excess of the maximum rate permitted by applicable usury law.
SECTION 2.06. Minimum Amount of Eurodollar Rate Advances; Maximum
---------------------------------------------------
Number of Interest Periods. The Borrower may not select the Eurodollar Rate for
--------------------------
any Multistate Borrowing if the aggregate amount of such Multistate Borrowing
and the aggregate amount of the Corresponding California Borrowing is less than
$40,000,000. In addition, the aggregate number of different Interest Periods in
effect at any time for outstanding Eurodollar Rate Advances shall not exceed
four (for purposes of this sentence, Interest Periods of the same duration, but
commencing on different dates, shall be treated as different Interest Periods).
SECTION 2.07. Conversion of Multistate Advances. (a) Optional. The
--------------------------------- --------
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Section 2.08 and
paragraph (c) of the definition of Interest Period, Convert all or any portion
of the Multistate Advances of one Type comprising the same Multistate Borrowing
into Multistate Advances of the other Type; provided, however, that any
-------- -------
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances and
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount, together with the amount of the Corresponding California Borrowing,
not less than the minimum amount specified in Section 2.06 and no Conversion of
Multistate Advances shall result in a greater number of Interest Periods for
Eurodollar Rate Advances than is permitted under Section 2.06. Each such notice
of Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Multistate Advances to be Converted and (iii)
if such Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Multistate Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.
(b) Mandatory. On the date on which the sum of the aggregate
---------
outstanding principal amount of the Eurodollar Rate Advances comprising any
Multistate Borrowing and the aggregate outstanding principal amount of the
California Eurodollar Advances comprising the Corresponding California Borrowing
shall be reduced, by payment or repayment or otherwise, to less than
$40,000,000, such Eurodollar Rate Advances comprising such Multistate Borrowing
shall automatically Convert into Base Rate Advances.
SECTION 2.08. Increased Costs Etc.
-------------------
(a) Subject to Section 2.08(c), if due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of making, funding or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand
by such Lender (with a copy of such demand to the Agent), pay to the Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost; provided, however, that before making any such
-------- -------
demand, each Lender agrees to use reasonable efforts
-36-
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Eurodollar Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of, such increased
cost and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to the reason for and amount of
such increased cost, submitted to the Borrower by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(b) Subject to Section 2.08(c), if any Lender determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend hereunder and other commitments of such type, then,
upon demand by such Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate as to the reason
for and such amounts submitted to the Borrower by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(c) Each Lender shall notify the Borrower (with a copy of such notice
to the Agent) of any event entitling such Lender to additional compensation
under Section 2.08(a) or 2.08(b) as promptly as practicable. The Borrower shall
not be obligated to pay any additional amounts arising pursuant to Section
2.08(a) or Section 2.08(b) that are attributable to the Excluded Period with
respect to such additional amount; provided that if any applicable law,
--------
regulation, guideline or request shall be adopted, made or interpreted on any
date and shall be applicable to a period (the "Retroactive Period") prior to the
------------------
date on which such law, regulation, guideline or request is adopted, made or
interpreted, the limitation on the Borrower's obligation to pay such additional
amounts hereunder shall not apply to the additional amounts payable in respect
of such Retroactive Period.
(d) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Eurodollar Rate Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining the Eurodollar Rate Advances for such
Interest Period (or if the California Required Lenders provide such a notice to
the Agent under Section 2.08(d) of the California Loan Agreement in respect of
the California Eurodollar Advances comprising the Corresponding California
Borrowing), the Agent shall forthwith so notify the Borrower and the Lenders,
whereupon (i) each such Eurodollar Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert Multistate
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower that such Lenders (or California Required Lenders, if the
notice causing the Conversion was provided under Section 2.08(d) of the
California Loan Agreement) have determined that the circumstances causing such
suspension no longer exist.
(e) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent (or on notice and demand by such Lender under Section 2.08(e)
of the California Loan Agreement in respect of California Eurodollar Advances),
(i) each Eurodollar Rate Advance will automatically, upon such demand, Convert
into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to
Convert
-37-
Multistate Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower that the circumstances causing such suspension
no longer exist; provided, however, that before making any such demand, such
-------- -------
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Eurodollar Lending
Office if the making of such a designation would allow such Lender or its
Eurodollar Lending Office to continue to perform its obligations to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
(f) If, with respect to any Eurodollar Rate Advances, the Reference
Bank is unable to determine the Eurodollar Rate for any Interest Period for such
Eurodollar Rate Advances, the Reference Bank shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Multistate Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower that the circumstances
causing such suspension no longer exist.
(g) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Multistate Advances
into, Eurodollar Rate Advances shall be suspended .
(h) On each date on which a payment of interest computed by reference
to the Determined Libor Rate on the 1988 Multistate Loans with a one month
interest period (as such term is customarily used with respect to Libor loans)
ending on the Closing Date, the Borrower shall pay to the Agent for the Lenders
entitled thereto an amount of the type described in Section 2.12 of the 1988
Multistate Loan Agreement.
SECTION 2.09. Payments, Computations and Fees.
-------------------------------
(a) The Borrower shall make each payment hereunder and under the
Multistate Notes not later than 11:00 A.M. (New York City time) on the day when
due in U.S. dollars to the Agent at the Agent's Account in same day funds. The
Agent will promptly thereafter cause like funds to be distributed (i) if such
payment by the Borrower is in respect of principal, interest, commitment fees or
any other Obligation then payable hereunder and under the Multistate Notes to
more than one Lender, to such Lenders for the account of their respective
Applicable Lending Offices ratably in accordance with the amounts of such
respective Obligations then payable to such Lenders and (ii) if such payment by
the Borrower is in respect of any Obligation then payable hereunder to one
Lender, to such Lender for the account of its Applicable Lending Office, in each
case to be applied in accordance with the terms of this Agreement. Each payment
made by the Borrower to the Agent for the Lenders in same day funds shall be
distributed by the Agent to each Lender entitled thereto in an amount determined
in accordance with the preceding sentence (x) if the payment is received by the
Agent from the Borrower at or prior to 2:00 P.M. (New York City time), on the
same Business Day as received by the Agent (unless such transfer cannot be made
on the same Business Day to a Lender due to time zone differences, in which case
the Agent shall distribute the payment to such Lender on the next Business Day)
and (y) if the payment is received by the Agent from the Borrower after 2:00
P.M. (New York City time), at or prior to 2:00 P.M. (New York City time) on the
next Business Day following the Agent's receipt of such payment together with
interest on the amount distributed to such Lender, for each day from the date
the payment is received by the Agent until the date the Agent pays the amount to
such Lender, at the Federal Funds Rate. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.07(d), from and after the effective date of such
Assignment and Acceptance, the Agent shall make all payments hereunder and under
the
-38-
Multistate Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the
Multistate Note held by such Lender, to charge from time to time, and upon at
least one day's notice (unless the payment not made when due is not a payment of
principal or interest, in which case the applicable notice period shall be at
least five days' notice) from such Lender to the Borrower of such Lender's
intention to charge any such accounts (which notice shall specify each account
and the amount thereof to be charged), against any or all of the Borrowers
accounts with such Lender any amount so due. From and after receipt of any
notice described in the preceding sentence, the Borrower shall not make any
withdrawal or transfer, nor instruct any Lender to make any withdrawal or
transfer, from the accounts specified in such notice (and shall instruct the
authorized signatories on such accounts not to do any of the foregoing) except
in an amount not in excess of the balance of such account less the amount to be
charged, and if any withdrawal or transfer instructions are given to any Lender
contrary to this sentence, such Lender shall not be obligated to comply
therewith. Notwithstanding the second preceding sentence, no Lender (other than
the Lender, if any, that is also the Agent hereunder) may exercise any right of
set-off with respect to any payment owed by the Borrower to such Lender except
with the prior written consent of all the Lenders. Each Lender agrees promptly
to notify the Borrower after any set-off of the occurrence and amount thereof;
provided, however, that the failure to give such notice shall not affect the
-------- -------
validity of such set-off or application of the funds thereof. Each notice
described in the first sentence of this Section shall be sent by telegraph,
telecopy, telex or cable, or delivered to the Borrower, and not sent by mail or
overnight courier.
(c) All computations of interest and fees shall be made by the Agent
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, fees or commissions are payable. Each determination by the
Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error. The Borrower shall pay to the Agent for its
own account such fees as may from time to time be agreed between the Borrower
and the Agent.
(d) Whenever any payment hereunder or under the Multistate Notes 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; provided,
--------
however, that if such extension would cause payment of interest on or principal
-------
of Eurodollar Rate Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.
(e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to any Lender hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each such
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower shall not have so made such payment in full to
the Agent, each such Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
(f) Without limiting the last sentence of Section 2.05(a)(i) and the
last sentence of Section 8.01, the Agent agrees to give each Lender by telex,
telecopier or cable, or by telephone with subsequent confirmation by telex,
telecopier, cable or in writing, notice of (i) each Interest Period selected by
the Borrower for Eurodollar Rate Advances, the aggregate principal amount of the
Eurodollar Rate Advances having such Interest Period and the applicable interest
rate under
-39-
Section 2.05(a), (ii) each notice of Conversion provided by the Borrower
pursuant to Section 2.07 and the information specified therein in accordance
with Section 2.07 and (iii) each notice of prepayment submitted by the Borrower
under Section 2.04(a) in each case described in this sentence (x) if the notice
from the Borrower with respect to such matter is received by the Agent from the
Borrower at or prior to 2:00 P.M. (New York City time), on the same Business Day
as received by the Agent and (y) if the notice from the Borrower is received by
the Agent from the Borrower after 2:00 P.M. (New York City time), at or prior to
2:00 P.M. (New York City time) on the nest Business Day following the Agent's
receipt of such notice.
SECTION 2.10. Taxes.
-----
(a) Subject to the provisions of Section 2.10(e) and 2.10(g), any and
all payments by the Borrower hereunder or under the Multistate Notes shall be
made, in accordance with Section 2.09, 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 each Lender and the Agent, taxes that are based on or measured by net income
or alternative minimum taxable income that are imposed by the United States and
taxes that are based on or measured by net income or alternative minimum taxable
income or taxable assets in lieu of income that are imposed on such Lender or
the Agent by the state or foreign jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof or any state or foreign jurisdiction in which the Lender or
the Agent is subject to net income taxes or franchise taxes and, in the case of
each Lender, taxes that are based on or measured by net income or alternative
minimum taxable income or taxable assets in lieu of income that are imposed on
such Lender by the state or foreign jurisdiction of such Lender's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
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 hereunder or under any
Multistate Note to any Lender or the Agent, (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
2.10) such Lender or the Agent (as the case may be) 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 law. Each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
reduce the amount of Taxes (including the designation of a different Eurodollar
Lending Office) in respect of any sum payable hereunder or under any Multistate
Note if such efforts would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Multistate Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Multistate Notes (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower shall indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes, and for the full amount of taxes imposed
by any jurisdiction on amounts payable under this Section 2.10, paid by such
Lender or the Agent (as the case may be) and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
-40-
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 9.02,
the original receipt of payment thereof or a certified copy of such receipt. In
the case of any payment hereunder or under the Multistate Notes by the Borrower
through an account or branch outside the United States or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this Section 2.10(d) and 2.10(e), the terms "United
------
States" and "United States Person" shall have the meanings specified in Section
------ --------------------
7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long thereafter as such Lender remains lawfully able
to do so), provide the Agent and the Borrower with Internal Revenue Service form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party that reduces the rate of
withholding tax on payments under this Agreement or the Multistate Notes or
certifying that the income receivable pursuant to this Agreement or the
Multistate Notes is effectively connected with the conduct of a trade or
business in the United States. If the form provided by a Lender at the time such
Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender provides
the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that if at the date of the
-------- -------
Assignment and Acceptance pursuant to which a Lender assignee becomes a party to
this Agreement, the Lender assignor was entitled to payments under Section
2.10(a) in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future or other amounts
otherwise includable in Taxes) United States withholding tax, if any, applicable
with respect to the Lender assignee on such date. If any form or document
referred to in this Section 2.10(e) requires the disclosure of information,
other than information necessary to compute the tax payable and information
required on the date hereof by Internal Revenue Service form 1001 or 4224, that
the Lender reasonably considers to be confidential, the Lender shall give notice
thereof to the Borrower and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.10(e)
(other than if such failure is due to a change in law occurring after the date
----- ----
on which a form originally was required to be provided or if such form otherwise
is not required under Section 2.10(e)), such Lender shall not be entitled to
indemnification under Section 2.10(a) or 2.10(c) with respect to Taxes imposed
by the United States; provided, however, that should a Lender become subject to
-------- -------
Taxes because of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(g) If, due to a change in law applicable to a Foreign Lender after
such Foreign Lender becomes a party to this Agreement, the Borrower would be
required to compensate such Foreign Lender for any Taxes under this Section
2.10, the Borrower shall be required to compensate such Foreign Lender for such
Taxes only to the extent to which, on account of the change in law, the Borrower
would have had an obligation to compensate the Lender from whom such Foreign
Lender's Multistate Advances originated if such Lender were a Lender at the time
the change in
-41-
law became effective. As used in this Section 2.10(g), "Foreign Lender" means
--------------
any Lender that is not organized under the laws of the United States or any
State or territory thereof other than (i) a Bank or (ii) a branch or agency
located in and operating under the laws of the United States or any State or
territory hereof.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.10 shall survive the payment in full of principal and interest
hereunder and under the Multistate Notes.
SECTION 2.11. Sharing of Payments, Etc.
------------------------
If any Lender shall obtain at any time any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise (a) on
account of Obligations due and payable to such Lender hereunder and under the
Multistate Notes (the "Multistate Obligations") or on account of Obligations due
----------------------
and payable under the California Loan Agreement and the California Notes (the
"California Obligations", and together with the Multistate Obligations the
----------------------
"Combined Obligations") at such time in excess of its ratable share (according
--------------------
to the proportion of (i) the aggregate amount of the Combined Obligations due
and payable to such Lender at such time to (ii) the aggregate amount of the
Combined Obligations due and payable to all Lenders at such time) of payments on
account of the Combined Obligations due and payable to all Lenders at such time
obtained by all the Lenders at such time or (b) on account of Multistate
Obligations or California Obligations owing (but not due and payable) to such
Lender at such time in excess of its ratable share (according to the proportion
of (i) the amount of Combined Obligations owing (but not due and payable) to
such Lender at such time to (ii) the aggregate amount of the Combined
Obligations owing (but not due and payable) to all Lenders at such time) of
payments on account of the Combined Obligations owing (but not due and payable)
to all Lenders at such time obtained by all the Lenders at such time, such
Lender shall forthwith purchase from the other Lenders such participations in
the Multistate Obligations or the California Obligations due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them in
respect of the Combined Obligations; provided, however, that if all or any
-------- -------
portion of such excess payment is thereafter recovered from such purchasing
Lender, each such purchase from each other Lender shall be rescinded and such
other Lender shall repay to the purchasing Lender the purchase price therefor to
the extent of such other Lender's ratable share (according to the proportion of
(i) the purchase price paid to such Lender for such participation to (ii) the
aggregate purchase price paid to all Lenders for participations in Multistate
Obligations (if the rescinded purchase is of a participation in the Multistate
Obligations) or for participations in the California Obligations (if the
rescinded purchase is of a participation in the California Obligations) of such
recovery together with an amount equal to such Lender's ratable share (according
to the proportion of (i) the amount of such other Lender's required repayment in
respect of such purchase to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.11 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off to the extent
permitted hereunder) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.12. Non-Recourse.
------------
The Lenders agree that, except as provided otherwise in the following
sentences of this Section 2.12, their recourse against the Borrower and its
partners for any default in the payment of the Borrowers Obligations under the
Multistate Loan Documents and performance of the Borrower's other obligations
under the Multistate Loan Documents, including, without
-42-
limitation, the payment of the Multistate Notes, shall be limited solely to the
Multistate Collateral (without regard to whether any Lien thereon is valid or
perfected), and the Lenders shall not seek recovery therefor, whether by direct
suit, deficiency judgment in foreclosure proceeding, or otherwise, in whole or
in part, against Host Marriott, Marriott International, the Tenant, any
International Ground Lessor or any of the partners of the Borrower
(collectively, and including their respective officers, directors and employees,
the "Exculpated Parties") or any of their respective assets other than the
------------------
Multistate Collateral. The first sentence of this Section does not limit the
Lenders' recourse against the following Loan Parties or their respective assets
as follows: (i) the General Partner or the International Ground Lessors in
connection with their respective obligations under the Subordination Agreement
or (ii) Host Marriott, Marriott International or the Tenant in connection with
their respective obligations under each Multistate Loan Document, including,
without limitation, the Debt Service Guaranty, the Backup Debt Service Guaranty,
the Debt and Tenant Change Guaranty, the MI Guaranty, the Subordination
Agreement, the Hotel Lease Guaranty, the Attornment Agreement, the Host Marriott
Indemnity Agreement and the Marriott International Indemnity Agreement.
Furthermore, the first sentence of this Section also does not limit the Lenders'
right to seek any recovery (by direct suit, deficiency judgment in foreclosure
proceeding or otherwise) against the Borrower, provided that the Lenders shall
--------
not seek to execute or otherwise enforce any decision or other award so obtained
against any assets of the Borrower other than the Multistate Collateral. Nothing
in this Section shall be construed to release or otherwise impair the
Indebtedness of the Borrower evidenced by the Multistate Notes, the other
obligations of the Borrower or any other Loan Party under the Multistate Loan
Documents, the Liens securing such obligations, or (except as and to the extent
set forth in the first sentence of this Section and the proviso of the preceding
sentence) any other rights of the Lenders. In addition, nothing in this Section
shall (A) limit or be construed to limit or impair any enforcement action
against the assets of the Loan Parties comprising Multistate Collateral or any
enforcement action against any Loan Party (including, without limitation, any
successors in interest, assigns, or transferees thereof) to enable the Agent or
any Lender to obtain any Multistate Collateral, or constitute a waiver, release
or discharge of any Loan Party's obligations, (B) limit the right of the Lenders
to name any successor owner of Multistate Collateral or other Person claiming an
interest therein as a party defendant in any action under this Agreement or any
other Multistate Loan Documents so long as (except as otherwise permitted by
clauses (C) and (D)) no judgment in the nature of a deficiency or personal money
judgment shall be requested, obtained or enforced against the Exculpated
Parties, or any of them, (C) affect in any way the validity of any separate
written guaranty, letter of credit, cash, line of credit, indemnification or
other undertaking now or hereafter given by any Person (including any Exculpated
Party) to the Lenders, (D) release any Exculpated Party from any personal
liability arising from (1) misapplication of trust funds, such as insurance
proceeds or condemnation awards, that may come into the possession of such
Exculpated Party or (2) fraud by such Exculpated Party or (E) after such time as
the Lenders acquire any right (by foreclosure on the Borrowers interest in a
Related Document or otherwise) to exercise the Borrower's rights under any
Related Document, limit or be construed to limit or impair any enforcement
action or any action for damages under such Related Document against any Loan
Party on account of such Loan Party's failure to perform any of its obligations
under such Related document.
-43-
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent.
--------------------
This amendment and restatement of the 1988 Multistate Loan Agreement
and the obligations of each Lender hereunder shall not be effective until the
date on which the following conditions precedent are satisfied and shall be
effective on and as of such date.
(a) All transfers described in Section 9.11 shall have occurred
in compliance with all material agreements and instruments relating
thereto.
(b) The Lenders shall be satisfied with (i) the corporate and
legal structure and capitalization of each Loan Party other than the
Borrower, including the terms and conditions of the charter, bylaws and
each class of capital stock of each such Person and of each agreement or
instrument relating to such structure or capitalization and (ii) the
partnership and legal structure and capitalization of the Borrower,
including the terms and conditions of the agreement of limited partnership
of the Borrower.
(c) There shall exist no action, suit, investigation, litigation
or proceeding affecting any Loan Party or any of its Subsidiaries pending
or threatened before any court, governmental agency or arbitrator that (i)
could have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of the Reorganization, this Agreement.
any Multistate Note, any other Multistate Loan Document, any Related
Document or the consummation of the transactions contemplated hereby. There
shall exist no other event or condition that could have a Material Adverse
Effect.
(d) The representations and warranties contained in each
Multistate Loan Document shall be true and correct on and as of the Closing
Date, before and after giving effect to the other transactions contemplated
hereby, other than any such representations and warranties that by their
terms refer to a date other than the Closing Date, and no event shall have
occurred and be continuing (including, without limitation, any resulting
from the Reorganization) or would result from the transactions contemplated
hereby that constitutes a Default.
(e) The Tenant shall have permanently and irrevocably released
the Borrower on or prior to the Closing Date from the Borrower's obligation
to pay to the Tenant all Deferred Incentive Management Fees, the Tenant and
the Borrower shall have terminated the 1986 Management Agreement as of
January 1, 1994 and the Tenant and the Borrower shall have furnished to the
Agent evidence satisfactory to it of such release.
(f) The Borrower shall (i) have caused all funds in account
number ▇▇▇-▇▇▇▇▇▇▇-▇ at ▇▇▇▇▇▇▇ ▇▇▇▇▇ Institutional Fund, c/o State Street
Bank and Trust Company, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
and all funds, if any, that CMC was required to but did not deposit in the
FF&E Reserve (as defined in the 1986 Management Agreement) pursuant to the
1986 Management Agreement, to be deposited in same day funds in the FF&E
Reserve Account (other than $242,756.55 of such funds, which the Borrower
will be depositing in a separate reserve for the Connecticut Hotel), (ii)
have caused the Administrative Holdback Amount, and the excess, if any, of
all other funds held by it (including funds in the Contingency Reserve (as
defined in the 1986 Management Agreement)) other than (A) all amounts paid
by it on the Closing Date as payments of principal, interest, fees and
expenses and (B) funds (in addition to those described in the
-44-
second parenthetical in clause (i)) relating to the Connecticut Hotel) to
be deposited in same day funds in the Borrower Operating Account and (iii)
have furnished to the Agent evidence satisfactory to it of such deposits.
(g) The Borrower shall have paid to the Agent for the ratable
benefit of the 1988 Lenders accrued interest on the outstanding principal
amount of the 1988 Multistate Loans (prior to giving effect to the
Multistate Closing Payment) for the period from March 18, 1994 to the
Closing Date at the Forbearance Agreement Rate.
(h) The Borrower shall have paid all accrued fees and expenses of
Coopers & ▇▇▇▇▇▇▇ and all reasonable fees and expenses of Shearman &
Sterling and of local counsel to the Lenders.
(i) This Agreement shall have been executed by the Borrower and
the Agent, and the Agent shall have been notified by each Bank that such
Bank has executed it.
(j) All conditions precedent to the effectiveness of the
California Loan Agreement shall have been satisfied.
(k) The Agent shall have received the following, each dated the
Closing Date (unless otherwise specified), in form and substance
satisfactory to the Lenders (unless otherwise specified) and (except for
the Multistate Notes, in sufficient copies for each Lender:
(i) The Multistate Notes to the order of the Tenders.
(ii) Certified copies of the resolutions of the Board of
Directors of each Loan Party (other than the Borrower) approving each
Multistate Loan Document and each Related Document to which it is or
is to be a party and the transactions contemplated hereby, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect thereto.
(iii) Certified copies of the resolutions of the Board of
Directors of the General Partner approving on behalf of the Borrower
each Multistate Loan Document and each Related Document to which the
Borrower is or is to be a party and the transactions contemplated
hereby, and of all documents evidencing other necessary partnership
and corporate action and governmental approvals, if any, with respect
thereto.
(iv) (A) (1) A copy of a certificate of the Secretary of
State of the jurisdiction of incorporation of Host Marriott, the
General Partner and the Tenant, dated reasonably near the Closing
Date, listing the charter of each such Loan Party and each amendment
thereto on file in his office and certifying that (X) such amendments
are the only amendments to each such Loan Party's charter on file in
his office, (y) each such Loan Party has paid all franchise taxes to
the date of such certificate and (z) each such Loan Party is duly
incorporated and in good standing under the laws of such State and (2)
if such certificate lists for any such Loan Party any charters or
amendments that were not provided by the Borrower in connection with
the closing of the 1986 Loan Agreements, a copy of the charter of such
Loan Party and each amendment thereto certified (as of a date
reasonably near the Closing Date) by the Secretary of State of the
jurisdiction of incorporation of such Loan Party as being a true and
correct copy thereof.
-45-
(B) A copy of the charter of Marriott International and
each International Ground Lessor and each amendment thereto certified
(as of a date reasonably near the Closing Date) by the Secretary of
State of the jurisdiction of incorporation of each such Loan Party as
being a true and complete copy thereof.
(C) A copy of a certificate of the Secretary of State of
the jurisdiction of incorporation of Marriott International and each
International Ground Lessor, dated reasonably near the Closing Date,
certifying that each such Loan Party has paid all franchise taxes to
the date of such certificate and is duly incorporated and in good
standing under the laws of such State.
(v) A copy of a certificate of the Secretary of State of the
State of Delaware, dated reasonably near the Closing Date, listing the
certificate of limited partnership of the Borrower and each amendment
thereto on file in his office and certifying that (A) such amendments
are the only amendments to such certificate on file in his office, (B)
the Borrower has paid all franchise taxes to the date of such
certificate and (C) the Borrower is duly organized and in good
standing under the laws of the State of Delaware.
(vi)(A) A certificate or certificates of each Loan Party
(other than the Borrower), signed on behalf of such Loan Party by a
duly authorized officer of such Loan Party, dated as of the Closing
Date (the statements made in each of which shall be true on and as of
the Closing Date), certifying as to (1) the absence of any amendments
to the charter of such Loan Party since the date of the Secretary of
State's certificate referred to in paragraph (iv) above, (2) a true
and correct copy of the bylaws of such Loan Party as in effect on the
Closing Date, (3) the due incorporation and good standing of such Loan
party as a corporation organized under the laws of the state of its
incorporation, and the absence of any proceeding for the dissolution
or liquidation of such Loan Party, (4) (x) in the case of each of the
General Partner and the Tenant, such Loan Party's qualification and
good standing as a foreign corporation in the State of Maryland and
each state in which a Hotel is located and (y) in the case of each
International Ground Lessor, such Loan Party's qualification and good
standing as a foreign corporation in each state in which such Loan
Party owns Land, and (5) (except in the case of Host Marriott and the
General Partner) to the Knowledge of such Loan Party, the absence of
any event occurring and continuing, or resulting from the transactions
contemplated by this Agreement, that constitutes a Default and (B) (1)
in the case of the General Partner and the Tenant, current good
standing certificates evidencing such Loan Party's qualification and
good standing as a foreign corporation in the State of Maryland and
each other state in which a Hotel is located and (2) in the case of
each International Ground Lessor, current good standing certificates
evidencing such Loan Party's qualification and good standing as a
foreign corporation in each state in which such Loan Party owns Land.
(vii) (A) A certificate or certificates of the Borrower,
signed on its behalf by a duly authorized officer of the General
Partner, dated the Closing Date (the statements made in each of which
shall be true on and as of the Closing Date), certifying as to (1) a
true and correct copy of the limited partnership agreement of the
Borrower (including all amendments thereto), (2) the due organization
and good standing of the Borrower as a limited partnership organized
under the laws of the State of Delaware, and the absence of any
proceeding for the dissolution or liquidation of the Borrower, (3) the
Borrower's qualification and good standing as a foreign limited
partnership in the State of Maryland and each state in which a Hotel
-46-
is located and (4) current certificates of limited partnership
(including all amendments thereto) filed in the appropriate offices in
the State of Delaware and (B) (1) current good standing certificates
evidencing the Borrower's qualification and good standing as a foreign
limited partnership in the State of Maryland and each other state in
which a Hotel is located and (2) current filings of limited
partnership applications (including all amendments thereto) on file in
the appropriate offices in the State of Maryland and each state in
which a Hotel is located.
(viii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party (other than the Borrower) certifying the
names and true signatures of the officers of such Loan Party
authorized to sign each Multistate Loan Document and each Related
Document to which it is or is to be a party and the other documents to
be delivered hereunder and thereunder.
(ix) A certificate of the Secretary or an Assistant
Secretary of the General Partner certifying the names and true
signatures of the officers of the General Partner authorized to sign
each Multistate Loan Document and each Related Document to which the
Borrower is or is to be a party and the other documents to be
delivered hereunder and thereunder.
(x) The Multistate Security Agreement, dated as of the
date hereof, duly executed by the Borrower, together with:
(A) executed originals of proper financing
statements, to be filed on or immediately after the Closing
Date under the Uniform Commercial Code of all jurisdictions
that the Agent may deem necessary or desirable in order to
perfect and protect the Liens created by the Multistate
Security Agreement covering the "Collateral" described in
the Multistate Security Agreement, and provision
satisfactory to the Agent for the payment of all filing,
recording and other taxes and fees applicable thereto and of
obtaining completed requests for information, listing such
financing statements and all other effective financing
statements filed in such jurisdictions that name the
Borrower as debtor, together with copies of such other
financing statements:
(B) evidence of the completion of, or procedures
satisfactory to the Agent for the completion of, all other
recordings and filings of or with respect to the Multistate
Security Agreement that the Agent or any Lender through the
Agent may reasonably deem necessary or desirable in order to
perfect and protect the Liens created thereby;
(C) original certificates of insurance evidencing
the insurance required by the terms of the Multistate
Security Agreement; and
(D) evidence that all other actions that the Agent
or any Lender through the Agent may reasonably deem
necessary or desirable in order to perfect and protect the
Liens created by the Multistate Security Agreement have been
taken.
(xi) The Marriott International Indemnity Agreement,
dated as of the date hereof, duly executed by Marriott International.
-47-
(xii) Amendments to each 1986 Multistate Mortgage in
respect of each Multistate Primary Hotel in substantially the form of
Exhibits F-1 and F-2 (each a "Multistate Primary Hotel Mortgage
---------------------------------
Amendment") and in respect of each Multistate Secondary Hotel in
---------
substantially the form of Exhibit G (each a "Multistate Secondary
--------------------
Hotel Mortgage Amendment"), each dated as of the date hereof, duly
------------------------
executed by the Borrower (except that the Multistate Primary Hotel
Mortgage Amendments for each Hotel Property in Illinois and Virginia
shall also be duly executed by the respective Land Trust to which the
Borrower has conveyed its interest in such Hotel Property) and, with
respect to each such Hotel located on Land leased to the Borrower (or
any Land Trust) under an International Ground Lease, the International
Ground Lessor that is the landlord thereunder, together with:
(A) evidence that counterparts of the Multistate
Mortgage Amendments have been duly recorded on or before the
Closing Date in all filing or recording offices that the
Agent may deem necessary or
desirable in order to create a valid and subsisting first
priority Lien or second priority Lien, in each case as
specified in the applicable Multistate Mortgages, on the
property described therein in favor of the Lenders and that
all stamp, deed, filing, recording and other taxes and fees
applicable thereto have been paid (or evidence of title
insurance covering the gap, if any, between the Closing Date
and the time such documents are duly filed or recorded and
provision . satisfactory to the Agent for the payment of all
stamp, deed, filing, recording and other taxes and fees
applicable thereto);
(B) a fully paid American Land Title Association
Lender's Extended Coverage title insurance policy or
endorsements updating the title insurance policies issued in
connection with the 1988 Multistate Loan Agreement (each a
"1994 Mortgage Policy" and collectively the "1994 Mortgage
-------------------- -------------
Policies") in form and substance, with endorsements (which,
--------
in the case of updates to the title insurance policies
issued in connection with the 1988 Multistate Loan
Agreement, will consist of the endorsements on such title
insurance policies as so issued and such additional
endorsements reasonably requested by the Agent that do not
significantly increase the cost of such updates) and in
amount acceptable to the Agent, issued by Chicago Title
Insurance Company or another title insurance company
reasonably acceptable to the Agent and reinsured by title
insurers acceptable to the Agent, insuring the Multistate
Mortgages to be valid and subsisting first priority Liens or
second priority Liens, as specified in the applicable
Multistate Mortgages, on the property described therein,
free and clear of all defects (including, but not limited
to, mechanics' and materialmen's Liens) and encumbrances,
excepting only Permitted Exceptions, and providing for such
other affirmative insurance (including endorsements for
future advances under the Multistate Loan Documents and for
mechanics' and materialmen's Liens) and such coinsurance and
direct access reinsurance as the Agent may reasonably deem
necessary or desirable;
(C) (1) American Land Title Association form surveys,
dated no more than 30 days before the Closing Date,
-48-
certified to the Agent and the issuer of the 1994 Mortgage
Policies in a manner satisfactory to the Agent by a land
surveyor duly registered and licensed in the State in which
the property described in such survey is located and
acceptable to the Agent, showing all buildings and other
improvements, any off-site improvements, the location of any
easements, parking spaces, rights of way, building set-back
lines and other dimensional regulations and the absence of
encroachments, either by such improvements or on to such
property, and other defects, other than encroachments and
other defects acceptable to the Agent, (2) such affidavit or
other documentation as shall be required by the title
insurer(s) insuring such 1994 Mortgage Policy in order that
the survey exception be removed from such policy or (3) such
other documentation as shall be reasonably satisfactory to
the Agent;
(D) such consents and agreements (including
subordination and attornment agreements) of lessors and
other third parties, and such estoppel letters and other
confirmations, as the Agent may deem necessary or desirable,
including, without limitation, with respect to each Third
Party Ground Lease, an estoppel letter substantially in the
form of Exhibit H, duly executed by the Third Party Ground
Lessor that is the landlord under such Third Party Ground
Lease;
(E) original certificates of insurance evidencing the
insurance required by the terms of the Multistate Mortgages;
and
(F) evidence that all other actions that the Agent or
any Lender through the Agent may reasonably deem necessary
or desirable in order to create valid first or second, as
specified in the Multistate Mortgages, and subsisting Liens
on the property described in the Multistate Mortgages have
been taken.
(xiii) For each International Ground Lease, a Ground Lease
Amendment, dated as of the date hereof, duly executed by the Borrower
(except that the Ground Lease Amendments for the Land on which each
Hotel in Illinois and Virginia (other than the Hotel in Fairfax,
Virginia referred to as Fair Oaks) is located shall be duly executed
by the respective Land Trust to which the Borrower has conveyed its
interest in such Hotel Property) and the applicable International
Ground Lessor, together with evidence that counterparts of each Ground
Lease Amendment, or an amendment to a memorandum, or short form, of
each International Ground Lease referring to such Ground Lease
Amendment (each such memorandum or short form of International Ground
Lease, as amended by such amendment, being a "Memorandum of Ground
--------------------
Lease") have been duly recorded on or before the Closing Date in all
-----
filing or recording offices that the Agent may deem necessary or
desirable in order to evidence the amendments to the International
Ground Leases governing the leasehold estates described in the
International Ground Leases and that all stamp, deed, filing,
recording and other taxes and fees applicable thereto have been paid
(or evidence of title insurance governing the gap, if any, between the
Closing Date and the time such documents are duly filed or recorded
and provision satisfactory to the Agent for the payment of all stamp,
deed, filing, recording and other taxes and fees applicable thereto).
-49-
(xiv) The Debt Service Guaranty, dated as of the date
hereof, duly executed by Host Marriott.
(xv) The Backup Debt Service Guaranty, dated as of the
date hereof, duly executed by Marriott International.
(xvi) The Subordination Agreement, dated as of the date
hereof, duly executed by Host Marriott, the General Partner, Marriott
International, the Tenant, the International Ground Lessors and the
Borrower.
(xvii) The Hotel Lease, dated as of January 1, 1994, duly
executed by the Tenant, the Borrower and the Land Trusts.
(xviii)[Intentionally Omitted]
(xix) For each Hotel (other than the Hotels located in
Maryland and Virginia), a Multistate Assignment of Leases, dated as of
the date hereof, duly executed by the Borrower (except that the
Multistate Assignment of Leases for the Hotel in Illinois shall also
be duly executed by the Land Trust to which the Borrower has conveyed
its interest in such Hotel) and, in the case of each Hotel located on
Land leased to the Borrower (or any Land Trust) under an International
Ground Lease, the International Ground Lessor that is the landlord
thereunder, together with:
(A) evidence that counterparts of each Multistate
Assignment of Leases have been duly recorded on or before
the Closing Date in all filing or recording offices that the
Agent may deem necessary or desirable in order to perfect
and protect the Liens created by such Multistate Assignment
of Leases covering the Hotel Lease described therein and the
rent due the Borrower and the Land Trust thereunder, the
rent due the International Ground Lessors under the
International Ground Leases described therein and the other
Leases" and "Rents" described in such Multistate Assignment
of Leases in favor of the Lenders and that all stamp, deed,
filing, recording and other taxes and fees applicable
thereto have been paid (or evidence of title insurance
covering the gap, if any, between the Closing Date and the
time such documents are duly filed or recorded and provision
satisfactory to the Agent for the payment of all stamp,
deed, filing, recording and other taxes and fees applicable
thereto); and
(B) evidence that all other actions that the Agent or
any Lender through the Agent may reasonably deem necessary
or desirable in order to perfect and protect the Liens
created by each Multistate Assignment of Leases have been
taken.
(xx) The Attornment Agreement, dated as of the date
hereof, duly executed by the Borrower, the Tenant, the Land Trusts and
the Agent.
(xxi) The Hotel Lease Guaranty, dated as of the date
hereof, duly executed by Marriott International.
(xxii) The Host Marriott Indemnity Agreement, dated as of
the date hereof, duly executed by Host Marriott and the Borrower.
-50-
(xxiii) The Debt and Tenant Change Guaranty, dated as of
the date hereof, duly executed by Marriott International.
(xxiv) The MI Guaranty, dated as of the date hereof, duly
executed by Marriott International.
(xxv) Such financial, business and other information
regarding each Loan Party and its respective Subsidiaries any Lender
through the Agent shall have reasonably requested, including, without
limitation, (A) information as to possible contingent liabilities, tax
matters or environmental matters, (B) obligations of the Borrower
under ERISA and Welfare Plans and arrangements with employees of the
Borrower and (C) financial statements as to Host Marriott, Marriott
International and the Borrower (including forecasted income statements
and cash flow statements of the Borrower, as referred to in Section
5.01(g)).
(xxvi) A letter, in form and substance satisfactory to the
Agent, from the Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., its independent
certified public accountants, advising such accountants that the Agent
has been authorized to exercise all rights of the Borrower to require
such accountants to disclose any and all financial statements and any
other information of any kind that they may have with respect to the
Borrower and directing such accountants to comply, subject to any
privilege that may exist between the Borrower and such accountants as
a matter of law, with any reasonable request of the Agent for such
information.
(xxvii) A favorable opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq., Deputy General Counsel of Host Marriott, counsel for the
Borrower, the General Partner and Host Marriott, in substantially the
form of Exhibit T and as to such other matters as any Lender through
the Agent may reasonably request.
(xxviii) A favorable opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
Assistant General Counsel of Marriott International, counsel for the
Tenant, Marriott International and the International Ground Lessors,
in substantially the form of Exhibit U and as to such other matters as
any Lender through the Agent may reasonably request.
(xxix) A favorable opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
counsel for the Loan Parties, in substantially the form of Exhibit V.
(xxx) A favorable opinion of the law firms listed on
Schedule 3.01(k)(xxx), local counsel to the Borrower, the Tenant and
the International Ground Lessors in each state in which one or more
Hotel Properties are located as set forth on such Schedule, in
substantially the form of Exhibits W-1 through W-15 and as to such
other matters as any Lender through the Agent may reasonably request.
(xxxi) A favorable opinion of Shearman & Sterling, special
counsel to the Lenders, in substantially the form of Exhibit X and as
to such matters as any Lender through the Agent may reasonably
request.
(xxxii) Such other approvals, opinions or documents as any
Lender through the Agent may reasonably request.
-51-
SECTION 3.02. Determinations under Section 3.01.
---------------------------------
For purposes of determining compliance with the conditions specified
in Section 3.01, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless an officer of the Agent responsible for the transactions
contemplated by the Multistate Loan Documents shall have received notice from
such Lender, prior to the Closing Date specifying its objection thereto and such
Lender shall not have withdrawn its notice on or before the Closing Date.
ARTICLE IV
RELEASE OF HOTELS
SECTION 4.01. Release.
-------
Upon satisfaction of the conditions set forth in Section 4.02 and 4.03
hereof, from and after the commencement of the first Tenant Accounting Quarter
in Tenant Fiscal Year 1995 the Agent shall execute and deliver to the Borrower a
release, in recordable form, releasing a Hotel Property from its Multistate
Mortgage, Multistate Assignment of Leases and the other Multistate Collateral
Documents encumbering such Hotel Property, provided, however, that no
-------- -------
Hotel Property shall be released that would reduce the number of Hotel
Properties then subject to Multistate Mortgages and Multistate Assignment of
Leases to less than thirty-four (34).
SECTION 4.02. Conditions to Release.
---------------------
The following conditions must be satisfied, in the reasonable judgment
of the Agent, for the release of a Hotel Property (other than a Multistate
Secondary Hotel Property):
(a) The Borrower shall have given not less than thirty (30) (or,
if such Hotel Property is proposed to be sold by the Borrower in
satisfaction of the second proviso of Section 7.01(g) or Section 7.01(h),
fifteen (15)) days' prior written notice to the Agent requesting the
release of a Hotel Property, together with a certificate of the Borrower
certifying as follows (and each of such certifications shall be true and
correct at the time the notice is given and on the proposed date of release
of the Hotel Property): (i) no Default (other than, if such Hotel Property
is proposed to be sold in satisfaction of the second proviso of Section
7.01(g) or Section 7.01(h), the Default under such Section) has occurred
and is continuing; (ii) the condition set forth in Section 4.02(b) below
has been satisfied (and incorporating a calculation (and schedules
satisfactory to the Agent showing such calculation) of Annual Loan Coverage
of the Remaining Hotels for the Current Year); and (iii) the financial
statements of the Borrower upon which the calculation referred to in clause
(ii) above is based (and which shall be delivered with such certificate)
are true, accurate and complete in all material respects and present fairly
the financial condition of Borrower and the results of Borrower's
operations for the period covered thereby;
(b) Annual Loan Coverage of the Remaining Hotels for the Current
Year shall be not less than 1.4; and
(c) The Borrower shall pay to the Agent as a payment of principal
of the aggregate outstanding principal amount of the Multistate Loans a sum
(the "Release Price") for the Hotel Property to be released in the amount
set forth below or such lower amount to which the Lenders owed or holding
at least 75 of the aggregate principal amount
-52-
of the Multistate Advances outstanding at such time may agree, together
with accrued interest to the date of such prepayment on the aggregate
principal amount prepaid, and such prepayment shall be applied as specified
in Section 2.04(b)(iii):
(i) For each of the first five Hotel Properties released, a
Release Price in an amount equal to 110% of the Base Release Price for such
Hotel Property; and
(ii) For each of the next ten Hotel Properties released, a
Release Price in an amount equal to 120% of the Base Release Price for such
Hotel Property.
SECTION 4.03. Release of Multistate Secondary Hotel Properties.
------------------------------------------------
In the event any Hotel Property proposed to be released is a
Multistate Secondary Hotel Property, the conditions set forth in Section 4.01
and 4.02 of the California Loan Agreement are satisfied with respect thereto,
and the Release Price (as defined in the California Loan Agreement) exceeds the
then aggregate outstanding principal amount of the California Advances, the
Borrower shall pay such excess amount to the Agent as a prepayment of the
aggregate outstanding principal amount of the Multistate Advances, together with
accrued interest to the date of such prepayment on the aggregate principal
amount prepaid, and such prepayment shall be applied as set forth in Section
2.04(b)(iii). If there is no such excess amount, the Agent shall release such
Hotel Property from its Multistate Mortgage, Multistate Assignment of Leases and
the other Multistate Collateral Documents encumbering such Hotel Property in
connection with the release of such Multistate Secondary Hotel Property from its
California Mortgage and California Assignment of Leases pursuant to Section 4.01
and 4.02 of the California Loan Agreement.
SECTION 4.04. Defined Terms Used in this Article.
----------------------------------
The following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Annual Interest Payments" means, at any time Annual Loan Coverage of
------------------------
the Remaining Hotels is to be determined, the aggregate amount of all
interest due and payable by the Borrower under this Agreement and the
California Loan Agreement during the Current Year applicable to such
determination.
"Annual Loan Coverage of the Remaining Hotels" means for any Current
--------------------------------------------
Loan Year the amount equal to (a) the Performance Operating Profit of the
Remaining Hotels divided by (b) the sum of (i) $7,000,000 and (ii) the
amount equal to the product of (A) Annual Interest Payments and (B) a
fraction, the numerator of which is the amount equal to (1) the aggregate
outstanding principal amount of the Multistate Advances and the California
Advances on the first day of such Current Year minus (2) the Base Release
Price of the Hotel to be released (or, if more than one Hotel Property is
to be released, the aggregate Base Release Prices of such Hotel
Properties), and the denominator of which is the aggregate outstanding
principal amount of the Multistate Advances and the California Advances on
the first day of such Current Year.
"Current Year" means the four consecutive Tenant Accounting Quarters,
------------
ending with (and including) the Tenant Accounting Quarter most recently
completed at any time the Borrower gives the Agent notice requesting the
release of a Hotel Property under Section 4.02(a).
"Performance Operating Profit of the Remaining Hotels" means the
----------------------------------------------------
Performance Operating Profit of the Remaining Hotels for the Current Year.
-53-
"Remaining Hotels" means the Hotels, excluding the Hotel included in
----------------
the Hotel Property then proposed to be released pursuant to Article IV (or,
if more than one Hotel Property is proposed to be released, the Hotels
included in such Hotel Properties).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Borrower.
----------------------------------------------
On and as of the Closing Date and, with respect to the provisions of
this Section 5.01 specified in the last sentence of this Section 5.01, on and as
of the first day of each Interest Period, the Borrower represents and warrants
as follows:
(a) (i) The Borrower (A) is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware, (B) is duly qualified and in good standing as a foreign
limited partnership in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify
or be licensed and (C) has all requisite power and authority to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. The general partnership interest
of the Borrower has been validly issued, is fully paid and is owned free
and clear of all Liens. The entire general partnership interest in the
Borrower is owned solely by the General Partner. The Borrower has entered
into this Agreement for its partnership business purposes and has used the
proceeds of the 1988 Multistate Loans for the purposes provided in the 1988
Multistate Loan Agreement and the 1986 Multistate Loan Agreement.
(ii) The General Partner (A) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, (B) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed, and (C) has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as now
conducted and proposed to be conducted. All of the outstanding capital
stock of the General Partner has been validly issued, is fully paid and
nonassessable and is owned free and clear of all Liens.
(b) The General Partner is a wholly owned Subsidiary of Host
Marriott. The General Partner has no Subsidiaries.
(c) The execution, delivery and performance by the Borrower and
the General Partner of this Agreement, the Multistate Notes, each other
Multistate Loan Document and each Related Document to which it is or is to
be a party and the consummation of the transactions contemplated hereby are
within the Borrower's partnership powers and the General Partner's
corporate powers, have been duly authorized by (i) in the case of the
Borrower, all necessary action by and on behalf of the partners of the
Borrower and (ii) in the case of the General Partner, all necessary
corporate action, and do not (A) in the case of the Borrower, contravene
any of the terms, conditions or provisions of the Partnership Documents,
(B) in the case of the General Partner, contravene the General Partner's
charter or by-laws, (C) violate any law (including, without limitation, the
Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the
-54-
Federal Reserve System), order, writ, judgment, injunction, decree,
determination, award, franchise or permit binding on or affecting the
Borrower or the General Partner or any of their properties, (D) conflict
with or result in the breach of, or constitute a default under, any
contract, loan agreement, deed of trust, lease or other instrument binding
on or affecting the Borrower or the General Partner or any of their
properties or (E) except for the Liens created by the Multistate Collateral
Documents and the California Collateral Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Borrower or the General Partner. Neither the Borrower nor
the General Partner is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination, award, franchise
or permit or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument the violation or breach
of which would be reasonably likely to have a Borrower Material Adverse
Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other third party (including, without limitation, any or all of the
partners of the Borrower other than (x) the authorization of the Board of
Directors of the General Partner and (y) the General Partner's execution of
the Multistate Loan Documents and the Related Documents to which the
Borrower is or is to be a party, on the Borrower's behalf) is required for
(i) the due execution, delivery, recordation, filing or performance by the
Borrower or the General Partner of this Agreement, the Multistate Notes,
any other Multistate Loan Document or any Related Document to which the
Borrower or the General Partner is or is to be a party, or for the
consummation of the transactions contemplated hereby, (ii) the grant by the
Borrower of the Liens granted by it pursuant to the Multistate Collateral
Documents, (iii) the perfection or maintenance of the Liens in all property
of the Borrower created by the Multistate Collateral Documents (including
the validity thereof, and the respective first priority and second priority
nature thereof specified in the Multistate Collateral Documents) to which
the Borrower is or is to be a party or (iv) the exercise by the Agent or
any Lender of its rights under the Multistate Loan Documents to which the
Borrower or the General Partner is or is to be a party or the remedies in
respect of the Multistate Collateral that constitutes property of the
Borrower pursuant to the Multistate Collateral Documents to which the
Borrower is or is to be a party, except for (A) the authorizations,
approvals, actions, notices and filings to be accomplished under Article
III hereof, all of which have been duly obtained, taken, given or made and
are in full force and effect and (B) such approvals of courts and trustees
(excluding trustees for any trusts that are party to any Multistate
Mortgage or other Multistate Collateral Document) as may be necessary under
applicable state law for the Agent or any Lender to foreclose on certain
Multistate Collateral. All applicable waiting periods in connection with
the transactions contemplated hereby have expired without any action having
been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the rights of the Borrower or the
General Partner freely to transfer or otherwise dispose of, or to create
any Lien on, any properties now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Multistate Notes and
each other Multistate Loan Document and Related Document to which the
Borrower or the General Partner is or is to be a party when delivered
hereunder will have been, duly executed and delivered by the Borrower or
the General Partner, as applicable. This Agreement is, and each of the
Multistate Notes and each other Multistate Loan Document and Related
Document to which the Borrower or the General Partner is or is to be a
party when delivered hereunder will be, the legal, valid and binding
obligation of the Borrower or the General Partner, as applicable,
enforceable against such Loan Party in accordance with its terms.
-55-
(f) The balance sheet of the Borrower as at December 31, 1992,
and the related statement of income and cash flows of the Borrower for the
Borrower Fiscal Year then ended, accompanied by an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co., independent public accountants, the unaudited balance sheet
of the Borrower as at September 10, 1993, and the related unaudited
statement of income and cash flows of the Borrower for the year-to-date
period then ended, duly certified by an Authorized Accounting Officer,
copies of which have been furnished to each Lender, fairly present,
subject, in the case of said balance sheet as at September 10, 1993, and
said statement of income and cash flows for the year-to-date period then
ended, to year-end audit adjustments, the financial condition of the
Borrower as at such dates and the results of the operations of the Borrower
for the periods ended on such dates, all in accordance with generally
accepted accounting principles applied on a consistent basis, and since
December 31, 1992, there has been no Borrower Material Adverse Change.
(g) The forecasted income statements and cash flow statements of
the Borrower delivered to the Lenders pursuant to Section 3.01(k)(xxv)
(which are set forth on Schedule 5.01(g)) were prepared in good faith on
the basis of the assumptions stated therein, which assumptions were fair in
the light of conditions existing at the time of delivery of such forecasts,
and represented, at the time of delivery, the Borrower's good faith
estimate of its future financial performance.
(h) No information, exhibit or report furnished by or on behalf
of the Borrower or the General Partner to the Agent or any Lender in
connection with the negotiation of the Multistate Loan Documents or
pursuant to the terms of the Multistate Loan Documents contained any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements made therein not misleading.
(i) Except as set forth on Schedule 5.01(i), there is no action,
suit, investigation, litigation or proceeding affecting the Borrower or the
General Partner, including any Environmental Action, pending or, to the
Knowledge of the Borrower, threatened before any court, governmental agency
or arbitrator that (i) in the case of the Borrower, involves the
possibility of liability in excess of $1,000,000, (ii) could have a
Borrower Material Adverse Effect or (iii) purports to affect the legality,
validity or enforceability of this Agreement, any Multistate Note or any
other Multistate Loan Document or Related Document to which the Borrower or
the General Partner is or is to be a party or the consummation of the
transactions contemplated hereby.
(j) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Multistate Advances (including the 1988 Multistate Loans)
have been used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock. Neither
the Borrower nor any agent acting on its behalf has taken or will take any
action that might cause this Agreement or the Multistate Notes to violate
Regulation U or Regulation X (as in effect from time to time) of the Board
of Governors of the Federal Reserve System or any other margin regulation
of the Board of Governors of the Federal Reserve System promulgated or
amended after the Closing Date that is applicable to any Lender and of
which the Agent, prior to any time this representation is made or deemed
made, shall have notified the Borrower.
(k) No proceeds of any Multistate Advances (including the 1988
Multistate Loans) have been used to acquire any equity security of a class
registered pursuant to Section 12 of the Securities Exchange Act of 1934.
(l) The Borrower does not own any Margin Stock.
-56-
(m) Neither the Borrower nor any of its ERISA Affiliates has
any Plans, Multiemployer Plans, Multiple Employer Plans or Welfare Plans.
(n) None of the business or properties (including the Hotel
Properties) of the Borrower or the General Partner is affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) that would be
reasonably likely to have a Borrower Material Adverse Effect.
(o) (i) The Hotel Properties and the other operations and
properties of the Borrower comply in all material respects with all
applicable Environmental Laws, all necessary Environmental Permits have
been obtained and are in effect for the operations and properties of the
Borrower (including Hotel Properties), the Borrower is in compliance in all
material respects with all such Environmental Permits and no circumstances
exist that could reasonably be expected to (A) form the basis of an
Environmental Action against the Borrower or the General Partner or any of
the properties described in the Multistate Mortgages that could have a
Borrower Material Adverse Effect or (B) cause any such property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(ii) The Hotel Properties are in compliance in all material
respects with all other Real Property Laws, and the Borrower and all of the
Borrower's other properties are in compliance in all material respects with
all requirements of law and all applicable rules and regulations of each
Governmental Authority.
(p) None of the Hotel Properties or any of the other properties
of the Borrower is listed or proposed for listing on the National
Priorities List under CERCLA or on the Comprehensive Environmental
Response, Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list of sites
requiring investigation or cleanup, and no underground storage tanks, as
such term is defined in 42 U.S.C. (S) 6991, are located on any property of
the Borrower.
(q) Except as set forth on Schedule 5.01(q), neither the
Borrower nor the General Partner has transported or arranged for the
transportation of any Hazardous Materials to any location that is listed or
proposed for listing on the National Priorities List under CERCLA,
Hazardous Materials have not been generated, used, treated, handled, stored
or disposed of on, or released or transported to or from, any property
described in the Multistate Mortgages or, to the Borrower's Knowledge, any
adjoining property, except in quantities required in connection with the
normal operation and maintenance of such properties and used or stored at
such properties in compliance with all applicable Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all applicable
Environmental Laws and applicable Environmental Permits.
(r) Neither the Borrower nor the General Partner is a party to
or otherwise bound by any contract, loan agreement, indenture, mortgage,
deed of trust, lease or other instrument or subject to any other
restriction or any judgment, order, writ, injunction, decree,
determination, award, law, rule or regulation or subject to any charter or
corporate or partnership restriction that would be reasonably likely to
have a Borrower Material Adverse Effect.
(s) Each of the Borrower and the General Partner has filed,
caused to be filed or has been included in all tax returns (federal, state,
local and foreign) that are required to be filed and has paid all taxes
shown thereon to be due, together with
-57-
applicable interest and penalties or pursuant to any assessment or notice
of tax claim or deficiency received by it. All tax liabilities of the
Borrower and the General Partner were adequately provided for at the end of
the most recent Fiscal Year of such Loan Party and are now so provided for
on the books of such Loan Party.
(t) Set forth on Schedule 5.01(t) hereto 1s a complete and
accurate list, as of the date hereof, of each taxable year of the Borrower
and the General Partner for which federal income tax returns have been
filed and for which the expiration of the applicable statute of limitations
for assessment or collection has not occurred by reason of extension or
otherwise (an "Open Year").
---------
(u) There are no unpaid amounts, as of the date hereof, of
adjustments proposed by the Internal Revenue Service to the federal income
tax liability of the Borrower with respect to Open Years. No issues have
been raised by the Internal Revenue Service in respect of Open Years that,
in the aggregate, could have a Borrower Material Adverse Effect.
(v) There are no unpaid amounts, as of the date hereof, of
adjustments to the state, local and foreign tax liability of the Borrower
proposed by any state, local or foreign taxing authorities (other than
amounts arising from adjustments to federal income tax returns). No issues
have been raised by such taxing authorities that, in the aggregate, could
have a Borrower Material Adverse Effect.
(w) Neither the Borrower nor the General Partner is an
"investment company,- or an "affiliated person" of, or "promoter. or
"principal underwriter. for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making or maintaining of the Multistate Advances, nor the application of
the proceeds thereof by the Borrower nor the consummation of the other
transactions contemplated hereby, will violate any provision of such Act or
any rule, regulation or order of the Securities and Exchange Commission
thereunder.
(x) The Borrower is Solvent. The General Partner (i) is Solvent
and (ii) was Solvent immediately prior to, and immediately after giving
effect to, the Reorganization.
(y) Except as reflected in the Financial Statements furnished by
the Borrower pursuant to Section 3.01(k)(xxv), the Borrower has not applied
any of its funds as a distribution to its partners.
(z) Schedule 5.01(z) completely and accurately sets forth for
each Mortgaged Interest (i) whether it is a Fee Interest, a Leasehold
Interest or both and (ii) if it is a Leasehold Interest, the name of the
Ground Lessor.
(aa) The Borrower has (i) with respect to all the Hotel
Properties, (A) good and marketable title to each Hotel Property (excluding
any Land leased to the Borrower under a Ground Lease) and (B) good and
indefeasible title to the leasehold estate governed by each Ground Lease,
in each case referred to in this clause (i) subject only to the Permitted
Liens and free and clear of all Liens other than the Permitted Liens, and
(ii) good title to the FF&E (or, in the case of FF&E permitted hereunder to
be leased to the Borrower, a good and valid leasehold interest in such FF&E
subject to the interests of the lessors thereof in such FF&E) and all other
properties reflected in the most recent Financial Statements, or acquired
by the Borrower after the date of such Financial Statements (excluding,
however, personal property sold or otherwise disposed of in the ordinary
course of business of the Borrower after such date and in accordance with
the
-58-
provisions of the Multistate Loan Documents), in each case referred to
in this clause (ii) free and clear of all Liens other than Liens created by
the Multistate Collateral Documents and the California Collateral
Documents. Except for the Multistate Loan Documents and the California Loan
Documents, none of the Hotel Properties, leasehold estates and fee
interests of the Borrower in any Hotel Property or any other properties of
the Borrower described above are subject to any agreement obligating the
Borrower to grant or otherwise place a Lien on, or sell and lease back,
such Hotel Properties, leasehold estates and other properties. In addition,
there is not on file in any public office, and the Borrower has not signed
or authorized any Person to sign on its behalf, any financing statement
naming the Borrower as debtor except for (x) financing statements in favor
of the Agent, (y) financing statements (none of which relate to Liens on
the Multistate Collateral other than the Purchase Agreement and the
Multistate Collateral described in Section l(c)(iii) and Section l(c)(vi)
of the Multistate Security Agreement) securing the obligations of the
Borrower under the Connecticut Hotel Documents and (z) financing statements
in favor of the equipment lessors under certain of the FF&E Leases and
Telephone Leases covering the FF&E, telephones and other telecommunications
systems and equipment leased thereunder. Schedule 5.01(aa) accurately
describes each Courtyard by Marriott hotel (other than the Connecticut
Hotel) owned by the Borrower and the Land on which each such hotel is
located. The Borrower does not own or lease any real property other than
the Motel Properties, the Connecticut Hotel and the land on which the
Connecticut Hotel is located.
(bb) None of the properties of the Borrower is held by the
Borrower as lessee under any lease, or as conditional vendee under any
conditional sales contract or other title retention agreement, except as
disclosed in the Financial Statements referred to in Section 5.01(f) and
except for the properties subject to the Ground Leases, the FF&E Leases,
the TV System Leases, the Telephone Leases and the Computer Leases.
(cc) No proceedings are pending or, to the Borrower's Knowledge,
threatened with respect to the revocation or suspension of any material
permits, licenses and approvals issued with respect to the Hotel Properties
and such permits, licenses and approvals shall not be altered or amended,
nor shall the Borrower make any attempt to alter or amend the same, in any
material respect, without the prior written consent of the Lenders.
(dd) To the Borrower's Knowledge, there is no note or notice in
any municipal or other public department that any of the Hotel Properties
violate or do not comply with any Real Property Laws.
(ee) There is no fact Known to the Borrower that has a Material
Adverse Effect that has not been set forth in this Agreement or the
Memorandum or in other documents, certificates and Financial Statements
furnished to the Lenders by or on behalf of the Borrower in connection with
the transactions contemplated hereby.
(ff) Set forth on Schedule 5.01(ff) hereto is a complete and
accurate list of all Material Contracts of the Borrower relating directly
or indirectly to the Hotels showing, in each case, as of the date hereof
the parties, subject matter and terms thereof. Each such Material Contract
has been duly authorized, executed and delivered by all parties thereto,
has not been amended or otherwise modified, is in full force and effect and
is binding upon and enforceable against the Borrower in accordance with its
terms and, to the Borrower's Knowledge, there exists no default under any
Material Contract by any party thereto.
(gg) The Borrower has paid the Deferred Payment Note in full,
including all interest due on the principal amount thereof.
-59-
(hh) None of the International Ground Leases has been amended
since its respective date of execution except for the Ground Lease
Amendments and except as set forth on Schedule 5.01(hh).
(ii) The Borrower has disclosed to the Agent in connection with
the calculation of the Initial Excess Cash Amount and the other payments
and transfers of funds to be made by the Borrower on the Closing Date the
full amount and the nature of all cash, Cash Equivalents and other
investments in which the Borrower has a legal or beneficial interest,
including, to the Knowledge of the Borrower, all cash, Cash Equivalents and
other investments held by CMC and Marriott International for the Borrower
(including in accounts under their respective control) and all other
amounts held by CMC and Marriott International in connection with the
management of the Hotels by CMC under the 1986 Management Agreement and the
Hotel Lease.
(jj) The Borrower has provided to the Agent for each Land Trust
true and complete copies of the land trust agreements, deeds in trust,
trust agreements, assignments of lease and other documents setting forth
the agreement of any or all of the parties thereto with respect to the Land
Trusts and the property of such Land Trusts. There are no other trust
arrangements in effect under which the Borrower has conveyed to another
Person in trust the Borrower's interest in all or part of any Hotel
Property or any other assets of the Borrower subject or purported to be
subject to any Lien pursuant to the Multistate Collateral Documents.
(kk) To the Knowledge of the Borrower, there exists no event
occurring or continuing, or resulting from the transactions contemplated by
this Agreement, that constitutes a Default.
On the first day of each Interest Period (without the execution or delivery of
any written instrument) the Borrower shall be deemed to have made the
representations and warranties set forth in Sections 5.01(8), 5.01(b), 5.01(c)
(up to clause 5.01(c)(A)), 5.01(e), 5.01(j), 5.01(k), 5.01(1), 5.01(m) and
5.01(w) on and as of such day.
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. Affirmative Covenants.
---------------------
So long as any Multistate Advance shall remain unpaid, the Borrower
will, unless the Required Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
-------------------------
with all applicable laws, rules, regulations and orders, such compliance to
include, without limitation, compliance with all Real Property Laws, ERISA
and the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970.
(b) Payment of Taxes, Etc. Pay and discharge before the same
---------------------
shall become delinquent (i) all taxes, assessments and governmental charges
or levies imposed upon it or upon its property, and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property; provided,
however, that the Borrower shall not be required to pay or discharge any
such tax, assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings and as to which appropriate reserves are
being
-60-
maintained, unless and until any Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors.
(c) Compliance with Environmental Laws. Comply, and cause all
----------------------------------
lessees and other Persons occupying its properties to comply, in all
material respects, with all Environmental Laws and Environmental Permits
applicable to its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and properties; and
conduct, or cause to be conducted, any investigation, study, sampling and
testing required by all applicable Environmental Laws, and undertake any
cleanup, removal, remedial or other action required by all applicable
Environmental Laws, to remove and clean up all Hazardous Materials from any
of its properties, in accordance with all applicable Environmental Laws;
provided, however, that the Borrower shall not be required to undertake any
-------
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) Insurance. Maintain insurance with responsible and reputable
---------
insurance companies or associations in such amounts and covering such risks
as are usually covered by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower
operates.
(e) Evidence of Hazard Insurance, Etc. (i) In furtherance (but
---------------------------------
not in limitation) of Section 6.01(d), (A) maintain, or, if the Borrower
should fail to maintain such insurance as is required herein, the Agent may
(but shall not be obligated to) with reasonable advance notice to Borrower
given the expiration date of the policies, procure at the Borrower's
expense, policies of "all risk" insurance and other hazard insurance
(including, without limitation, except with respect to coverage by reason
of earthquake in the State of California, building collapse), covering the
Hotels (including all Equipment and Inventory, whether or not located at
the Hotels) for their full replacement cost (exclusive of the costs of
excavation and foundation), as well as business interruption (with not less
than 12 months of coverage), loss of rent and extra expense forms of
insurance, and furnish to the Agent original certificates of insurance
evidencing such insurance and (B) maintain policies of liability insurance,
including bodily injury and property damage, workers' compensation and
employer's liability insurance and such other insurance as the Required
Lenders shall reasonably request, and furnish to the Agent original
certificates of insurance evidencing such insurance. Each policy referred
to in clause (B) shall provide for all losses to be paid on behalf of the
Agent and the Borrower as their interests may appear. Each policy referred
to in clause (A) shall provide for all losses and all moneys which may
become due and payable under any such policy to be paid directly to the
Agent except as and to the extent such losses may be paid directly to the
Borrower as set forth in the Section of the Multistate Mortgages titled
"Adjustment of Loss".
(ii) All policies or certificates referred to in clauses (i)(A)
and (i)(B) above shall (A) name the Borrower and the Agent (as mortgagee)
as insured parties or loss payees, as applicable, thereunder (without any
representation or warranty by or obligation upon the Agent), as their
interests may appear, (B) contain an agreement by the insurer that any loss
under policies for which the Agent is a loss payee shall be payable to the
Agent (excluding those that may be paid directly to the Borrower as set
forth in the Section of the Multistate Mortgages titled "Adjustment of
Loss") notwithstanding any action, inaction or breach of representation or
warranty by the Borrower, (C) provide that there shall be no recourse
against the Agent for payment of premiums or other amounts with respect
thereto, (D) contain the agreement of the insurer to give not less than
thirty (30) days' (or, in the case of nonpayment of premiums, twenty (20)
days') prior written notice to the Agent of a proposed policy cancellation,
(E) be issued by companies having a then
-61-
current rating by the A.M. Best Co. of not less than "B+" (Policyholders'
Rating) and not less than "X" (Financial Size Category) and (F) be in form,
substance, and amounts reasonably satisfactory to the Required Lenders. To
the extent not otherwise expressly set forth in the certificates of
insurance, all cancellation notice provisions referred to in clause (D) of
the preceding sentence will be incorporated into each insurance policy by
an endorsement, copies of which will be provided to the Agent.
(iii) Insurance proceeds shall be applied as set forth in the
Multistate Security Agreement and the Multistate Mortgages.
(f) Preservation of Existence, Etc. Preserve and maintain its
------------------------------
limited partnership existence, rights (partnership agreement and statutory)
and franchises.
(g) Inspection Rights. At any reasonable time and from time to
-----------------
time on not less than five (5) Business Days' notice, and in the case of a
visit to a Hotel Property, unless an Event of Default shall have occurred
and be continuing, in no event more than one visit (which may last more
than one day) to such Hotel Property per year, permit the Agent or any
agents or representatives thereof to examine and make copies of and
abstracts from the records and books of account of, and visit the
properties of, the Borrower, and to discuss the affairs, finances and the
accounts of the Borrower with its officers, directors and other
representatives and with its independent certified public accountants.
Unless an Event of Default shall have occurred and be continuing or such
visit is made for the preparation or updating of appraisals required by
FIRREA (in which case the Borrower shall pay the costs and expenses of the
Agent and its representatives), the Agent shall pay its costs and expenses,
and the costs and expenses of its agents and representatives, in making
such visits.
(h) Keep Books; set Aside Reserves. Keep proper books of record
------------------------------
and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower in
accordance with generally accepted accounting principles in effect from
time to time, including the setting aside on its books its earnings for
each Borrower Fiscal Year and for each Borrower Fiscal Year thereafter,
adequate reserves for depreciation, obsolescence and/or amortization of its
properties during such year, and all other proper reserves that should be
set aside from such earnings in connection with its business.
(i) Maintenance of Properties, Etc. Maintain and preserve, or
------------------------------
cause to be maintained and preserved, all of its properties (including,
without limitation, all of the Hotel Properties) that are used or useful in
the conduct of its business in good working order and condition, and from
time to time make or cause to be made all needful repairs, renewals,
replacements and improvements so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
(j) Interest Rate Hedge. (i) Purchase, within sixty (60) days
-------------------
after the Closing Date, an interest rate cap for a notional amount equal to
$250,000,000 for the period ending on June 15, 1997 protecting the Borrower
against increases of three month LIBOR (as such term is commonly used in
the derivatives market) over 8.5% per annum and (ii) on the Payment Date
immediately following such purchase pay to the Agent, together with any
other amount due under Section 2.04(b)(i), an amount equal to 86.30604209%
of the difference between (x) S2,704,019.64 minus (y) the purchase price of
such cap, which amount shall be applied as set forth in Section 2.04(b)(i).
(k) Related Documents and Third Party Ground Leases. (i)
-----------------------------------------------
Perform and observe within all applicable notice and grace periods all of
the material terms and
-62-
provisions of the Purchase Agreement and each Ground Lease to be performed
or observed by it, maintain the Purchase Agreement and each Ground Lease in
full force and effect, enforce the Purchase Agreement and each Ground Lease
(in each case other than any immaterial provisions thereof) in accordance
with its respective terms, take all action to such end as may be from time
to time reasonably requested by the Agent (including, upon the request of
the Agent, the exercise of such rights and remedies as are available to the
Borrower upon a default by the other party to the Purchase Agreement or
such Ground Lease in performing its obligations thereunder), not allow any
right to renew any Ground Lease to be forfeited or canceled, promptly
notify the Agent of any default by any party of any material provision of
any Ground Lease and, upon the reasonable request of the Agent, make to
Host Marriott and each Ground Lessor such demands and requests for
information and reports or for action as the Borrower is entitled to make
under the Purchase Agreement or any Ground Lease, as the case may be.
(ii) Perform and observe within all applicable notice and grace
periods all of the Material Terms of the Hotel Lease to be performed
or observed by it, maintain the Hotel Lease in full force and effect,
enforce the Hotel Lease in accordance with its terms, take all such
action to such end as may be from time to time reasonably requested by
the Agent (including, upon the request of the Agent, the exercise of
such rights and remedies as are available to the Borrower upon a
default by the Tenant in performing its obligations thereunder),
promptly notify the Agent of any default by the Borrower or the Tenant
of any provision of the Hotel Lease, upon the request of the Agent
exercise the Borrowers right to terminate the Hotel Lease under
Section 4.03 thereof, and, upon the reasonable request of the Agent,
make to the Tenant such demands and requests for information and
reports or for action as the Borrower is entitled to make under the
Hotel Lease; provided, however, that the Borrower shall not be
-------- -------
required to perform any term or provision of the Hotel Lease that
requires it to provide funds to the Tenant for so long as (A) the
Borrower shall be challenging in good faith its obligation to provide
such funds and (B) such challenge or non-provision of funds shall not
impair the value of the interest or rights of the Borrower thereunder
or impair the rights or interests of the Agent or any Lender. Without
limiting the preceding sentence, the Borrower will cause the Tenant to
contribute to the FF&E Reserve Account the amounts required to be
deposited therein from time to time by the Tenant pursuant to Section
8.02B of the Hotel Lease.
(l) Performance of Material Contracts. Perform and observe
---------------------------------
within all applicable notice and grace periods all of the material terms
and provisions of each Material Contract to be performed or observed by it,
maintain each such Material Contract in full force and effect, enforce each
such Material Contract (other than any immaterial provisions thereof) in
accordance with its terms, take all such action to such end as may be from
time to time reasonably requested by the Agent and, upon the reasonable
request of the Agent, make to each other party to each such Material
Contract such demands and requests for information and reports or for
action as the Borrower is entitled to make under such Material Contract.
(m) Transactions with Affiliates. Except for the transactions
----------------------------
conducted pursuant to the terms of the Hotel Lease and the terms of the
other agreements listed on Schedule 6.01(m), conduct all transactions
governed by written contracts and otherwise permitted under the Multistate
Loan Documents with any of its Affiliates on terms that are fair and
reasonable and no less favorable to the Borrower than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
-63-
(n) Maintenance of Borrowers Office. Maintain an office in
-------------------------------
Bethesda, Maryland (or such other place in the United States of America as
the Borrower shall designate in writing to the Agent upon at least thirty
(30) days' prior written notice) where notices and demands to or upon the
Borrower in respect of the Multistate Loan Documents may be given or made.
(o) Continuous Operations, Etc. (i) Conduct continuously and
--------------------------
operate actively its business (subject to temporary cessation of, or other
limitations on, its activities due to strikes, lockouts, casualties, acts
of God, war, governmental regulation or control, or other causes beyond the
reasonable control of the Borrower, provided prompt written notice thereof
--------
is given to the Lenders); (ii) keep in full force and effect and existence
all rights, licenses, permits, franchises and certificates required for and
material to the use or operation of the Hotel Properties (including all
amenities), and provided that the Borrower shall not terminate, allow to
--------
terminate or allow to lapse any rights, licenses, permits, franchises or
certificates the termination or lapse of which would be reasonably likely
to result in a decrease in the Operating Profit of a Hotel; and (iii) make
all such reports and pay all such franchise and other taxes and license
fees, and do all such other things as lawfully may be required, to maintain
all such rights, licenses, powers and franchises under the laws of the
United States and of the states or jurisdictions in which it is organized
or does business.
(p) Standard of Operations. Operate continuously, or cause to be
----------------------
operated continuously, each of the Hotels as a "Courtyard by Marriott"
hotel in accordance with the standards established by Marriott
International with respect to its Courtyard by Marriott hotels; provided
--------
that if the Borrower or Tenant loses the right to operate the Hotels as
"Courtyard by Marriott" hotels (i) the Borrower shall operate continuously
each of the Hotels under the trade name by which the Hotels shall be known
following any such event in accordance with the standards established by
the owner of such tradename with respect to the hotels of such name owned
or operated by it or, if the owner of such trade name does not own or
operate any such hotels, in accordance with the standards otherwise
established by the owner for the use of such name and (ii) in any such
event the Borrower shall operate each of the Hotels in accordance with the
standards at least as high as those employed by CMC on the Closing Date
with respect to the Hotels and to any other Courtyard by Marriott hotels
CMC manages on the Closing Date.
(q) Restrictive Covenants. Comply in all material respects with
---------------------
all covenants, conditions and restrictions affecting the Hotel Properties
unless the Lenders are insured against loss, in a form satisfactory to
Agent, for such noncompliance in the applicable policy of title insurance
issued in favor of the Lenders.
(r) Easements. (i) Submit to the Agent for approval, prior to the
---------
execution thereof, all proposed easements (including those described in
clause (a) of the definition of Permitted Liens) benefiting or affecting
any Hotel Property and (ii) cause to be deposited in the Borrower Operating
Account immediately upon the Borrowers receipt thereof, the Net Cash
Proceeds, if any, paid to the Borrower in consideration of the execution of
each easement; provided, However, that the Agent's approval shall not be
-------- -------
required for the execution of any easement benefiting or serving a Hotel
Property that does not, and will not, render title to the property
encumbered thereby unmarketable, materially adversely affect the use of
such property for its present purposes or, individually or combined with
all other easements benefiting or burdening the Hotel Properties, have a
Material Adverse Effect if the Borrower delivers to the Agent at least ten
(10) days before the execution of such easement a copy of the easement.
-64-
(s) Deferral of Ground Rent. Defer, or cause to be deferred,
-----------------------
from time to time through the Scheduled Maturity Date (or, if the Scheduled
Maturity Date is not a Business Day, through the Business Day immediately
following the Scheduled Maturity Date) rent payable under the International
Ground Leases, as and to the extent necessary to enable the Borrower to pay
principal, interest and its other Obligations under the Combined Loan
Documents when due and payable under the Combined Loan Documents and to
enable the Borrower to pay Partnership Costs when due and payable.
(t) UCC Search Reports. As promptly as practicable after the
------------------
Closing Date, furnish to the Agent completed requests for information
listing the financing statements referred to in Sections 3.01(k)(x)(A) and
all other effective financing statements filed in the jurisdictions
referred to therein that name the Borrower as debtor, together with copies
of such financing statements.
(u) Compliance by Land Trusts. Direct, and use its commercially
reasonable best efforts to cause, each Land Trust to comply, with respect
to such Land Trust's interest in any property or assets, with the
Borrower's covenants and other obligations under the Multistate Loan
Documents.
SECTION 6.02. Negative Covenants.
------------------
So long as any Multistate Advance shall remain unpaid, the Borrower
will not, at any time, without the written consent of the Required Lenders or,
if required under Section 9.01, of all of the Lenders (which consent in the case
of Section 6.02(i) will not be unreasonably withheld):
(a) Liens, Etc. (i) Create, incur, assume or suffer to exist
----------
any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, (ii) acquire or agree to acquire any property subject to any
Lien, (iii) sign or file under the Uniform Commercial Code of any
jurisdiction, a financing statement that names the Borrower as debtor, or
sign any security agreement authorizing any secured party thereunder to
file such financing statement, or (iv) assign any accounts or other right
to receive income, excluding, however, from the operation of the foregoing
--------- -------
restrictions the following:
(A) Liens created by the Multistate Loan Documents and the
California Loan Documents;
(B) Permitted Liens;
(C) Liens created by or resulting from any legal
proceedings (including legal proceedings instituted by the
Borrower) which are being contested in good faith by appropriate
proceedings, including appeals of judgments as to which a stay of
execution shall have been issued and adequate reserves shall have
been established, provided that the aggregate Obligations secured
--------
thereby and claimed to be secured thereby shall not exceed
$5,000,000 at any time outstanding;
(D) Liens on the Connecticut Hotel and the other assets of
the Borrower on which Liens have been granted by the Borrower
pursuant to the Connecticut Hotel Documents securing Indebtedness
of the Borrower permitted under Section 6.02(b)(ix) (none of
which Liens shall be on any Multistate Collateral except for the
Purchase Agreement and the Multistate
-65-
Collateral described in Section l(c)(iii) of the Multistate
Security Agreement); and
(E) Liens in favor of the equipment lessors under the
Telephone Leases, Computer Leases, TV System Leases and FF&E
Leases permitted under Section 6.02(b) on the equipment leased
under such leases and securing the Indebtedness thereunder of the
Borrower or the Tenant to the respective lessors.
(b) Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness other than:
(i) Indebtedness under the Multistate Loan Documents and
the California Loan Documents;
(ii) Indebtedness in respect of taxes, assessments and
governmental charges or levies and claims as and to the extent
permitted to remain unpaid and undischarged by Section 6.01(b);
(iii) Indebtedness for the deferred purchase price of
property or services secured by Liens described in clause (b)(ii) of
the definition of Permitted Liens;
(iv) Indebtedness secured by Liens specifically permitted
by paragraph (C) of Section 6.02(a);
(v) Unsecured Indebtedness to Host Marriott, arising by
reason of payment by Host Marriott of any amounts pursuant to the Debt
Service Guaranty which Indebtedness, if any, will be evidenced by the
Host Subordinated Notes and subject to the Subordination Agreement;
(vi) Unsecured Indebtedness to Marriott International,
arising by reason of payment by Marriott International of any amounts
pursuant to the Backup Debt Service Guaranty, the Debt and Tenant
Change Guaranty, and the MI Guaranty, which Indebtedness, if any, will
be evidenced by the International Subordinated Notes and subject to
the subordination Agreement;
(vii) Unsecured Indebtedness aggregating not more than
$20,000,000 at any time outstanding to Host Marriott, Marriott
International and the General Partner in addition to the unsecured
Indebtedness described in Section 6.02(b)(v) and Section 6.02(b)(vi)
which additional unsecured Indebtedness will be subject to the
Subordination Agreement; provided that for purposes of determining
--------
whether the Borrower is in compliance with the dollar limitation set
forth in this Section 6.02(b)(vii) there shall not be included in the
calculation of the Indebtedness described in this Section 6.02(b)(vii)
the liability accounting for rent due from the Borrower to the
International Ground Lessors as required by GAAP);
(viii) Unsecured Indebtedness to the Tenant arising by
reason of payment by the Tenant of any amounts pursuant to Section
5.05 of the Hotel Lease, which additional unsecured Indebtedness will
be subject to the Subordination Agreement;
(ix) Indebtedness under the Connecticut Hotel Documents;
-66-
(x) Endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(xi) The Telephone Leases;
(xii) The Computer Leases, the FF&E Leases and the TV
System Leases; and
(xiii) Other unsecured Indebtedness not referred to in
Section 6.02(b)(i) through Section 6.02(b)(xii) above and to Persons
other than the Loan Parties and their Affiliates, which Indebtedness
shall not exceed, in the aggregate, $10,000,000 nor have maturity
dates prior to the Scheduled Maturity Date.
(c) Lease Obligations. (i) Create, incur, assume or suffer to
exist any obligations as lessee (A) for the rental or hire of real or
personal property in connection with any sale and leaseback transaction
other than the FF&E Leases and leases relating to the Connecticut Hotel, or
(B) for the rental or hire of other real or personal property of any kind
under leases or agreements to lease (including Capitalized Leases) other
than (1) the Ground Leases, (2) the FF&E Leases (provided that the fair
---------
market value of the FF&E relating to each Hotel and leased to the Borrower
or Tenant cannot exceed at any time $200,000 in respect of such Hotel), the
TV System Leases, the Telephone Leases and the Computer Leases, (3) leases
of motor vehicles for use in connection with the operation of the Hotels
and (4) leases relating to the Connecticut Hotel.
(ii) Create, incur, assume or suffer to exist any
obligations as lessor (A) for the rental or hire of real or personal
property in connection with any sale and leaseback transaction or (B)
for the rental or hire of other real or personal property of any kind
under leases or agreements to lease (including Capitalized Leases)
other than (1) the Hotel Lease and (2) leases relating to the
Connecticut Hotel.
(d) Mergers. Merge or consolidate with any Person or permit any
-------
Person to merge into it.
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
---------------------
dispose of any Multistate Collateral or any substantial part of its assets
(excluding the Connecticut Hotel and assets relating solely to or arising
solely out of the operation of the Connecticut Hotel) other than Multistate
Collateral, or grant any option or other right to purchase, lease or
otherwise acquire any Multistate Collateral other than Inventory to be sold
in the ordinary course of its business, except (i) sales of Inventory in
the ordinary course of its business, (ii) dispositions of Collateral
permitted by the Multistate Security Agreement and (iii) so long as no
Default shall occur and be continuing, the grant of any option or other
right to purchase any asset in a transaction which would be permitted under
the provisions of the preceding clauses (i) or (ii).
(f) Investments in Other Persons. Make or hold any Investment
----------------------------
in any Person other than Investments in Cash Equivalents.
(g) Distributions, Etc. Pay any distributions with respect to
------------------
any general or limited partnership interest, purchase, redeem, retire,
defease or otherwise acquire for value any general or limited partnership
interest or any warrants, rights or options to acquire general or limited
partnership interest, now or hereafter outstanding, return any capital to
its general or limited partners as such, make any distribution of assets,
partnership interests, warrants, rights, options, obligations or securities
to its general or
-67-
limited partners as such or issue or sell any partnership interests or any
warrants, rights or options to acquire such partnership interests, except
------
that the Borrower may make distributions to its limited partners as such
and return capital to its limited partners as such in accordance with and
to the extent permitted by Section 6.02(r)(v).
(h) Change in Nature of Business. Engage in any business other
----------------------------
than the ownership, leasing and operation of the Hotels and the Connecticut
Hotel.
(i) Charter Amendments. Amend the Partnership Documents, except
------------------
to provide for the sale of additional limited partnership interests and as
required by law.
(j) Accounting Changes. Make or permit any change in accounting
------------------
policies or reporting practices of the Borrower, except as required by
generally accepted accounting principles (including as interpreted by the
Financial Accounting Standards Board) and as required by law.
(k) Prepayments, Etc. of Indebtedness. Prepay, redeem,
---------------------------------
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness, other than (i) the prepayment of
the Multistate Advances in accordance with the terms of this Agreement,
(ii) the prepayment of the California Advances in accordance with the terms
of the California Loan Agreement, (iii) the prepayment of the Host
Subordinated Notes, the International Subordinated Notes and the
Indebtedness to the Tenant described in Section 6.02(b)(viii) to the extent
permitted by Section 6.02(r)(ii) through Section 6.02(r)(iv) and the
Subordination Agreement, (iv) prepayments of other Indebtedness out of
funds retained by the Tenant pursuant to Section 5.03 of the Hotel Lease
(and consistent with Section 3 of the Attornment Agreement) to the extent
permitted by the Subordination Agreement and (v) regularly scheduled or
required repayments or redemptions of Indebtedness, or amend, modify or
change any term or condition of any Indebtedness that would or could change
the amount or time of any payment of such Indebtedness.
(l) Amendment, Etc. of Related Documents and Memoranda of
-----------------------------------------------------
Related Documents. (i) Cancel or terminate the Purchase Agreement or
-----------------
consent to or accept any cancellation or termination thereof, amend, modify
or change in any manner Section 3.18 thereof or any other material term or
condition of the Purchase Agreement or give any consent, waiver or approval
thereunder other than in respect of any immaterial term or condition
thereof, waive any default under or any breach of any material term or
condition of the Purchase Agreement, agree in any manner to any other
amendment, modification or change of any material term or condition of the
Purchase Agreement or take any other action in connection with the Purchase
Agreement that would impair the value of the interest or rights of the
Borrower thereunder or that would impair the rights or interests of the
Agent or any Lender. Without limiting the preceding sentence, the Borrower
will not amend, modify or change, or give any consent, waiver or approval
in respect of, or waive any default under or breach of, any term or
condition of the Purchase Agreement directly or indirectly affecting the
calculation or timing of any amount payable to or by the Borrower
thereunder.
(ii) Cancel or terminate any Ground Lease or consent to or
accept any cancellation or termination thereof, amend, modify or change in
any manner any material term or condition of any Ground Lease or give any
consent, waiver or approval thereunder other than in respect of any
immaterial term or condition thereof, waive any default under or any breach
of any material term or condition or any Ground Lease, agree in any manner
to any other amendment, modification or change of any material term or
condition of any Ground Lease or take any other action in connection with
any Ground Lease that would
-68-
impair the value of the interest or rights of the Borrower thereunder or
that would impair the rights or interests of the Agent or any Lender.
Without limiting the Preceding sentence, the Borrower will not amend,
modify or change, or give any consent, waiver or approval in respect of, or
waive any default under or breach of, any term or condition of any Ground
Lease directly or indirectly affecting the calculation or timing of any
amount payable to or by the Borrower thereunder or the right of the
Borrower to defer the payment of rent thereunder.
(iii) Cancel or terminate the Hotel Lease or consent to or
accept any cancellation or termination thereof, amend, modify or change in
any manner any Material Term or condition of the Hotel Lease or give any
consent, waiver or approval under any Material Term of the Hotel Lease
(excluding approvals of budgets and such other financial reports that the
Hotel Lease expressly provides the Borrower has the right to give in the
ordinary course of the Hotel Lease), waive any default under or any breach
of any Material Term of the Hotel Lease, agree in any manner to any other
amendment, modification or change of any term or condition of the Hotel
Lease or take any other action in connection with any Hotel Lease that
would impair the value of the interest or rights of the Borrower thereunder
or that would impair the rights or interests of the Agent or any Lender
except as permitted by the Attornment Agreement.
(iv) Cancel or terminate any Memorandum of Ground Lease or
consent to or accept any cancellation or termination thereof, amend, modify
or change in any manner any Memorandum of Ground Lease (other than
technical corrections to any Memorandum of Ground Lease that would not
impair the rights or interests of the Agent or any Lender), agree in any
manner to any other amendment, modification or change of any term or
condition of any Memorandum of Ground Lease or take any other action in
connection with any Memorandum of Ground Lease that would impair the rights
or interests of the Agent or any Lender.
(m) Amendment, Etc. of Material Contracts. Take any action in
-------------------------------------
connection with any Material Contract that would have a Material Adverse
Effect.
(n) Negative Pledge. Enter into or suffer to exist any
---------------
agreement prohibiting or conditioning the creation or assumption of any
Lien upon any of its property or assets other than any such agreement in
favor of the Agent and the Lenders and the Connecticut Hotel Documents.
(o) Partnerships. Become a general partner in any general or
------------
limited partnership.
(p) FF&E Reserve. Cause or permit any part of the FF&E Reserve
------------
to be used for any purpose other than as described in Section 8.02(A) of
the Hotel Lease.
(q) Partnership Costs. (i) Incur during any Tenant Fiscal Year
-----------------
Partnership Costs in excess of (A) for the Tenant Fiscal Year ending
December 31, 1994, $250,000 and (B) for each Tenant Fiscal Year thereafter,
the product of (1) $250,000 and (2) the CPI Adjustment Factor.
(ii) Incur during any Cumulative Tenant Period Partnership
Costs except to the extent that (A) Adjusted Operating Profit for such
Cumulative Tenant Period exceeds (B) (1) the amount of principal, interest
and other Obligations of the Borrower under the Combined Loan Documents due
and payable by the Borrower during such Cumulative Tenant Period pursuant
to the Combined Loan Documents (excluding (w) payments of principal and
interest due pursuant to Section 2.04(b)(i) hereof and of the
-69-
California Loan Agreement, (X) payments of principal and interest made
pursuant to Article IV of this Agreement and the California Loan Agreement
in connection with the release of a Hotel Property, (y) during the second
Cumulative Tenant Period hereunder, the amount described in clause (iv) of
the definition of "Excess Earnings Recapture-) and (z) to the extent not
included in (X), payments made to the Agent of proceeds of sales of
Multistate Collateral to the extent such proceeds are not included in Gross
Revenues and (2) the amount of principal, interest and other Obligations of
the Borrower under the Combined Loan Documents due and payable by the
Borrower during prior Cumulative Tenant Periods to the extent not
previously paid.
(r) Payment of Current Ground Rent Host Subordinated Notes,
-------------------------------------------------------
International Subordinated Notes, Deferred Ground Rent, Certain Amounts to
--------------------------------------------------------------------------
Tenant and Distributions to Partners. Pay or permit the payment of during
------------------------------------
any Cumulative Tenant Period (including during Cumulative Tenant Periods
for which the Payment Date has not yet occurred):
(i) Current Ground Rent except in an amount not in
excess of the amount by which (A) Adjusted Operating Profit for such
Cumulative Tenant Period exceeds (B) the sum of (1) the amount of
principal, interest and other Obligations of the Borrower under the
Combined Loan Documents due and payable by the Borrower during such
Cumulative Tenant Period pursuant to the Combined Loan Documents
(excluding (w) payments of principal and interest due pursuant to
Section 2.04(b)(i) hereof and of the California Loan Agreement, (x)
payments of principal and interest made pursuant to Article IV of this
Agreement and the California Loan Agreement in connection with the
release of a Hotel Property, (y) during the second Cumulative Tenant
Period hereunder, the amount described in clause (iv) of the
definition of "Excess Earnings Recapture" and (z) to the extent not
included in (x), payments made to the Agent of proceeds of sales of
Multistate Collateral to the extent such proceeds are not included in
Gross Revenues), (2) the amount of principal, interest and other
Obligations of the Borrower under the Combined Loan Documents due and
payable by the Borrower during prior Cumulative Tenant Periods to the
extent not previously paid and (3) Partnership Costs due and payable
during such Cumulative Tenant Period; provided that payments in excess
of those permitted under this Section 6.02(r)(i) of Current Ground
Rent as a result of incorrect projections by the Tenant or the
Borrower of Adjusted Operating Profit shall not constitute a breach of
this Section 6.02(r)(i) if such overpayments are repaid to the Agent
by the International Ground Lessors in accordance with Section 4.03(b)
of the International Ground Leases; and provided further that
notwithstanding the preceding provisions of this Section 6.02(r)(i)
the Borrower may pay (or permit the Tenant to pay on its behalf)
Current Ground Rent as and when due under the International Ground
Leases from and after the date following the Scheduled Maturity Date
(or, if the Scheduled Maturity Date does not occur on a Business Day,
from and after the expiration of the Business Day immediately
following the Scheduled maturity Date);
(ii) Deferred Ground Rent and any interest thereon except
in an amount not in excess of the amount of Excess Earnings Recapture,
if any, permitted to be retained by the Borrower for such Cumulative
Tenant Period pursuant to Section 2.04(b)(i) and except as permitted
by Section 5.06 of the Hotel Lease; provided that (A) payments of
interest shall be calculated at a rate not in excess of the rate
specified in the applicable International Ground Lease and (B) no
Event of Default shall have occurred and be continuing immediately
before and after giving effect to each such payment; and provided
--------
further that notwithstanding the preceding provisions of this Section
-------
6.02(r)(ii) the Borrower may pay (or permit the
-70-
Tenant to pay on its behalf) Deferred Ground Rent and interest thereon
as and when due under the International Ground Leases from and after
the date following the Scheduled Maturity Date (or, if the Scheduled
Maturity Date does not occur on a Business Day, from and after the
expiration of the Business Day immediately following the Scheduled
Maturity Date);
(iii) Principal and interest on the Host Subordinated Notes
and the International Subordinated A Notes except in an amount not in
excess of the amount of Excess Earnings Recapture, if any, permitted
to be retained by the Borrower for such Cumulative Tenant Period
pursuant to Section 2.04(b)(i) and except as permitted by Section 5.06
of the Hotel Lease; provided that (A) payments of interest shall be
calculated at a rate not in excess of the rate specified in such
promissory notes, (B) Deferred Ground Rent and interest thereon shall
have been paid in full at the time of each such payment, and (C) no
Event of Default shall have occurred and be continuing immediately
before and after giving effect to each such payment;
(iv) Payments of principal and interest on the
International Subordinated Notes (other than the International
Subordinated A Notes), payments of principal and interest on the
Indebtedness to the Tenant described in Section 6.02(b)(viii) or
refunds of any Additional Rent (as defined in the Hotel Lease and
consistent with Section 3 of the Attornment Agreement) during any
Cumulative Tenant Period except in an amount not in excess of the
amount of Excess Earnings Recapture, if any, permitted to be retained
by the Borrower for such Cumulative Tenant Period pursuant to Section
2.04(b)(i) and except as permitted by Section 5.06 of the Hotel Lease;
provided that (A) payments of interest described above shall be
calculated at a rate not in excess of the rate specified in (as
applicable) the International Subordinated Notes or Section 5.05 of
the Hotel Lease, (B) each of (1) principal and interest on the Host
Subordinated Notes and the International Subordinated A Notes and (2)
Deferred Ground Rent and interest thereon shall have been paid in full
at the time of each such payment and (C) no Event of Default shall
have occurred and be continuing immediately before and after effect to
such payment; or
(v) Distributions to its limited partners as such or
returns of capital to its limited partners as such during any
Cumulative Tenant Period, in each case except in an amount not in
excess of the amount of Excess Earnings Recapture, if any, permitted
to be retained by the Borrower for such Cumulative Tenant Period
pursuant to Section 2.04(b)(i); provided that (A) each of (1)
--------
principal and interest on the Host Subordinated Notes and the
International Subordinated A Notes and (2) Deferred Ground Rent and
interest thereon shall have been paid in full at the time of each such
distribution or return of capital and (B) no Default shall have
occurred and be continuing immediately before or after giving effect
to each such distribution or return of capital.
SECTION 6.03. Reporting Requirements.
----------------------
So long as any Multistate Advance shall remain unpaid, the Borrower
will, unless the Required Lenders shall otherwise consent in writing, furnish to
the Agent for the benefit of the Lenders the financial statements, notices and
other items described below in this Section 6.03. Whenever any financial
statement, notice or other item shall be stated to be due on a day other than a
Business Day, such financial statement, notice or other item shall be due on the
nest succeeding Business Day. All financial statements relating to earnings and
expenses shall set forth
-71-
separately or otherwise identify all extraordinary and non-recurring items to
the extent required by GAAP.
(a) Borrower Quarterly Financial Statements. As soon as practicable,
---------------------------------------
and in any event within seventy-five (75) days after the end of each
Borrower Accounting Quarter (other than the last Borrower Accounting
Quarter) in each Borrower Fiscal Year, an unaudited balance sheet of the
Borrower as at the end of such Borrower Accounting Quarter and an unaudited
statement of income and cash flow of the Borrower for each such Borrower
Accounting Quarter and for that part of the Borrower Fiscal Year then
ended, all in reasonable detail and satisfactory in scone to the Required
Lenders, setting forth in each case in comparative form the corresponding
figures for the corresponding period(s) of the preceding Borrower Fiscal
Year (except that the balance sheet shall be compared to the corresponding
figures for the preceding Borrower Fiscal Year), which statements shall, as
a whole, fairly present the financial position of the Borrower as at the
end of the periods involved and the results of the operations of the
Borrower for such periods, and which shall be certified by an Authorized
Accounting Officer as having been prepared under his or her supervision in
accordance with GAAP, subject to year-end audit adjustments, and that he or
she knows of no facts inconsistent with such Financial Statements, together
with a certificate of such Authorized Accounting Officer stating that no
Default has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof, the period of its
existence and the action that the Borrower has taken and proposes to take
with respect thereto.
(b) Quarterly Calculations of Excess Earnings Recapture. As soon as
---------------------------------------------------
practicable, and in any event on or before each Payment Date, (i) a
schedule in the form set forth as Schedule 6.03(b) of the computations used
by the Borrower in determining Excess Earnings Recapture for the most
recently ended Cumulative Tenant Period and the amount of principal of the
Combined Advances prepaid by the Borrower pursuant to Section 2.04(b) of
this Agreement and Section 2.04(b) of the California Loan Agreement on
account thereof and the payment of any unused Multistate Withheld Amount
pursuant to Section 2.04(b)(iv) and which shall be certified by an
Authorized Accounting Officer as having been prepared under his or her
supervision, (ii) a schedule in form satisfactory to the Agent, which shall
be certified by an Authorized Accounting Officer as having been prepared
under his or her supervision, showing, for the International Ground
Lessors, the repayments of Deferred Ground Rent and interest thereon during
the most recently ended Cumulative Tenant Period and the outstanding amount
of Deferred Ground Rent owing to such International Ground Lessors at the
end of such Cumulative Tenant Period and (iii) if the Borrower will be
withholding any Multistate Withheld Amount on such Payment Date pursuant to
Section 2.04(b)(iv), a schedule of the projections and computations used by
the Borrower supporting its need for and calculation of the Multistate
Withheld Amount, which shall be certified by an Authorized Accounting
Officer as having been prepared under his or her supervision. For the
schedule due on or before the May 1, 1994 Payment Date, the August 1, 1994
Payment Date and the November 1, 1994 Payment Date, such schedule shall
also set forth the Transaction Costs (as defined in the definition of
"Excess Earnings Recapture" paid by the Borrower after the Closing Date
during the Cumulative Tenant Period relating to such Payment Date.
(c) [Intentionally omitted]
(d) Borrower Annual Financial Statements. (i) As soon as practicable,
------------------------------------
and in any event within one hundred twenty (120) days after the end of each
Borrower Fiscal Year, a balance sheet of the Borrower as at the end of such
Borrower Fiscal Year and a statement of income, partners capital/deficit
and cash flow of the Borrower for such Borrower Fiscal Year, setting forth
in each case in comparative form the corresponding
-72-
figures for the preceding Borrower Fiscal Year, prepared in accordance with
GAAP, together with (A) (1) an audit report and opinion in respect of such
Financial Statements of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or other independent
certified public accountants of recognized national standing selected by
the Borrower and reasonably acceptable to the Required Lenders, which
report and opinion shall be unqualified as to the scope of the audit and
reasonably satisfactory to the Required Lenders in all other respects and
(2) the written statement of the accountants described in clause (1) that,
in making the examination necessary for their report and opinion on such
Financial Statements, they have obtained no knowledge of any condition,
event or act that constitutes a Default, or, if such accountants shall have
obtained such knowledge, a statement as to the nature and status thereof,
and (B) a certificate of an Authorized Accounting Officer, stating that (1)
such Financial Statements have been prepared under his or her supervision
in accordance with GAAP and that he or she knows of no facts inconsistent
with such Financial Statements and (2) no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as
to the nature thereof, the period of its existence and the action that the
Borrower has taken and proposes to take with respect thereof.
(ii) No later than the time of delivery of the Financial Statements
described in Section 6.03(d)(i), (A) schedules in form and substance
satisfactory to the Agent showing for the Tenant Fiscal Year then ended the
calculation of Excess Earnings Recapture for the Tenant Fiscal Year as a
single period rather than for each Cumulative Tenant Period included in the
Tenant Fiscal Year (the "Annualized Recapture Amount") and (B) a
---------------------------
certificate of an Authorized Accounting Officer stating that such schedules
have been prepared under his or her supervision. The schedules delivered by
the Borrower shall be prepared using (w) the Financial Statements then
delivered pursuant to Section 6.03(d)(i), (X) if the beginning portion of
the Tenant Fiscal Year is included in the Borrower Fiscal Year preceding
the Borrower Fiscal Year covered by the delivered Financial Statements, the
audited Financial Statements for the preceding Borrower Fiscal Year, (y) if
the ending portion of the Tenant Fiscal Year is included in the Borrower
Fiscal Year in effect at the time of delivery of the audited Financial
Statements, unaudited Financial Statements of the Borrower covering such
period and (z) such supplemental schedules as shall be reasonably
satisfactory to the Agent identifying the location on such Financial
Statements of the items used to calculate the Annualized Recapture Amount.
(iii) Notwithstanding any provision of this Agreement to the
contrary, the Annualized Recapture Amount for Tenant Fiscal Year 1994 shall
be computed for all of such Tenant Fiscal Year, and for purposes of such
calculation, (A) "Adjusted Operating Profit. shall include all cash and
cash equivalents of the Borrower on the first day of the Tenant Fiscal Year
(including all cash held by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Funds Distributor under the
Escrow Agreement among the Borrower, the Agent and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Funds
Distributor executed in connection with the Forbearance Agreement) other
than (1) funds in the FF&E Reserve (as defined in the 1986 Management
Agreement, (2) the amount of funds on deposit in local checking accounts
associated with each Hotel on the Closing Date (not to exceed $490,000 in
the aggregate) and of reasonable ▇▇▇▇▇ cash funds at each Hotel on the
Closing Date (not to exceed $245,000 in the aggregate) and (3) funds
relating only to the Connecticut Hotel, (B) "Adjusted Operating Profit.
shall not include interest and other amounts earned by the Borrower on
funds in the FF&E Reserve (as defined in the 1986 Management Agreement)
from and after the beginning of the Tenant Fiscal Year and (C) there shall
be deducted from Adjusted Operating Profit in calculating Excess Earnings
Recapture (to the extent not otherwise deducted therefrom) (1) Transaction
Costs (as defined in the definition of "Excess Earnings Recapture", (2)
interest in respect of the 1988 Multistate Loans and the 1988 California
Loans paid by the Borrower under the Forbearance Agreement from and after
the beginning of the Tenant Fiscal Year and (3) Current Ground Rent paid by
the Borrower or CMC to the International Ground Lessors
-73-
from and after the beginning of the Tenant Fiscal Year and prior to the
first Cumulative Tenant Period hereunder in accordance with the
International Ground Leases.
(e) [Intentionally omitted]
(f) Annual Operating Projections of the Mortgaged Hotels and Repairs
----------------------------------------------------------------
and Equipment Estimate. Promptly after the Borrower's receipt thereof, and
----------------------
in any event within seven (7) days after the beginning of each Tenant
Fiscal Year, (i) an annual operating projection for the Hotels, on a
consolidated basis, for such Tenant Fiscal Year prepared by the Tenant
pursuant to Section 9.03A of the Hotel Lease and including a projection of
the average annual occupancy and average annual room rate for each Hotel
for such Tenant Fiscal Year together with (ii) the Repairs and Equipment
Estimate (as defined in Section 8.02D of the Hotel Lease) prepared by the
Tenant pursuant to section 8.02D of the Hotel Lease.
(g) Annual Five-Year Projections. Promptly after the Borrower's
----------------------------
receipt thereof, copies of any projections with respect to the Hotels on a
consolidated basis for each of the five (5) Tenant Fiscal Years commencing
with the immediately following Tenant Fiscal Year that are prepared by the
Tenant pursuant to Section 9.03B of the Hotel Lease.
(h) Annual Building Estimate. Promptly after the Borrower's receipt
------------------------
thereof, and in any event within seven (7) days after the beginning of each
Tenant Fiscal Year, copies of the Building Estimate (as defined in Section
8.03A of the Hotel Lease) prepared by the Tenant pursuant to Section 8.03A
of the Hotel Lease.
(i) Annual Accounting of the Tenant. (i) Promptly after the Borrowers
-------------------------------
receipt thereof, and in any event within eighty-two (82) days after the end
of each Tenant Fiscal Year, copies of the annual accounting prepared by the
Tenant pursuant to Section 9.01 of the Hotel Lease and (ii) promptly after
the Borrowers receipt thereof, such financial information regarding the
operations of each Hotel for the period covered by the annual accounting as
is customarily prepared by the Tenant from time to time.
(j) Certificates Regarding Defaults. Within two (2) Business Days
-------------------------------
after any officer of the General Partner obtains Knowledge of any Default,
a statement of an executive officer of the General Partner, specifying the
nature of such Default, the period of existence thereof and what action the
Borrower has taken and proposes to take with respect thereto.
(k) Accountants' Reports. Promptly upon request of any Lender through
--------------------
the Agent, copies of any reports submitted to the Borrower by its
accountants in connection with any examination of the financial statements
of the Borrower made by such accountants, and copies of any other
communications received by the Borrower or the General Partner from such
accountants relative to any financial statements or audit or internal
controls and systems of the Borrower.
(l) Copies of Other Reports. Promptly upon their becoming available,
-----------------------
copies of all financial statements, reports, notices and statements sent or
made available generally by the Borrower to its limited partners, and of
all reports, registration statements and prospectuses filed by the Borrower
with any securities exchange or with the Securities and Exchange
Commission, or any governmental authority succeeding to any of its
functions.
(m) Proposed Amendments to Partnership Documents. Not less than ten
--------------------------------------------
(10) days prior to the execution thereof, a true and complete copy of any
proposed amendment
-74-
to the Partnership Documents (other than amendments which merely reflect
the admission or withdrawal of limited partners).
(n) Material Adverse Change. (i) Promptly following the occurrence
-----------------------
thereof, notice of any Borrower Material Adverse Change and (ii) promptly
after the Borrower has Knowledge thereof, notice of any other Material
Adverse Change.
(o) Litigation. Promptly after the commencement thereof, notice of
----------
all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (i) affecting the Borrower of the
type described in Section 5.01(i), (ii) affecting the Borrower in which
injunctive relief or other equitable remedy is sought or (iii) that may
materially and adversely affect any of the Hotels.
(p) Environmental Conditions. Promptly after the Borrower has
------------------------
Knowledge thereof, notice of any condition or occurrence on any property of
any Loan Party described in the Multistate Mortgages that could reasonably
be expected to result in a material liability under, or a material
noncompliance by any Loan Party with, any Environmental Law or
Environmental Permit or would be reasonably likely to (i) form the basis of
an Environmental Action against any Loan Party or such property that could
have a Material Adverse Effect or (ii) cause any such property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(q) Insurance Information. Promptly, and in any event within thirty
---------------------
(30) days after its receipt thereof, the certificates of insurance
(including any riders and amendments thereto) evidencing the insurance
policies described in Section 6.01(e) and required to be furnished to the
Agent thereunder.
(r) Surveys Regarding Easements. Promptly upon its becoming
---------------------------
available, a survey, and the surveyor's written descriptions, with respect
to any easement proposed to be executed by the Borrower benefiting or
affecting any Hotel Property, showing the portion of such Hotel Property
and any adjoining property affected by such easement.
(s) Rent Letters. As soon as practicable and in any event within
------------
twenty-seven (27) days after the end of each Tenant Accounting Period, the
Rent Letter (as defined in Section 5.04A of the Hotel Lease) prepared by
the Tenant for such Tenant Accounting Period pursuant to Section 5.04A of
the Hotel Lease.
(t) Executive Officers. Promptly, and in any event within fifteen
------------------
(15) days after the occurrence thereof, notice and a description of any
change in the titles of the officers of the Borrower or the General Partner
who in the ordinary course of their responsibilities handle, or will be
handling, matters relating to the operation of the Hotel Properties and the
administration of any of the Combined Loan Documents.
(u) Other Information. Such other reasonable information respecting
-----------------
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, as the Lenders, or any of them,
may from time to time reasonably request through the Agent.
-75-
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default.
-----------------
Subject to the provisions of Sections 7.02 and 7.03, if any of the
following events ("Events of Default") shall occur and be continuing:
-----------------
(a) the Borrower shall fail to pay any principal of any Multistate
Advance when the same becomes due and payable (excluding any regularly
scheduled principal payments due under Section 2.02 and 2.03 prior to the
Scheduled Maturity Date (giving effect to any extensions made pursuant to
Section 2.03(a) or 2.03(b)), the Borrower's failure to pay which are
governed by Section 7.01(b)); or
(b) the Borrower shall fail to pay any principal of any Multistate
Advances not included in Section 7.01(a) or any interest on any Multistate
Advance when the same becomes due and payable and such failure shall remain
unremedied for three (3) days; or
(c) any Loan Party shall fail to make any other payment due under any
Multistate Loan Document when the same becomes due and payable and such
failure shall remain unremedied for ten (10) days after notice thereof
shall have been given to the Borrower by the Agent or any Lender; or
(d) (i) any representation, warranty or written statement made by
or on behalf of any Loan Party (or any of its officers) under or in
connection with any Multistate Loan Document (including, without
limitation, in any report, certificate, financial statement or other
instrument delivered to any Lender or the Agent prior to or after the date
hereof (other than those described in clause (ii) of this Section 7.01(d)))
shall prove to have been incorrect in any material respect when made or
(ii) any representation, or warranty made by the Borrower under the last
sentence of Article V of this Agreement shall prove to have been incorrect
in any material respect when made and the event or condition which is the
subject of such representation or warranty would be reasonably likely to
have a Material Adverse Effect; or
(e) the Borrower shall fail to perform or observe any term, covenant
or condition contained in Section 6.01(9), 6.01(k), 6.01(m) or 6.01(s) or
in Section 6.02; or
(f) the Borrower shall fail to perform or observe any term, covenant
or condition contained in Section 6.03 if such failure shall remain
unremedied for ten (10) days after written notice thereof shall have been
given to the borrower by the Agent or any Lender; or
(g) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 6.01 (other than those listed in Section
7.01(e)) if such failure shall remain unremedied for thirty (30) days after
written notice thereof shall have been given to the Borrower by the Agent
or any Lender, provided, however, that if such failure is not remedied
-------- -------
within such thirty (30) day period, is of such a nature that it is capable
of being cured within an additional one hundred fifty (150) day period and
is not, and does not become, a failure that the Required Lenders believe in
their reasonable judgment could have a Material Adverse Effect (by itself
or combined with any other Defaults that shall have occurred and be
continuing), such failure shall not be an Event of Default if the Borrower
shall have promptly taken appropriate actions to remedy such
-76-
failure, shall diligently pursue such actions and such failure shall be
remedied before the expiration of one hundred eighty (180) days after such
notice shall have been given, and provided further that if such failure is
-------- -------
not remedied within the thirty (30) day period described in the first part
of this Section 7.01(g), is not of such a nature that it is capable of
being cured within an additional one hundred fifty (150) day period,
relates to no more than two (2) Hotel Properties and the Borrower is not
relying on this proviso or the corresponding proviso in Section 7.01(h)
with respect to any other failure involving more than two (2) Hotel
Properties (including the Hotel Property or Hotel Properties to which the
failure described in this Section 7.01(9) relates), such failure shall not
be an Event of Default if the Borrower causes the Hotel Property or Hotel
Properties to which such failure relates to be sold in accordance with the
provisions of Article IV within ninety (90) days after such written notice
shall have been given; or
(h) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Multistate Loan Document on its part to be
performed or observed, if such failure shall remain unremedied for thirty
(30) days after written notice thereof shall have been given to the
Borrower by the Agent or any Lender, provided, however, that if such
-------- -------
failure is not remedied within such thirty (30) day period, is of such a
nature that it is capable of being cured within an additional one hundred
fifty (150) day period and is not, and does not become, a failure that the
Required Lenders believe in their reasonable judgment could have a Material
Adverse Effect (by itself or combined with any other Defaults that shall
have occurred and be continuing), such failure shall not be an Event of
Default if such Loan Party shall have promptly taken appropriate actions to
remedy such failure, shall diligently pursue such actions and such failure
shall be remedied before the expiration of one hundred eighty (180) days
after such written notice shall have been given, and provided further that
-------- --------
if such failure is not remedied within the thirty (30) day period described
in the first part of this Section 7.01(h), is not of such a nature that it
is capable of being cured within an additional one hundred fifty (150) day
period, relates to no more than two (2) Hotel Properties and the Borrower
is not relying on this proviso or the corresponding proviso in Section
7.01(g) with respect to any other failure involving more than two (2) Hotel
Properties (including the Hotel Property or Hotel Properties to which the
failure described in this Section 7.01(h) relates), such failure shall not
be an Event of Default if the Borrower causes the Hotel Property or Hotel
Properties to which such failure relates to be sold in accordance with
Article IV within ninety (90) days after such written notice shall have
been given; or
(i) the Borrower or the General Partner shall fail to pay any
principal of, premium or interest on or any other amount payable in respect
of, any Indebtedness that is outstanding in a principal or notional amount
of at least $1,000,000 in the aggregate (but excluding Indebtedness
outstanding hereunder) of such Loan Party, when the same becomes due and
payable (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 any other event shall occur or condition shall exist
under any agreement or instrument relating to any 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
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holders thereof to
cause, such Indebtedness to mature (unless and except and for so long as,
in any of the foregoing cases, the holders of such Indebtedness with at
least the amount of such Indebtedness with power under the agreement or
instrument relating thereto to waive such event or condition or recognize
that such event or condition has been cured to their satisfaction waive
such event or condition or recognize such event or condition as cured); or
any such Indebtedness shall be declared to be due and payable or required
to be prepaid or redeemed (other than by a
-77-
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
(j) Host Marriott or any of its Material Subsidiaries shall fail to
pay any principal of, premium or interest on or other amount in respect of
any Indebtedness that is outstanding in a principal or notional amount of
at least $50,000,000 in the aggregate, when the same becomes due and
payable (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 any other event shall occur or condition shall exist
under any agreement or instrument relating to any 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
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holder thereof to
cause, such Indebtedness to mature (unless and except and for so long as,
in any of the foregoing cases, the holders of such Indebtedness with at
least the amount of such Indebtedness with power under the agreement or
instrument relating thereto to waive such event or condition or recognize
that such event or condition has been cured to their satisfaction waive
such event or condition or recognize such event or condition as cured); or
any such Indebtedness shall be declared to be due and payable or required
to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Indebtedness shall be required to be made,
in each case prior to the stated maturity thereof; provided, however, that
-------- -------
none of the foregoing matters with respect to any Indebtedness of Host
Marriott or any of its Material Subsidiaries shall be an Event of Default
under this Section 7.01(j) if and for so long as both (i) (A) the principal
remedy with respect to such matters under the agreements relating to such
Indebtedness and applicable law of the holders of such Indebtedness is to
foreclose upon or otherwise acquire the properties on which Host Marriott
or its Material Subsidiaries shall have granted a Lien to secure such
Indebtedness and (B) the aggregate cost or other economic impact to Host
Marriott and its Material Subsidiaries (excluding any cost or other
economic impact to the extent it shall have been reduced or eliminated by
the taking of any action by Marriott International or its Material
Subsidiaries under the agreements relating to such Indebtedness or
otherwise) of all other rights and remedies available to the holders of all
such Indebtedness with respect to such matters would not (together with the
outstanding principal or notional amount of all other Indebtedness not
covered by this proviso but described in this Section 7.01(j) for which any
matter specified in this Section 7.01(j) shall have occurred and be
continuing) exceed $50,000,000 and (ii) such matters, including the rights
and remedies available in respect of such matters, would not be reasonably
likely to have a Host Material Adverse Effect; or
(k) Marriott International or any of its Material Subsidiaries
(excluding the Tenant and any International Ground Lessor) shall fail to
pay any principal of or premium or interest on any MI Debt which is
outstanding in a principal amount of at least $50,000,000 in the aggregate,
when the same becomes due and payable (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 MI Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating
to any such MI Debt 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 accelerate, or to permit the acceleration of, the
maturity of such MI Debt (unless and except and for so long as, in any of
the foregoing cases, the holders of such Indebtedness with at least the
amount of such Indebtedness with power under the agreement or instrument
relating thereto to waive such event or condition or
-78-
recognize that such event or condition has been cured to their satisfaction
waive such event or condition or recognize such event or condition as
cured); or any such MI Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment, including, without limitation, a prepayment required in
connection with the sale of the sole asset or all assets securing such MI
Debt), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such MI Debt shall be required to be made, in each case
prior to the stated maturity thereof; provided, however, that if there is
-------- -------
acceleration or an event permitting acceleration of any MI Debt which is
included under this Section 7.01(k) solely because of a Guarantee by
Marriott International or one of its Material Subsidiaries, an Event of
Default will not exist under this Section 7.01(k) so long as Marriott
International or such Material Subsidiary, as the case may be, fully
performs its obligations in a timely manner under such Guarantee; and
provided, further, that none of the foregoing matters with respect to any
-------- -------
MI Debt shall be an Event of Default under this Section 7.01(k) if and for
so long as the only remedy with respect to such matters under the
agreements relating to such MI Debt and applicable law of the holders of
such MI Debt is to foreclose upon or otherwise acquire the properties on
which MI or its Material Subsidiaries have granted a Lien to secure such MI
Debt; or
(l) the Borrower or the General Partner 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 any such
Loan Party 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 it (but not instituted by it) that is being diligently contested by
it in good faith, either such proceeding shall remain undismissed or
unstayed for a period of sixty (60) days, or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its property)
shall occur; or any such Loan Party shall take any action to authorize any
of the actions set forth above in this subsection (1); or
(m) Host Marriott, Marriott International or any of their respective
Material Subsidiaries (excluding the Borrower, the General Partner, the
Tenant and any International Ground Lessor) 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 any such
Loan Party or any of such 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 it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall
remain undismissed or unstayed for a period of sixty (60) days, or any of
the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial
part of its property) shall occur; or any such Loan Party or any such
Material Subsidiaries shall take any action to authorize any of the actions
set forth above in this subsection (m); or
-79-
(n) (i) any judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Borrower or the General Partner or
(ii) any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against Host Marriott, Marriott International
or any of their respective Material Subsidiaries (excluding the Tenant, the
General Partner and any International Ground Lessor) and in either case
described in clause (i) or clause (ii) either (A) enforcement proceedings
(excluding enforcement proceedings against (1) the Connecticut Hotel, the
parcel of land on which the Connecticut Hotel is located, all easements and
appurtenances relating to such land and other property associated only with
the Connecticut Hotel (and not the Hotel Properties) and (2) any Hotel
Property released prior to the commencement of such enforcement proceedings
from its Multistate Mortgage, Multistate Assignment of Leases and the other
Multistate Collateral Documents encumbering such Hotel Property pursuant to
Article IV) shall have been commenced by any creditor upon such judgment or
order and remain unstayed or (B) (1) in the case of any such judgment or
order against the Borrower or the General Partner, there shall be any
period of thirty (30) consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect and (2) in the case of any judgment or order against
Host Marriott, Marriott International or any of their respective Material
Subsidiaries (excluding the Borrower, the General Partner, the Tenant and
any International Ground Lessor), from and after thirty (30) days following
such judgment or order there shall be any period of thirty (30) consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(o) [Intentionally omitted]
(p) any Multistate Loan Document after delivery thereof pursuant to
Section 3.01 shall for any reason cease to be valid and binding on or
enforceable against any Loan Party (or Land Trust) party to it in any
material respect, or any such Loan Party (or Land Trust) shall so state in
writing; or
(q) any Multistate Collateral Document after delivery thereof pursuant
to Section 3.01 shall for any reason (other than pursuant to and then only
to the extent permitted by the terms thereof) cease to create a valid and
perfected first priority Lien on any Hotel, the Land on which any Hotel is
located or any material portion of any other Multistate Collateral
purported to be covered thereby; or
(r) (i) the Tenant shall fail to perform or observe any Material Term
contained in the Hotel Lease on its part to be performed or observed and
such failure shall not be cured (including by Marriott International under
the Hotel Lease Guaranty) within any applicable notice or grace period
specified therein, (ii) Host Marriott shall fail to perform or observe any
material term or condition contained in the Purchase Agreement on its part
to be performed or observed and such failure shall not be cured within any
applicable notice or grace period specified therein, or (iii) any party to
any Related Document or Third Party Ground Lease shall, without the prior
consent of the Required Lenders, terminate or seek to terminate such
Related Document or Third Party Ground Lease, except (A) in the case of any
Hotel Lease, in and to the extent, if any, permitted in the Attornment
Agreement and (B) in the case of any International Ground Lessor seeking to
terminate one or more International Ground Leases, for so long as an
injunction against each attempted termination shall be in effect, the
Borrower shall have promptly taken appropriate actions to contest such
attempted termination, the Borrower shall diligently pursue such actions,
and such attempted termination, if successful, would not be reasonably
likely to have a Material Adverse Effect; or
-80-
(s) the General Partner shall cease to be the sole general partner of
the Borrower or the General Partner shall cease to be a direct or indirect
wholly owned Subsidiary of Host Marriott or Marriott International; or
(t) the Tenant shall cease to be a direct or indirect wholly owned
Subsidiary of Marriott International; or
(u) an "Event of Default" (as defined in the California Loan
Agreement) shall have occurred and be continuing under the California Loan
Agreement;
then, end in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower declare the
Multistate Notes, all interest thereon and all other amounts payable under this
Agreement and the other Multistate Loan Documents to be forthwith due and
payable, whereupon the Multistate Notes, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an actual or deemed
-------- -------
entry of an order for relief with respect to any Loan Party under the Bankruptcy
Code, the Multistate Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 7.02. Cure of Certain Events of Default by Host Marriott and
------------------------------------------------------
Marriott International.
----------------------
(a) Notwithstanding Section 7 01(c), the failure of the Borrower to
pay any amount described in any such Section (i) shall not become an Event
of Default if, before the expiration of the applicable grace period, if
any, specified in such Section for the payment of such amount, Host
Marriott pays such amount pursuant to the Debt Service Guaranty or Marriott
International pays such amount pursuant to the Backup Debt Service Guaranty
(including in either case all interest and other amounts, if any, due on
account of the late payment of such Obligations of the Borrower) and shall
not be a Default from and after the time Host Marriott or Marriott
International so pays such amount and (ii) if clause (i) is not satisfied,
shall no longer be an Event of Default from and after such time (if the
Multistate Notes, all interest thereon and all other amounts payable under
the Multistate Loan Documents shall not have been declared or automatically
become due and payable under Section 7.01), if any, as Host Marriott pays
such amount pursuant to the Debt Service Guaranty or Marriott International
pays such amount pursuant to the Backup Debt Service Guaranty (including in
either case all interest and other amounts, if any, due on account of the
late payment of such Obligations of the Borrower).
(b) Notwithstanding Section 7.01(t), the change in the ownership of
the Tenant described therein (i) shall not become an Event of Default if
before such change, as applicable, (A) Marriott International makes the
payment described in Section 3 of the MI Guaranty and Section 2 of the Debt
and Tenant Change Guaranty or (B) Marriott International makes the payment
described in Section 2 of the Debt and Tenant Change Guaranty and the
events described in Section 5 of the MI Guaranty occur when specified in
such Section 5 in satisfaction of the obligation of Marriott International
to make the payment described in Section 3 of the MI Guaranty and (ii) if
clause (i) is not satisfied, shall cease to be an Event of Default from and
after such time (if the Multistate Notes, all interest thereon and all
other amounts payable under the Multistate Loan Documents shall not have
been declared or automatically become due and payable under Section 7.01),
as applicable, clause (A) or clause (B) of clause (i) is satisfied.
-81-
SECTION 7.03. Events of Default with Respect to Marriott
------------------------------------------
International, Host Marriott and their Subsidiaries.
---------------------------------------------------
(a) Notwithstanding Section 7.01, from and after such time as Host
Marriott or Marriott International has no Obligations under any Multistate
Loan Document, no Default or Event of Default shall be deemed to have
occurred on account of any matter determined in Section 7.01, the
definition of Material Adverse Change or the definition of Material Adverse
Effect by specific reference to (a) if Host Marriott has no such
Obligations, Host Marriott or any of its Subsidiaries (including where Host
Marriott is referred to by use of the phrase "Loan Party-) and, in
furtherance hereof, the term Loan Party. therein shall be construed to
exclude Host Marriott if Host Marriott has no such Obligations, or (b) if
Marriott International has no such Obligations, Marriott International or
any of its Subsidiaries (including where Marriott International is referred
to by use of the phrase "Loan Party" and in furtherance hereof, the term
"Loan Party" therein shall be construed to exclude Marriott International
if Marriott International has no such Obligations, provided that this
---------
Section 7.03 does not apply to Section 7.01(s) or Section 7.01(t), and
provided further that this Section 7.03 shall not limit the occurrence of
----------------
any Default or Event of Default on account of any matter determined by
reference to any Loan Party that is a Subsidiary of Host Marriott or
Marriott International.
(b) Notwithstanding Section 7.01, and if the Backup Debt Service
Guaranty is in full force and effect, no Default or Event of Default shall
be deemed to have occurred on account of any matter determined in Section
7.01(l), 7.01(m) or 7.01(n), in each case by reference to Host Marriott or
any of its Material Subsidiaries (excluding the General Partner), if at the
time of the occurrence of such matter (a "Host Event", and for so long as
such Host Event shall be continuing, Marriott International shall be in
compliance with the financial covenants (including, without limitation, any
interest coverage ratio, leverage ratio, net worth test, working capital
ratio, fixed charge coverage ratio or minimum EBITDA requirement) contained
in the MI Senior Credit Facility (which financial covenants are, on the
Closing Date, contained in Sections 6.01(1), 6.01(m) and 6.01(n) of the
Closing Date MI Revolver); provided that if during all or a portion of the
-------- ----
time during which such Host Event shall have occurred and be continuing (i)
there shall be no MI Senior Credit Facility in effect or (ii) the MI Senior
Credit Facility in effect shall include no financial covenants which
Marriott International shall then be obligated to satisfy by itself or on a
Consolidated basis (whether because such MI Senior Credit Facility shall
include no such financial covenants, Marriott International's compliance
with all such financial covenants shall have been waived before or after
any acceleration hereunder or otherwise), then no Default or Event of
Default shall be deemed to have occurred on account of such Host Event
during such time if Marriott International shall be maintaining at the end
of each fiscal quarter of Marriott International commencing with the fiscal
quarter ending immediately prior to the occurrence of the Host Event, for
the Rolling Period ending at the end of each such fiscal quarter, a ratio
of Consolidated EBITDA to Consolidated Net Interest Expense of not less
than 1.5 to 1. For purposes of the preceding sentence, the terms
"Consolidated", "EBITDA". and "Net Interest Expense" (and all defined terms
used in the Closing Date MI Revolver in connection with the definition of
such terms) shall have the respective meanings specified in the Closing
Date MI Revolver (regardless of any event or occurrence with respect to the
Closing Date MI Revolver, the Amended MI Revolver or Marriott
International's obligations thereunder, including without limitation any
amendment of or waiver to the Closing Date MI Revolver, any termination of
the Closing Date MI Revolver or the Amended MI Revolver or any provision of
the Closing Date MI Revolver not being enforceable)
SECTION 7.04. Specific Performance.
--------------------
-82-
Subject to the provisions of Section 2.12 hereof, in the event one or
more Events of Default shall have occurred and be continuing, the Lenders may
proceed, to the extent permitted by law, to protect and enforce their rights
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, condition or agreement contained in this Agreement
or the Multistate Notes or in aid of the exercise of any power granted in this
Agreement or the Multistate Notes, or proceed to enforce the payment of the
Multistate Notes or to enforce any other legal or equitable right of the
Lenders.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action.
------------------------
Each Lender hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Multistate Loan Documents as are delegated to the
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. As to any matters not expressly provided
for by the Multistate Loan Documents (including, without limitation, enforcement
or collection of the Multistate Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Multistate
Notes; provided, however, that the Agent shall not be required to take any
-------- -------
action that exposes the Agent to personal liability or that is contrary to this
Agreement or applicable law. Without limiting the preceding provisions of this
Section 8.01, if the Agent shall acquire title to one or more Hotel Properties
on behalf of the Lenders following an Event of Default, whether pursuant to a
foreclosure sale or otherwise, the provisions of this Article VIII and Section
9.01 shall apply to the Agents ownership of the same and the Agent upon
acquiring such Hotel Properties shall be entitled to hold, lease, rent, operate,
manage or sell the same as Agent for the Lenders in any manner provided by
applicable law and, subject to Section 9.01, in accordance with the instructions
of the Required Lenders. The Agent agrees to give to each Lender prompt notice
of each notice given to it by the Borrower pursuant to the terms of this
Agreement and to distribute promptly to each Lender copies of the financial
statements, certificates, reports and other information provided to the Agent by
(a) the Borrower pursuant to Section 6.03, (b) Host Marriott pursuant to Section
6 of the Debt Service Guaranty, (c) Marriott International pursuant to Section 6
of the Backup Debt Service Guaranty, Section 8 of the MI Guaranty, Section 6 of
the Debt and Tenant Change Guaranty, Section 6 of the Hotel Lease Guaranty and
Section 6 of the MI Indemnity Agreement and (d) the Tenant pursuant to Section 8
of the Attornment Agreement.
SECTION 8.02. Agent's Reliance Etc.
---------------------
Neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with the Multistate Loan Documents, except for its
or their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent: (i) may treat the payee of any
Multistate Note as the holder thereof until the Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Multistate Note, as assignor, and an Eligible Assignee, as assignee, as provided
in Section 9.07; (ii) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with the Multistate Loan Documents; (iv) shall not have any duty to
ascertain or to
-83-
inquire as to the performance or observance of any of the terms, covenants or
conditions of any Multistate Loan Document on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan Party; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Multistate
Loan Document or any other instrument or document furnished pursuant hereto and
(vi) shall incur no liability under or in respect of any Multistate Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopy, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
SECTION 8.03. Citibank and Affiliates.
-----------------------
With respect to the Multistate Notes issued to it, Citibank shall have
the same rights, powers and obligations under the Multistate Loan Documents as
any other Lender and may exercise the same and shall be responsible for the same
as though it were not the Agent; and the term "Lenders or "Lenders. shall,
unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, any Loan Party, any of its
Subsidiaries and any Person who may do business with or own securities of any
Loan Party or any such Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders. The term "Agent" refers to
Citibank or any successor Agent in its capacity as Agent and not in its capacity
as a Lender. Citibank agrees with the Lenders that, for so long as Citibank is
the Agent, Citibank will hold, unless the Required Lenders agree to a lesser
amount, Multistate Advances in an amount at least equal to 2.67989462% of the
Multistate Advances owing to all the Lenders from time to time.
SECTION 8.04. Lender Credit Decision.
----------------------
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender, and based on the financial
statements referred to in Section 5.01(f) and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
SECTION 8.05. Indemnification.
---------------
Each Lender severally agrees to indemnify the Agent (to the extent not
promptly reimbursed by the Borrower), from and against such Lender's ratable
share of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements, of any kind or
nature whatsoever, that may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of the Multistate Loan Documents or
any action taken or omitted by the Agent under the Multistate Loan Documents;
provided, however, that no Lender shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs and
expenses payable by the Borrower under Section 9.04, to the extent that the
Agent is not promptly reimbursed for such costs and expenses by the Borrower.
For purposes of this Section 8.05, the Lenders t respective ratable shares
(including the Lender that is also the Agent) of any amount shall be determined,
at any time, according to the aggregate principal amount of the Multistate
Advances outstanding at such time and owing to the respective Lenders. The
failure of any Lender to reimburse the Agent promptly upon demand for its
ratable share of any amount required to be paid by the Lenders to the Agent as
provided herein shall not relieve any other Lender of its obligation hereunder
to reimburse the Agent
-84-
for its ratable share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse the Agent for such other Lender's
ratable share of such amount.
SECTION 8.06. Successor Agents.
----------------
The Agent may resign at any time with the consent of the Required
Lenders (provided that such consent shall not be required if Citibank determines
that its resignation is necessary for it to comply with any applicable law, rule
or regulation) by giving written notice thereof to the Lenders and the Borrower
and may be removed at any time with or without cause by the Required Lenders,
provided that the Agent shall also resign or be removed at the same time as
--------
Agent. under the California Loan Agreement. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders t removal of the
retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Each successor Agent shall be the same
commercial bank as the successor Agent appointed pursuant to Section 8.06 of the
California Loan Agreement. Upon the acceptance of any appointment as Agent
hereunder by such a successor Agent, and upon the execution and filing or
recording of such financing statements or any amendments thereto, any such
amendments or supplements to the Multistate Mortgages and such other instruments
or notices as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be grantee by the Multistate Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations (other than its responsibility, if any, for its
actions and inactions as Agent prior to its resignation or removal hereunder as
Agent) under the Multistate Loan Documents. After any retiring Agents
resignation or removal hereunder as Agent, the provisions of this Article VIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc.
----------------
No amendment or waiver of any provision of this Agreement or the
Multistate Notes, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no amendment, waiver or consent shall, unless in writing and
-------
signed by all the Lenders, do any of the following at any time: (i) waive any of
the conditions specified in Section 3.01; (ii) change the percentage of the
aggregate unpaid principal amount of the Multistate Notes, or the number of
Lenders, that shall be required for the Lenders or any of them to take any
action hereunder; (iii) amend or waive Section 6.02(e) with respect to any
Multistate Collateral or any defined term to the extent used therein with
respect thereto; (iv) amend this Section 9.01; (v) obligate the Lenders to loan
any additional amounts to the Borrower or subject the Lenders to any additional
obligations; (vi) reduce the principal of, or interest on, the Multistate Notes,
reduce the rate of interest on the Multistate Notes or otherwise payable
hereunder, reduce the amount of any required payment of principal or reduce any
fees or other amounts payable hereunder (provided that this Section 9.01(vi)
shall not apply to any reduction in (x) the rate or amount of interest described
in clause (i) of Section 2.05(c) upon the occurrence and during the continuance
of a Default if such
-85-
reduction does not cause the rate or amount of interest on the unpaid principal
amount of the Eurodollar Rate Advances or the unpaid principal amount of the
Base Rate Advances to be less than the rate or amount of interest on such
Eurodollar Rate Advances or Base Rate Advances under Section 2.05(a) in the
absence of the occurrence and continuation of a Default, (y) the rate or amount
of interest described in Section 2.05(c)(ii) upon the occurrence and during the
continuance of a Default and (z) the rate or amount of Additional Interest);
(vii) postpone any date fixed for any payment of principal of, or interest on,
the Multistate Notes or any fees or other amounts payable hereunder or (viii)
amend or waive any provision of any Multistate Loan Document with the effect of
accomplishing any of the matters specifically described in Sections 9.01(i)
through 9.01(vii) above; provided further that no amendment, waiver or consent,
----------------
unless in writing and signed by the Agent in addition to the Lenders required
above to take such action, shall affect the rights or duties of the Agent under
this Agreement or any Multistate Note. In addition, no decision may be made
without the prior written consent of all the Lenders: (x) to alter materially
the Debt Service Guaranty or the Backup Debt Service Guaranty or to release all
or a substantial portion of the Multistate Collateral; (y) with respect to all
or a substantial portion of the Multistate Collateral, to accept deeds in lieu
of foreclosure for the benefit of the Lenders with respect thereto and in
connection therewith to release the parties to the applicable Multistate
Mortgages, or the respective successors to their interest in consideration of
such conveyance in lieu of foreclosure; or (z) to receive as partial payment for
the sale of a Hotel a purchase money mortgage to be held by the Agent for the
benefit of the Lenders.
SECTION 9.02. Notices. Etc.
-------------
All notices and other communications provided for hereunder shall be in
writing (including telegraphic, telecopy, telex or cable communication) and
mailed, sent by a reputable overnight courier, telegraphed, telecopied, telexed,
cabled or delivered, if to the Borrower, (a) if sent by mail, at its address at
Courtyard by Marriott Limited Partnership, c/o Host Marriott Corporation, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: Law Department 72/923 and (b)
otherwise, at its address at Courtyard by Marriott Limited Partnership, c/o Host
Marriott Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Law Department 72/923; if to any Bank, at its Domestic Lending Office specified
opposite its name on Schedule 2.01B hereto; if to any other Lender, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender; and if to the Agent, at its address at Citibank, N.A.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇ and with a copy to Citicorp Real Estate, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇; or as to the
Borrower or the Agent, at such other address as shall be designated by such
party in a written notice to the other parties and, as to each other party, at
such other address as shall be designated by such party in a written notice to
the Borrower and the Agent. All such notices and communications shall (a) when
mailed, be effective upon receipt of the same at the applicable address
described above or upon the refusal of an employee or other agent of the
Borrower, such Bank, such other Lender or the Agent, as applicable, to accept
the same, (b) when sent by a reputable overnight courier, be effective when the
same is delivered to the applicable address described above, and (c) when
telegraphed, telecopied, telexed or cabled, be effective when the same is
telegraphed, telecopied and the telecopy is confirmed by telephone or return
telecopy, telexed and confirmed by telex answerback, or delivered to the cable
company, respectively, except that notices and communications to the Agent
pursuant to Article II, III or VIII shall not be effective until received by the
Agent.
SECTION 9.03. No Waiver; Remedies.
--------------------
No failure on the part of any Lender or the Agent to exercise, and no
delay in exercising, any right hereunder or under any Multistate Note or other
Multistate Loan Document 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 rights and remedies provided
herein, in the other Multistate Loan Documents and in the California Loan
Documents are
-86-
cumulative and are not exclusive of any rights and remedies provided by law.
Without limiting the generality of the foregoing, if any Multistate Note or any
of the other obligations of the Borrower to the Lenders shall not have been paid
when due, whether at the stated maturity thereof, by acceleration or otherwise,
the Lenders shall not be required to resort to any particular Multistate
Collateral, right or remedy, or to proceed in any particular order of priority,
and the Lenders shall have the right at any time and from time to time, in any
manner and in any order, to enforce their Liens, rights and remedies, or any of
them, as the Lenders deem appropriate in the circumstances and to apply the
proceeds of the Multistate Collateral to the Obligations of the Borrower under
the Multistate Loan Documents.
SECTION 9.04. Costs and Expenses.
------------------
(a) The Borrower agrees to pay on demand (i) all costs and expenses of
the Agent in connection with the preparation, execution, delivery and
administration (excluding amounts allocable to salaries and similar
indirect overhead costs of the Agent and such other costs and expenses of
the Agent that are customarily borne by the Agent) of the Multistate Loan
Documents and the modifications and amendments of the Multistate Loan
Documents requested by the Borrower (including, without limitation in this
clause (i), (A) all due diligence, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees
and expenses (including, without limitation, all search, filing and
recording fees and expenses referred to in Section 3.01(k)(x)(A)) and (B)
in addition to the fees and expenses described in Section 3.01(h) to be
paid on the Closing Date, the reasonable fees and expenses of counsel for
the Agent with respect to (1) the foregoing matters, (2) advising the Agent
as to its rights and responsibilities, or the perfection, protection or
preservation of rights or interests, under the Multistate Loan Documents,
(3) negotiations with any Loan Party or with other creditors of any Loan
Party or any of its Subsidiaries arising out of any Default, or any events
or circumstances that may give rise to a Default, and (4) presenting claims
in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto and all of which arise out of or are
connected, directly or indirectly, with any transaction contemplated by
this Agreement), (ii) all costs and expenses of the Agent in connection
with the enforcement of the Multistate Loan Documents (including, without
limitation, costs and expenses that the Agent may incur in connection with
the custody, preservation, use or operation of or the sale of, collection
from or other realization upon any Collateral (as defined in the Multistate
Security Agreement)), whether in any action, suit or litigation, or any
bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally or otherwise (including, without limitation, the
reasonable fees and expenses of counsel for the Agent with respect thereto
and (iii) all costs and expenses of the Lenders in connection with the
preparation, execution, delivery, administration, modification, amendment
and enforcement of the Multistate Loan Documents, whether in any suit or
litigation, or any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally or otherwise, including all
reasonable fees and expenses of counsel which arise out of or are
connected, directly or indirectly, with any transaction contemplated by
this Agreement. Notwithstanding the preceding sentence, the Borrower shall
have no obligation thereunder to pay the reasonable fees and expenses of
counsel for the Agent to the extent such fees and expenses are not incurred
in the reasonable judgment of the Agent.
(b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates, and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party" from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel)
that may be incurred by, or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of,
or in connection with the
-87-
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the Reorganization,
the ownership or operation of the Hotels and any of the other transactions
contemplated hereby or by the other Multistate Loan Documents or (ii) the
actual or alleged presence of Hazardous Materials on any property described
in the Multistate Mortgages, or any Environmental Action relating in any
way to any Loan Party or any of its Subsidiaries, in each case whether or
not such investigation, litigation or proceeding is brought by any Loan
Party, its directors, shareholders or creditors or an Indemnified Party, or
any Indemnified Party which is otherwise a party thereto, and whether or
not the transactions contemplated hereby are consummated, except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful
misconduct. Notwithstanding the preceding sentence, the Borrower shall have
no obligation thereunder to indemnify and hold harmless any Indemnified
Party from and against any claim, damages, loss, liability or expense that
would have been incurred by, or asserted or awarded against such
Indemnified Party independently of the Multistate Loan Documents or such
Indemnified Party's participation in the transactions contemplated hereby
and thereby. The Borrower also agrees that no Indemnified Party shall have
any liability (in contract, tort or otherwise) to the Borrower arising out
of or otherwise relating to any of the transactions contemplated herein or
in any other Multistate Loan Document or the actual use of the proceeds of
the Multistate Advances except to the extent that such liability is found
in a final, non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or willful
misconduct.
(c) Nothing in Section 9.04(a) or 9.04(b) shall be construed to
require the Borrower to pay any costs and expenses described in Section
9.04(a) or indemnify and hold harmless any Indemnified Party from and
against any claims, damages, losses, liabilities and expenses described in
Section 9.04(b) to the extent the foregoing relate to any of the California
Mortgages or the California Assignments of Leases.
(d) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender
(including as a result of distributions by the Agent of Net Cash Proceeds
of Multistate Collateral paid by the Borrower to the Agent pursuant to
Section 12 of the Multistate Security Agreement) other than on the last
day of the Interest Period for such Eurodollar Rate Advance, as a result of
a payment pursuant to Section 2.07 or 2.08(e), acceleration of the maturity
of the Multistate Notes pursuant to Section 7.01, or for any other reason,
or by an Eligible Assignee to a Lender other than on the last day of the
Interest Period for such Eurodollar Rate Advance upon an assignment of
rights and obligations under this Agreement pursuant to Section 9.07 as a
result of a demand by the Borrower pursuant to Section 9.07(a), the
Borrower shall, upon demand by such Lender (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender any amounts
required to compensate such Lender for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment,
including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Eurodollar Rate Advance.
(e) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Multistate Loan Document, including,
without limitation, the fees and expenses of counsel and indemnities, such
amounts may be paid on behalf of such Loan Party by the Agent or any
Lender, in its sole discretion and such Loan Party shall, on demand by the
Agent or such Lender, reimburse the Agent or such Lender for such payment
together with interest, if any, required by the Multistate Loan Documents.
-88-
SECTION 9.05. Right of Set-off.
----------------
Upon (a) the occurrence and during the continuance of any Event of
Default and (b) the making of the request or the granting of the consent
specified by Section 7.01 to authorize the Agent to declare the Multistate Notes
due and payable pursuant to the provisions of Section 7.01, each Lender and each
of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held, and other indebtedness at any time owing by such Lender or such Affiliate
to or for the credit or the account of the Borrower against any and all of the
Obligations of the Borrower, now or hereafter existing under this Agreement and
the Multistate Note or Notes held by such Lender, irrespective of whether such
Lender shall have made any demand under this Agreement or such Multistate Note
or Notes and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application of the
occurrence and amount thereof; provided, however, that the failure to give such
-------- -------
notice shall not affect the validity of such set-off and application. The rights
of each Lender and its Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender and its Affiliates may have. Notwithstanding the preceding
sentence, (s) no Lender (other than the Lender, if any, that is also the Agent
hereunder) may exercise any right of set-off with respect to any payment owed by
the Borrower to such Lender except with the prior written consent of all the
Lenders and (y) the Lender that is also the Agent hereunder may not exercise any
right of set-off with respect to any payment owed by the Borrower to such Lender
except with the prior written consent of the Required Lenders.
SECTION 9.06. Binding Effect.
--------------
This Agreement shall become effective when and if the Closing Date
shall have occurred, and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Lender, and their respective
successors and assigns, except that the Borrower shall not have the right to
-------
assign its rights hereunder, or any interest herein or in any of the other
Multistate Loan Documents, without the prior written consent of the Lenders.
SECTION 9.07. Assignments and participations.
------------------------------
(a) Each Lender may (and, i f demanded by the Borrower in the event of
an occurrence that would require such Borrower to make a payment under
Section 2.08(a), Section 2.08(b) (each as supplemented by Section 2.08(c),
subject to Section 9.07(b)) or Section 2.10(a) or Section 2.10(c) of this
Agreement or the California Loan Agreement, or that requires the Eurodollar
Rate Advances to Convert into Base Rate Advances under Section 2.08(e), in
each case upon at least 30 days' notice to the Lender and such Agent, such
Lender will) assign to one or more banks or other entities all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Multistate Advances owing to it and the
Multistate Note or Notes held by it) and the California Loan Agreement;
provided, however, that (i) each such assignment shall be of a uniform, and
-------- -------
not a varying percentage of all rights and obligations under and in respect
of each of this Agreement and the California Loan Agreement and each such
assignment shall be of the same percentage of all rights and obligations
under and in respect of each of this Agreement and the California Loan
Agreement, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's rights and obligations under this Agreement and the
California Loan Agreement, the aggregate unpaid principal amount of the
Combined Advances owing to the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, (iv) each such assignment made
as a result of a
-89-
demand by the Borrower pursuant to this Section 9.07(a) shall be arranged
by the Borrower after consultation with the Agent and shall be either an
assignment of all the rights and obligations of the assigning Lender under
this Agreement and the California Loan Agreement or an assignment of a
portion of such rights and obligations made concurrently with another such
assignment or other assignments that together cover all of the rights and
obligations of the assigning Lender under this Agreement and the California
Loan Agreement, (v) the Lender shall not be obligated to make any such
assignment as a result of a demand by the Borrower pursuant to this Section
9.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal
amount of the Multistate Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount,
all other amounts payable to such Lender under this Agreement and all
amounts described in Section 9.07(a)(v) of the California Loan Agreement,
(vi) unless any matter determined in Section 7.01(1) shall have occurred
and be continuing, if a Lender proposes to assign all or a portion of its
rights and obligations to a fund described in clause (d) of the definition
of "Eligible Assignee" for a purchase price that is less than 75% of the
aggregate unpaid principal amount of the Multistate Advances owing to such
Lender proposed to be assigned, such Lender may not make such assignment
unless the Lender notifies the Borrower that such Lender proposes to make
an assignment for a purchase price that is less than 75% of such amount
(provided that the Lender shall not be required to advise the Borrower of
--------
the purchase price therefor) and obtains the Borrower's prior consent to
such assignment, which the Borrower will not unreasonably withhold, and
(vii) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Multistate Note or Notes, subject to such
assignment and a processing and recordation fee of $2,500, which fee shall
cover the assignments under both this Agreement and the California Loan
Agreement. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto). No assignment made by any Lender pursuant to a demand by
the Borrower described in the first parenthetical of the first sentence of
this Section 9.07(a) will relieve the Borrower from its obligation to pay
such Lender under this Agreement the payments referred to in such
parenthetical.
(b) By executing and delivering an Assignment and Acceptance, both the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility, with respect to
any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument
or document furnished pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility, with respect to
the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 5.01(f) and such
other documents and
-90-
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Agent to take such action as agent on
its behalf, and to exercise such powers and discretion under this Agreement
as are delegated to the Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform, in accordance with their terms, all
of the obligations that by the terms of this Agreement are required to be
Performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assignment and Acceptance delivered to and accepted by
it, and a register for the recordation of the names and addresses of the
Lenders and principal amount of the Multistate Advances owing to each
Lender from time to time (the Register-). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection and copying by
the Borrower or any Lender, at any reasonable time and from time to time,
upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee, together with any Multistate
Note or Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for the surrendered Multistate Note or
Notes, a new Multistate Note to the order of such Eligible Assignee in an
amount equal to the aggregate unpaid amount of the Multistate Advances
assigned to it pursuant to such Assignment and Acceptance and, if the
assigning Lender has not assigned its rights hereunder in respect of the
aggregate unpaid principal amount of the Multistate Advances owing to such
Lender, a new Multistate Note to the order of the assigning Lender in an
amount equal to the aggregate unpaid amount of the Multistate Advances
retained by it. Such new Multistate Note or Notes (including any new
Multistate Note to the order of the assigning Lender) shall be in an
aggregate principal amount equal to the aggregate principal amount of the
Multistate Advances owing to the assignee Lender (determined as of the date
of the Assignment and Acceptance with respect to such assignment), shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit C hereto. If the Agent
has not remitted the surrendered Multistate Note or Notes to the Borrower
on or before the time the Borrower executes and delivers to the Agent a new
Multistate Note or Notes prepared in accordance with this Section 9.07(d),
the Agent will promptly after the delivery of such new Multistate Note or
Notes by the Borrower remit to the Borrower the surrendered Multistate Note
or Notes. Each surrendered Multistate Note or Notes shall be marked
"Canceled'' or be marked with words to the same effect.
(e) Each Lender may sell participations in or to all or a portion of
its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Multistate Advances owing to it and the
Multistate Note or Notes held by it) and the California Loan Agreement;
provided, however, that (i) each such participation shall be of the same
-------- -------
percentage of such Lender's rights and obligations under each of this
Agreement
-91-
and the California Loan Agreement, (ii) each such participation other than
a participation of all of a Lender's rights and obligations under this
Agreement and the California Loan Agreement, at the time such participation
is sold, shall in no event be in less than $5,000,000 aggregate principal
amount of such Lender's rights and obligations under each of this Agreement
and the California Loan Agreement, (iii) such Lender's obligations under
this Agreement shall remain unchanged, (iv) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (v) such Lender shall remain the holder of any such Multistate
Note for all purposes of this Agreement, (vi) the Borrower, the Agent and
the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (vii) no participant under any such participation shall have
any right to approve any amendment or waiver of any provision of any
Multistate Loan Document, or any consent to any departure by any Loan Party
therefrom or any other decision, except to the extent that such amendment,
waiver, consent or decision requires the consent of all the Lenders
pursuant to Section 9.01.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.07,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided, however, that prior to
-------- -------
any such disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion
of its rights under this Agreement (including, without limitation, the
Multistate Note or Notes held by it) in favor of any Federal Reserve Bank,
in accordance with Regulation A of the Board of Governors of the Federal
Reserve System, provided that such Lender at such time also creates a
--------
security interest in the same proportion of its rights under the California
Loan Agreement in favor of such Federal Reserve Bank. Each Lender that
creates a security interest in all or a portion of its rights under this
Agreement as described in this section 9.07(g) agrees to give the Borrower
prompt written notice thereof, provided that the failure of any Lender to
--------
give such notice shall not have any effect on any such security interest.
SECTION 9.08. Obligations Several.
--------------------
The obligation of each Lender hereunder is several, and neither the
Agent nor any Lender shall be responsible for the obligation of any other Lender
hereunder, nor will the failure of any Lender to perform any of its obligations
hereunder relieve the other Lenders from the performance of their respective
obligations hereunder. Nothing contained in this Agreement or any other
Multistate Loan Document, and no action taken by the Lenders hereto or thereto,
shall be deemed to constitute the Lenders a partnership, association, joint
venture or other entity.
SECTION 9.09. Headings.
--------
Article and Section headings in this Agreement and the other Multistate
Loan Documents are included for convenience of reference only, and shall not
constitute a part of this Agreement for any other purpose.
SECTION 9.10. Severability of Provisions.
--------------------------
Any provision of this Agreement or any other Multistate Loan Document
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the
-92-
extent of such prohibition or unenforceability, without invalidating the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 9.11. Consents of the Lenders Associated with Reorganization
------------------------------------------------------
and Amendment and Restatement.
-----------------------------
On and as of the Closing Date, the Lenders consent (including for the
benefit of Marriott International and the Tenant) to the consummation of the
following transactions constituting part of the Reorganization: (a) the transfer
of the issued and outstanding shares of capital stock of the Tenant from Host
Marriott to Marriott International; (b) the transfer of the issued and
outstanding shares of capital stock of each International Ground Lessor, a
wholly owned direct or indirect Subsidiary of Marriott Corporation immediately
prior to the Reorganization, to Marriott International; and (c) the provision by
Marriott International of the Backup Debt Service Guaranty. In addition, the
Lenders agree that from and after the Closing Date the Obligations of the Loan
Parties in respect of the Multistate Advances shall not be governed by the Loan
Documents (as defined in the 1988 Multistate Loan Agreement) but shall be
governed by the Multistate Loan Documents.
SECTION 9.12. Agreement of Lenders Not to Object and Waiver.
---------------------------------------------
The Lenders agree that, if a voluntary or involuntary case is
commenced by or against the Borrower under the Bankruptcy Code, they will not
object to a proposed provision to the Borrower of a debtor-in-possession
financing not in excess of $2,000,000 principal amount secured by Liens on the
Multistate Collateral senior to the Liens of the Lenders. In consideration of
Borrower's conversion of the 1986 Management Agreement to the Hotel Lease; the
Lenders further waive any right, subsequent to the first to occur of (a) an
acceleration of the indebtedness due under the Multistate Notes in accordance
with the provisions of Article VII, (b) the occurrence and continuation for one
hundred eighty (180) days of a default by the Borrower in paying any principal
or interest due hereunder or (c) the date for the final scheduled principal
payment on the Multistate Notes, to seek a dismissal of any bankruptcy case
commenced by the Borrower or of any involuntary bankruptcy case consented to, or
converted by, the Borrower under the Bankruptcy Code, or the agreement of the
Borrower (however evidenced) to be subject to an involuntary case against the
Borrower, and the Lenders agree not to support such a challenge by any other
Person, on grounds that such a case was commenced in bad faith, or that Borrower
has no reasonable likelihood of rehabilitation under the Bankruptcy Code;
provided, however, that the Lenders reserve all other rights in any such
-------- -------
proceeding, including without limitation the right (s) to seek a reduction in or
termination of any period during which the debtor would have an exclusive right
to file a plan of reorganization and (y) to seek to convert to a case under
chapter 7 of the Bankruptcy Code for any reason other than that the case was
commenced in bad faith.
SECTION 9.13. Governing Law.
-------------
This Agreement and the Multistate Notes shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 9.14. 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. Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement. Any party hereto
that delivers an executed counterpart of a signature page to this Agreement by
telecopier shall promptly thereafter deliver to the Agent a manually executed
counterpart of this Agreement.
-93-
SECTION 9.15. Confidentiality.
---------------
Neither the Agent nor any Lender shall disclose any Confidential
Information to any Person without the consent of the Borrower, other than (a) to
the Agent's or such Lender's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking.
SECTION 9.16. Consent to Jurisdiction.
-----------------------
(a) The Borrower hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in New York City, and any appellate
court from any thereof in any action or proceeding arising out of or
relating to this Agreement or the Multistate Notes, and the Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such New York State court or in such Federal
court. The Borrower hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. The Borrower irrevocably consents to the
service of any and all process in any such action or proceeding, by the
mailing of copies of such process to the Borrower at its address specified
in Section 9.02. The Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive, and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Nothing in this Section 9.16 shall affect the right of any Lender
or the Agent to serve legal process in any other manner permitted by law,
or affect the right of any Lender or the Agent to bring any action or
proceeding against the Borrower or its property in the courts of other
jurisdictions.
SECTION 9.17. Release.
-------
The Borrower hereby forever releases and discharges the Agent and each
Lender, and their respective Subsidiaries, Affiliates, officers, directors,
employees and agents (including attorneys and accountants) and participants,
successors and assigns, if any (the "Releasees"), from any and all of their
Obligations under the 1986 Multistate Loan Documents and the 1988 Multistate
Loan Documents and from any and all claims, debts, demands, allegations,
actions, causes of action, suits, duties, controversies, agreements, promises,
omissions, variances, damages, judgments, costs, expenses, losses, obligations,
liabilities or rights whatsoever, known or unknown, whether in law, equity or
otherwise, absolute or contingent, determined or speculative, which the Borrower
or any of its Affiliates ever have had, may have now or in the future may, can
or shall have against any Releasee relating to, based upon or arising out of the
execution, delivery, performance, administration or enforcement of (i) the 1986
Multistate Loan Documents, the 1986 Multistate Loans and the Lenders' ownership
of the Notes (as defined in the 1986 Multistate Loan Agreement), (ii) the 1988
Multistate Loan Documents, the 1988 Multistate Loans and the Lenders' ownership
of the Notes (as defined in the 1988 Multistate Loan Agreement) and (iii) any of
the transactions contemplated thereby, any act or omission of any Releasee or
other Person in connection therewith or relating thereto, including efforts to
obtain payment thereof or thereunder.
SECTION 9.18. Waiver of One Action Rule. Etc.
--------------------------------
In consideration of the agreement of the Banks (a) to extend the
maturity date of the loans made under the 1988 Multistate Loan Agreement from
June 15, 1993 to June 15, 1997 as provided in this Agreement and (b) to
otherwise amend and restate the 1988 Multistate Loan
-94-
Agreement on the terms and conditions set forth herein, as a result of which
certain "Events of Default" under and as defined in the 1988 Multistate Loan
Agreement are being waived by the Banks, and to confirm the intention of the
parties that the Lenders shall be entitled to recourse against all Multistate
Collateral, under any and all circumstances, as security for all Obligations of
the Borrower under the Multistate Loan Documents, each of the Borrower and, by
execution hereof on behalf of the Borrower, the General Partner, hereby waives
all rights, benefits and defenses under Section 726 of the California Code of
Civil Procedure and any statute or law in any other jurisdiction having similar
effect. Without limitation of the foregoing, each of the Borrower and the
General Partner agrees (i) that neither the Liens in favor of the Agent and the
Lenders with respect to any Multistate Collateral (whether granted by the
Borrower or any other Person), nor the enforceability thereof, shall be (or be
deemed to be) waived, lost, released, forfeited or otherwise impaired as a
result of (A) any "action" (within the meaning of Section 726 of the California
Code of Civil Procedure) that may be taken by the Agent, any of the Lenders or
any other Person, or that may otherwise occur, in connection with the
enforcement of such Obligations (or any Obligations of the Borrower under the
California Loan Documents) or in connection with the enforcement by any
guarantor or any other Person of rights of subrogation, reimbursement,
exoneration, contribution of indemnification against the Borrower, the General
Partner or any other Person (including, without limitation, the entry of any
judgment against the Borrower, the General Partner, any guarantor or any other
Person in connection with the enforcement of such Obligations (or any
Obligations of the Borrower under the California Loan Documents) or other
rights), or (B) any other act or omission (whether or not the same constitutes
an "action" within the meaning of Section 726 of the California Code of Civil
Procedure) by the Agent, any of the Lenders, any guarantor or any other Person,
whether in connection with the enforcement of such Obligations (or any
Obligations of the Borrower under the California Loan Documents) or other rights
or otherwise (including, without limitation, the enforcement of any rights or
Liens under any Multistate Loan Document or California Loan Document, the
commencement of any legal action by any Person, or the exercise of any right of
setoff or any other right, power or remedy, whether contractual or otherwise),
(ii) that if and to the extent that the occurrence of any of the matters
described in clause (i) above would otherwise (in the absence of this Section
9.18) give rise to (A) any claim that any of the Liens in favor of the Agent and
the Lenders with respect to any Multistate Collateral, or the enforceability
thereof, is or should be (or is deemed or should be deemed to be) waived, lost,
released, forfeited or otherwise impaired, or (B) any defense to the enforcement
of such Liens, each of the Borrower and the General Partner hereby knowingly
waives any such claim or defense, and (iii) subject to Section 2.12, that the
Agent and the Lenders shall not be required to enforce rights with respect to
any Multistate Collateral or any other security prior to obtaining a judgment
against the Borrower, the General Partner or other Person with respect to any
obligations secured thereby.
SECTION 9.19. Waiver of Jury Trial. Etc.
---------------------------
Each of the Borrower, the Agent and the Lenders hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to any
of the Multistate Loan Documents, the Multistate Advances or the actions of the
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof. In addition, the Borrower hereby irrevocably waives in any
such action, proceeding or counterclaim (a) any claim for consequential or
special damages or (b) the right to assert any set-off or counterclaim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Borrower
--------
-95-
COURTYARD BY MARRIOTT LIMITED
PARTNERSHIP
By: CBM One Corporation
General Partner
By:
----------------------------------
Title:
Agent
-----
CITIBANK, N.A., as Agent
By:
----------------------------------
Title:
Banks
-----
BANKERS TRUST COMPANY
By:
----------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By:
----------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Title:
-96-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Borrower
--------
COURTYARD BY MARRIOTT LIMITED
PARTNERSHIP
By: CBM One Corporation
General Partner
By:
----------------------------------
Title:
Agent
-----
CITIBANK, N.A., as Agent
By:
----------------------------------
Title:
Banks
-----
BANKERS TRUST COMPANY
By:
----------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By:
----------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Title:
-97-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Borrower
--------
COURTYARD BY MARRIOTT LIMITED
PARTNERSHIP
By: CBM One Corporation
General Partner
By:
----------------------------------
Title:
Agent
-----
CITIBANK, N.A., as Agent
By:
----------------------------------
Title:
Banks
-----
BANKERS TRUST COMPANY
By:
----------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By:
----------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Title:
-98-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Borrower
--------
COURTYARD BY MARRIOTT LIMITED
PARTNERSHIP
By: CBM One Corporation
General Partner
By:
----------------------------------
Title:
Agent
-----
CITIBANK, N.A., as Agent
By:
----------------------------------
Title:
Banks
-----
BANKERS TRUST COMPANY
By:
----------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By:
----------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
-100-
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
-101-
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
-102-
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
-103-
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
----------------------------------
Title:
CITIBANK, N.A.
By:
----------------------------------
Title:
CREDIT COMMERCIAL DE FRANCE
By:
----------------------------------
Title:
THE DAIWA BANK, LIMITED, NEW YORK
BRANCH
By:
----------------------------------
Title:
-104-
FIRST INTERSTATE BANK OF CALIFORNIA
By:
----------------------------------
Title:
THE MITSUI TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
NATIONAL WESTMINSTER BANK Plc
By:
----------------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
-105-
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
-106-
NATIONSBANK BANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
-107-
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
-108-
By:
----------------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
-109-
NATIONSBANK OF GEORGIA, N.A.
By:
----------------------------------
Title:
NATWEST USA
By:
----------------------------------
Title:
SEATTLE FIRST NATIONAL BANK
By:
----------------------------------
Title:
SUMITOMO TRUST & BANKING COMPANY,
LTD., NEW YORK BRANCH
By:
----------------------------------
Title:
THE TOYO TRUST & BANKING CO., LTD.
By:
----------------------------------
Title:
UNIBANK A/S,
NEW YORK BRANCH
By:
----------------------------------
Title:
-110-
BAYERISCHE VEREINSBANK AG,
CAYMAN ISLANDS BRANCH
By:
----------------------------------
Title:
-111-