Exhibit 10.30
POOLING AND SECURITY AGREEMENT
BY AND AMONG
CRESTLINE CAPITAL CORPORATION,
[POOL PARENT], AND
THE PERSONS NAMED AS TENANTS
AND TENANT MEMBERS HEREIN
AND
HOST MARRIOTT, L.P.
AND THE PERSONS NAMED AS LANDLORDS HEREIN
DATED AS OF _____________, 199___
TABLE OF CONTENTS
PAGE
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1. CERTAIN DEFINITIONS................................................................... 1
2. CASH COLLATERAL ARRANGEMENTS.......................................................... 11
2.1 Security Agreement Relating to Account Collateral................................. 11
2.2 Establishment, Maintenance and Funding of Pool Cash Collateral Account............ 13
2.3 Disbursements from Pool Cash Collateral Account................................... 14
3. ADDITION OF LEASES.................................................................... 15
3.1 Addition of Leases, Tenants, or Tenant Members.................................... 15
4. NEGATIVE COVENANTS APPLICABLE TO POOL PARENT.......................................... 16
4.1 Indebtedness...................................................................... 16
4.2 Liens............................................................................. 16
4.3 Investments....................................................................... 16
4.4 Transfers of Interests in Tenants and Tenant Members.............................. 16
4.5 Amendment of Organizational Documents............................................. 17
4.6 Misapplication of Funds........................................................... 17
4.7 Place of Business................................................................. 17
5. SPE COVENANTS......................................................................... 17
5.1 Business of Pool Parent........................................................... 17
5.2 Separate Existence................................................................ 17
5.3 Independent Director.............................................................. 18
5.4 Fundamental Changes............................................................... 18
6. EVENTS OF DEFAULT; REMEDIES........................................................... 18
6.1 Events of Default................................................................. 18
6.2 Remedies in Case of an Event of Default........................................... 19
6.3 Remedies, Etc. Cumulative......................................................... 21
6.4 Indemnity......................................................................... 21
7. MISCELLANEOUS PROVISIONS.............................................................. 22
7.1 Termination....................................................................... 22
7.2 Financial Reporting............................................................... 22
7.3 Notices........................................................................... 23
7.4 Waiver; Amendment................................................................. 24
7.5 Benefit........................................................................... 24
7.6 Governing Law..................................................................... 24
7.7 Headings.......................................................................... 25
7.8 Counterparts...................................................................... 25
7.9 Assignment........................................................................ 25
7.10 Waiver of Jury Trial............................................................. 25
7.11 Delay Not a Waiver............................................................... 25
7.12 Severability..................................................................... 25
7.13 Preferences...................................................................... 26
7.14 Waiver of Notice................................................................. 26
7.15 Remedies of Pool Parent, CCC, or Tenants......................................... 26
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SCHEDULES
Schedule 1 Leases, Tenants, Landlords, and Hotels
Schedule 2 Tenant Members
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POOLING AND SECURITY AGREEMENT
THIS POOLING AND SECURITY AGREEMENT (this "AGREEMENT") is made and entered
into as of December [___], 1998 by and among Crestline Capital Corporation, a
Maryland corporation ("CCC"), [________________], a Delaware corporation ("POOL
PARENT"), the Tenants party hereto named on Schedule 1 hereto from time to time,
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and the Tenant Members party hereto named on Schedule 2 hereto from time to time
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(collectively, the "CCC ENTITIES") for the benefit of (i) the Landlords named on
Schedule 1 hereto from time to time, (ii) Host Marriott, L.P., a Delaware
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limited partnership, in its capacity as Landlord Representative hereunder, and
(iii) __________, as collateral agent for the benefit of the Landlords (together
with its permitted successors and assigns, the "COLLATERAL AGENT").
RECITALS
A. The Tenants and Landlords are party to leases (the "LEASES") of the
respective hotels (the "HOTELS") set forth on Schedule 1 hereto.
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B. Pool Parent, the Tenants, and the Tenant Members are direct or
indirect wholly owned Subsidiaries of CCC. The Tenants and the Tenant Members
are direct or indirect wholly owned Subsidiaries of Pool Parent. The Tenant
Members are the sole equity members of the respective Tenants set forth on
Schedule 2 attached hereto.
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C. In order to induce the Landlords to enter into the Leases, CCC and
Pool Parent (together, the "GUARANTORS") have executed and delivered a Pool
Guarantee, of even date herewith (the "GUARANTEE"), pursuant to which the
Guarantors have guaranteed certain obligations of Tenants under the Leases for
the benefit of the respective Landlords, and the CCC Entities are executing and
delivering this Agreement.
NOW, THEREFORE, in consideration of the covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, (i) the terms defined in this Article
shall have the meanings assigned to them in this Article and include the plural
as well as the singular, (ii) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, (iv) the term "including" shall have the same meaning as
"including, without limitation," and (v) the words "herein," "hereof,"
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision.
"ACCOUNT COLLATERAL" has the meaning ascribed to such term in Section
2.1(a).
"ACCOUNTING PERIOD" means (i) for so long as CCC uses a fiscal year
consisting of 52/53 weeks ending on the Friday closest to December 31 each year,
each of the four (4) week accounting periods which are used in CCC's accounting
system, except that an Accounting Period may occasionally contain five (5) weeks
when necessary to conform CCC's accounting system to the calendar, and (ii) if
CCC uses a fiscal year based on calendar quarters, each calendar month.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly through one or more intermediaries controlling, controlled by or
under common control with the subject Person. The term "control," as used in
the immediately preceding sentence, means, with respect to a corporation, the
right to exercise, directly or indirectly, fifty percent (50%) or more of the
voting rights of any class of the shares of the controlled corporation, and,
with respect to an entity that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity. Notwithstanding the foregoing, Marriott
International, Inc. and its Subsidiaries shall not be deemed to be Affiliates of
CCC, Pool Parent, Landlord Representative, any Landlord or any Tenant.
"BUSINESS DAY" means any day other than Saturday, Sunday, or any other day
on which banking institutions in the State of Maryland are authorized by law or
executive action to close.
"CAPITALIZED INTEREST" shall mean interest that is capitalized and is not
counted as interest expense in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" of any Person shall mean all rental
obligations which, under GAAP, are or will be required to be capitalized on the
books of such Person, in each case taken at the amount thereof accounted for as
indebtedness in accordance with such principles.
"CASH EXPENSES" means, with respect to any Tenant or Tenant Member, all
expenses incurred by such Person and payable in cash, excluding (i) expenses of
a Tenant paid by a manager on behalf of such Tenant pursuant to a hotel
management agreement with respect to a hotel that is subject to a Lease, (ii)
expenses relating to the performance of asset management services for the hotels
subject to the Leases, including salaries or other employee costs of employees
relating to the performance of asset management services, fees paid to
independent contractors for provision of such services, or amounts paid to
Affiliates for provision of such services, and (iii) expense reimbursements,
overhead allocations and any other amount paid to an Affiliate of such Person.
"CCC" means Crestline Capital Corporation, and its successors and permitted
assigns.
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"CCC CONSOLIDATED FINANCIAL STATEMENTS" shall mean for any Fiscal Year or
quarter thereof, consolidated statements of operations, retained earnings and
cash flow for such period and for the period from the beginning of the
respective Fiscal Year to the end of such period and the related balance sheet
as at the end of such period, together with the notes to any such statement, all
in such detail as may be required by the Securities and Exchange Commission with
respect to filings made by Landlord Representative or Host REIT and, after the
first full Fiscal Year of Pool Parent, setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal Year,
and prepared in accordance with GAAP and (in the case of annual financial
statements) audited by a "Big Five" firm of independent certified public
accountants or such other firm of independent certified public accountants as
may be reasonably approved by Landlord Representative. CCC Consolidated
Financial Statements shall be prepared on the basis of the Fiscal Year or
quarter thereof, as applicable.
"CCC LIMIT OF LIABILITY" means, with respect to the Guarantee or any Other
Guarantee, the maximum liability of CCC under such Guarantee or Other Guarantee
for obligations under the Leases or Other Leases, as the case may be, other than
liability with respect to fraud or misapplication or misappropriation of funds
or the existence of liens in violation of the Pooling Agreement or any Lease.
"CHANGE OF CONTROL" means the (i) acquisition (after a registered offering
of shares or otherwise) by any Person, or two or more Persons acting in concert,
in a single or series of transactions (whether or not related), of:
(a) with respect to Pool Parent, beneficial ownership (within the
meaning of Rule 13d-3 of the SEC) of, or rights (including conversion
rights), options or warrants to acquire (whether absolute or
conditional), all or any portion of the outstanding voting or economic
interests in Pool Parent (other than voting rights held by an Independent
Member of Tenant as set forth in the Limited Liability Company Operating
Agreement of Tenant as in effect on the date hereof); or
(b) with respect to CCC, beneficial ownership of, or rights (including
conversion rights), options or warrants to acquire, thirty-five percent
(35%) or more of the outstanding shares of voting stock of CCC;
or (ii) the merger or consolidation of Pool Parent or CCC with or into
any other Person if, in the case of CCC, immediately following the effectiveness
of such merger or consolidation, more than thirty-five percent (35%) of the
beneficial ownership of the outstanding voting shares of the surviving entity of
such merger or consolidation (including for such purpose in both the numerator
and the denominator, shares of voting stock issuable upon the exercise of then
outstanding rights (including conversion rights), options or warrants) is held
by one or more Persons who were not holders of the outstanding voting shares of
CCC (or outstanding rights (including conversion rights), options or warrants to
acquire voting shares of CCC) immediately prior to the effectiveness of such
merger or consolidation; or
(iii) any one or a series of related sales or conveyances to any Person of
all or substantially all of the assets of Pool Parent or CCC; or
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(iv) a change in the majority of the board of directors or similar managing
body of CCC during the longer of (A) any twelve (12) month period and (B) the
period during which two consecutive annual meetings of the equity holders of CCC
at which directors or similar managers are elected have been held;
provided, however, that the acquisition by any one or more wholly owned
direct or indirect Subsidiaries of CCC of beneficial ownership of, or rights,
options or warrants to acquire, all or any portion of Pool Parent shall not be a
"Change of Control" hereunder.
"COLLATERAL AGENT" means [__________________], or its successors and
assigns.
"CONSOLIDATED COVERAGE RATIO" of any Person means, for any period, the
ratio of (x) Consolidated EBITDA of such Person for such period to (y) the sum
of (i) Consolidated Interest Expense of such Person for such period, and (ii)
the amount of all scheduled principal amortization payments (other than balloon
payments at maturity of such Indebtedness) on all Indebtedness of such Person
and its Subsidiaries made during such period.
"CONSOLIDATED EBITDA" of any Person shall mean, for any period, the
Consolidated Net Income of such Person for such period adjusted (A) to add
thereto (to the extent deducted in determining Consolidated Net Income for such
period), without duplication, the sum of the amounts for such period of (i)
Consolidated Interest Expense, (ii) provisions for taxes based on income, (iii)
depreciation and amortization expense (provided that the depreciation and
amortization expense of a non-wholly owned Subsidiary shall be included only to
the extent of the equity interest of such Person in such non-wholly owned
Subsidiary), (iv) any other noncash items reducing Consolidated Net Income of
such Person for such period (except to the extent that such noncash items relate
to the write-off or write-down of any item included in Consolidated Net Income
in a prior period) and (v) any cash receipts of such Person or a Subsidiary
thereof during such period that represent items included in Consolidated Net
Income of such Person for a prior period which were excluded from Consolidated
EBITDA in such prior period by virtue of clause (B) of this definition, and (B)
to subtract therefrom, without duplication, the sum of the amounts for such
period of (i) all noncash items increasing Consolidated Net Income of such
Person for such period and (ii) any cash expenditures of such Person and its
Subsidiaries during such period to the extent that such cash expenditures (x)
did not reduce Consolidated Net Income of such Person for such period and (y)
were applied against reserves or accruals that constituted noncash items
reducing Consolidated Net Income of such Person when reserved or accrued for in
a prior period; provided, that Consolidated EBITDA shall be determined without
giving effect to any extraordinary gains or losses (including any taxes
attributable to any such extraordinary gains or losses) or gains or losses from
sales of assets other than from sales of inventory in the ordinary course of
business.
"CONSOLIDATED INTEREST EXPENSE" of any Person shall mean, for any period,
the total consolidated cash interest expense of such Person and its Subsidiaries
for such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, that portion of the Capitalized Lease
Obligations of such Person and its Subsidiaries representing the interest factor
for such period, but excluding (i) any Capitalized Lease Obligations that relate
to leases of furniture, fixtures and equipment,
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(ii) the interest factor (if any) in such period under any leases of furniture,
fixtures and equipment or any Lease or Other Lease with respect to the
furniture, fixtures and equipment subject to such Lease or Other Lease, and
(iii) any note issued by a tenant to a landlord pursuant to a Lease or Other
Lease in connection with the purchase of working capital by such tenant.
Notwithstanding anything to the contrary contained in the requirements of GAAP,
the amount of Capitalized Interest incurred during any period shall be added as
a component of Consolidated Interest Expense.
"CONSOLIDATED NET INCOME" of any Person shall mean, for any period, the net
income (or loss) of such Person and its Subsidiaries for such period, determined
on a consolidated basis; provided, that (i) net income (or loss) of (x) any
other Person that is accounted for by such specified Person by the equity method
of accounting or (y) any Subsidiary of such Person that is restricted from
declaring or paying dividends or other distributions, directly or indirectly, by
operation of the terms of its charter, any applicable agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation or otherwise
shall (in each case) be included only to the extent of the amount of cash
dividends or distributions paid to the specified Person or a wholly owned
Subsidiary of such Person, (ii) the net income (or loss) of any other Person
acquired by such specified Person or a Subsidiary of such Person in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iii) to the extent Consolidated Net Income reflects amounts
attributable to minority interests in Subsidiaries that are not wholly owned
Subsidiaries of such Person, Consolidated Net Income shall be reduced by the
amounts attributable to such minority interests, and (iv) any income, rental
credit or expense associated with leases of Excess FF&E by any Tenant or any
Other Tenant shall not be taken into account in determining Consolidated Net
Income.
"DISTRIBUTABLE CASH" means, with respect to a Tenant as of any Rent Payment
Date, an amount of cash equal to (i) the aggregate amount of cash in all lockbox
accounts of such Tenant maintained pursuant to the applicable Lease as of such
date, immediately after payment of all rent owing under the Leases to which such
Tenant is party less (ii) the amount of Cash Expenses of such Tenant then
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payable less (y) the amount of available cash reasonably required to be reserved
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for payment of future Cash Expenses for which such Tenant reasonably believes,
after taking into account existing cash reserves of such Tenant, that it will
not have adequate cash after payment of rent in future Accounting Periods.
"Distributable Cash" means, with respect to a Tenant Member as of any Rent
Payment Date, an amount of cash equal to (x) the aggregate amount of cash
distributed to such Tenant Member by the applicable Tenant on such date, less
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(y) the amount of Cash Expenses of such Tenant Member then payable, less (z) the
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amount of available cash reasonably required to be reserved for payment of
future Cash Expenses for which such Tenant Member reasonably believes, after
taking into account existing cash reserves of such Tenant Member, that it will
not have adequate cash.
"DISTRIBUTION DATE" means, with respect to any Accounting Period, the first
Business Day after the latest date on which payment of regularly scheduled Rent
is due under any Lease.
"EVENT OF DEFAULT" has the meaning ascribed to such term in Section 6.1.
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"EXCESS FF&E" means furniture, fixtures or equipment that any Tenant or
Other Tenant is required to lease from a Person other than a Landlord or the
landlord under an Other Lease, as the case may be, and receives a rental credit
in respect of such lease, pursuant to the terms of any Lease or Other Lease.
"FINANCIAL OFFICER'S CERTIFICATE" shall mean a certificate of the chief
financial officer, controller, chief accounting officer or treasurer of CCC,
accompanying the financial statements required to be delivered by CCC pursuant
to Section 7.2, in which such officer shall certify (a) that such statements
have been properly prepared in accordance with GAAP and fairly present, in all
material respects, the financial condition of CCC as of the dates thereof, and
the results of its operations for the periods covered thereby (except that, in
the case of financial statements delivered pursuant to clause Section 7.2(b)(i),
the certificate shall state the extent to which such financial statements are
not in accordance with GAAP), (b) that such officer has no knowledge of any
Payment Default or Event of Default hereunder, and (c) the then-current Tangible
Net Worth, Consolidated Coverage Ratio, Minimum Net Worth, and the CCC Limit of
Liability under the Guarantee and each Other Guarantee.
"FISCAL YEAR" means the fiscal year of CCC.
"GAAP" means generally accepted accounting principles consistently applied.
"GUARANTEE" means that certain Pool Guarantee, of even date herewith,
entered into by CCC and Pool Parent for the benefit of the Landlords, as it may
be amended from time to time.
"GUARANTEED OBLIGATIONS" means any obligation of a Tenant or a Tenant
Member that is guaranteed pursuant to the Guarantee.
"HOST REIT" shall mean Host Marriott Corporation, a Maryland corporation,
or its successors or assigns.
"INDEBTEDNESS" shall mean all obligations, contingent or otherwise, which
in accordance with GAAP should be reflected on the obligor's balance sheet as
debt.
"INDEPENDENT DIRECTOR" means a Person who is not, and has not within the
past five (5) years been, (i) an officer, director, employee, partner, member,
manager, stockholder or beneficial-interest holder of Pool Parent; (ii) an
officer, director, employee, partner, member, beneficial-interest holder, or
stockholder of any "Affiliate" (as defined below) of Pool Parent; or (iii) a
spouse, parent, sibling, or child of any Person described in (i) or (ii) of this
section; provided, however, that a Person shall not be deemed to be a director
or member of an Affiliate solely by reason of such Person being a director,
manager, or member of a single-purpose entity that would otherwise be deemed to
be an Affiliate because they are under common control. For the purpose of this
definition alone, "Affiliate" means any Person (x) which owns beneficially,
directly or indirectly, more than ten percent (10%) of the outstanding equity
interest in Pool Parent or which is otherwise in control of Pool Parent; (y) of
which more than ten percent (10%) of the outstanding voting securities are owned
beneficially, directly or indirectly, by any Person described in clause (x)
above; or (z) which is controlled by, or under common control with, any Person
or entity
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described in clause (x) above; the terms "control" and "controlled by" shall
have the meanings assigned to them in Rule 405 under the Securities Act of 1933.
"INTANGIBLE ASSET" shall mean, with respect to any Person, a long-lived
asset that is useful in the operations of such Person, that is not directly used
in revenue generation and that is not held for sale, and is without physical
qualities, including but not limited to patents, copyrights and goodwill, but
excluding capitalized costs associated with the acquisition of brand names,
franchises and trademarks, franchise agreements and management agreements.
"LANDLORD" means each Person named as the lessor under a Lease on Schedule
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1 hereto, and each Person that becomes a "Landlord" hereunder pursuant to
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Section [__].
"LANDLORD REPRESENTATIVE" means Host Marriott, L.P., a Delaware limited
partnership, or its successor or permitted assigns.
"LEASE" means any lease listed on Schedule 1 hereto.
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"LIEN" means any mortgage, security interest, pledge, collateral
assignment, or other encumbrance, lien or charge of any kind (including, without
limitation, any easements, covenants, conditions and restrictions), or any
transfer of any property or assets for the purpose of subjecting the same to an
encumbrance, lien or charge securing the payment of Indebtedness or performance
of any other obligation in priority to payment of any Person's general
creditors.
"LOCKBOX NOTICE DATE" means, with respect to a Lockbox Trigger Event, the
earliest date of a notice by a Landlord or the Landlord Representative to a
Tenant and to CCC and the Pool Parent of the exercise by such Landlord of its
right to implement the lockbox procedures under the Lease to which such Landlord
and Tenant are parties.
"LOCKBOX PERIOD" means the period beginning no later than two weeks after a
Lockbox Notice Date and continuing thereafter until the first day of the first
full Accounting Period after (i) the Consolidated Coverage Ratio of CCC is at
least 2.3 to 1.0 for each of three consecutive Accounting Periods, (ii) the
Tangible Net Worth of CCC is at least equal to two hundred percent (200%) of the
aggregate of the CCC Limits of Liability under the Guarantee and all Other
Guarantees from time to time as of the end of each of three consecutive
Accounting Periods, and (iii) no Payment Default under (A) any Lease or (B) any
Other Lease with respect to which the CCC Limit of Liability under the
applicable Other Guarantee is greater than zero and no "Event of Default" (as
defined in the applicable Lease) under Section 12.1(c) of any Lease by reason of
a breach of Section 7.1 or 21.6.3 of such Lease has been in effect as of three
consecutive Distribution Dates; provided that a Lockbox Period shall not
terminate by reason of an event described in clause (i), (ii), or (iii) if the
CCC Limit of Liability under the Guarantee shall have been reduced to zero.
"LOCKBOX TRIGGER EVENT" means any of the following events:
(i) the Tangible Net Worth of CCC is less than two hundred percent
(200%) of the amount of the aggregate of the CCC Limits of
Liability
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under the Guarantee and all Other Guarantees from time
to time as of the end of each of three consecutive Accounting
Periods;
(ii) the Consolidated Coverage Ratio of CCC is less than 2.3 to 1.0
for each of three consecutive Accounting Periods;
(iii) the occurrence of a Payment Default under (A) any Lease or (B)
any Other Lease with respect to which the CCC Limit of
Liability under the applicable Other Guarantee is greater than
zero, or an "Event of Default" (as defined in the applicable
Lease) under Section 12.1(c) of any Lease by reason of a breach
of Section 7.1 or 21.6.3 of such Lease; or
(iv) the CCC Limit of Liability under the Guarantee shall have been
reduced to zero.
"MINIMUM NET WORTH" means, with respect to the last day of any Accounting
Period, a Tangible Net Worth (calculated on a book value basis), excluding
amounts held in any lockbox or cash collateral account under any Lease, any
Other Lease, this Agreement or any pooling and security agreement relating to
Other Leases, immediately after the Distribution Date for such Accounting
Period, equal to one hundred fifty percent (150%) of the aggregate of the CCC
Limits of Liability under the Guarantee and the Other Guarantees from time to
time; provided that the Minimum Net Worth shall be reduced by one hundred fifty
percent (150%) of the total amount of cash held in any lockbox or cash
collateral account under any Lease, any Other Lease, this Agreement or any
pooling and security agreement relating to Other Leases, immediately after the
Distribution Date for such Accounting Period.
"OTHER GUARANTEE" means a guarantee by CCC and any Subsidiary of CCC of the
obligations under one or more Other Leases.
"OTHER LEASE" means any lease (other than a Lease) of a full service hotel
under which Host Marriott, L.P. or a Subsidiary of Host Marriott, L.P. is the
lessor and a Subsidiary of CCC is the lessee and that is the subject of a
guarantee by CCC and a pooling and security agreement substantially similar to
the Guarantee and this Agreement, as in effect on the date hereof.
"OTHER TENANT" means the lessee under an Other Lease.
"PAYMENT DEFAULT" means, with respect to a Lease or any Other Lease as to
which the CCC Limit of Liability under the applicable Other Guarantee is greater
than zero, a default by the applicable Tenant or Other Tenant in the payment of
Rent after expiration of any applicable notice and cure periods and after giving
effect to distributions from the Pool Cash Collateral Account or payment of such
Rent by Pool Parent or CCC pursuant to the Guarantee; provided that no Payment
Default will be deemed to have occurred with respect to any Other Lease under
which the ownership interest of CCC (direct or indirect) in the lessee is less
than 100%, so long as CCC and the applicable
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Subsidiary of CCC that has entered into a guarantee of the obligations under
such Other Lease shall have fulfilled their obligations under such guarantee./1/
"PERMITTED DEBT" has the meaning ascribed to such term in Section 4.1.
"PERMITTED INVESTMENTS" means any one or more of the following:
(i) securities issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United
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States of America is pledged in support thereof) having
maturities of not more than one year from the date of
acquisition (or such shorter period required by the terms of
this Agreement);
(ii) U.S. dollar denominated time deposits, certificates of deposit
and bankers acceptances of any bank whose short-term commercial
paper rating from Standard & Poor's Rating Services ("S&P") is
at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ Investors
Service, Inc. ("▇▇▇▇▇'▇") is at least P-2 or the equivalent
thereof (any such bank, an "APPROVED BANK"), in each case with
maturities of not more than one year from the date of
acquisition (or such shorter period required by the terms of
this Agreement);
(iii) commercial paper issued by any Approved Bank or by the parent
company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-
term commercial paper rating of at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long
term unsecured debt rating of at least A or A-2, or the
equivalent of each thereof, from S&P or Moody's, as the case may
be, and in each case maturing within one year after the date of
acquisition (or such shorter period required by the terms of
this Agreement);
(iv) marketable direct obligations issued by the District of Columbia
or any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition
thereof (or such shorter period required by the terms of this
Agreement) and, at the time of acquisition, having one of the
two highest ratings obtainable from either S&P or Moody's; and
(v) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in
clauses (i) through (iv) above.
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/1/ The liability under the guarantee of such a lease will be limited to the
percentage ownership interest of CCC in the lessee.
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"PERMITTED LIEN" has the meaning ascribed to such term in Section 4.2.
"PERSON" means any individual, partnership, limited liability company,
joint venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"POOL CASH COLLATERAL ACCOUNT" has the meaning ascribed to such term in
Section 2.2(a).
"RENT" means, with respect to any Lease or Other Lease, minimum rent,
percentage rent or additional charges owing under such Lease or Other Lease.
"RENT PAYMENT DATE" means, with respect to any Lease, the date on which a
regularly scheduled payment of Rent is due.
"RENT SHORTFALL" means, with respect to any Lease, the amount of any
deficit in payment of Rent on any Rent Payment Date, prior to giving effect to
any distribution from the Pool Cash Collateral Account or any payment of the
amount owing by Pool Parent or CCC pursuant the Guarantee.
"REQUIRED RESERVE AMOUNT" means, as of any Distribution Date, an amount
equal to the greater of (i) the CCC Limit of Liability under the Guarantee as of
such Distribution Date, after giving effect to all payments on such date or (ii)
0.5% of the aggregate Rent (excluding Additional Charges (as defined in each
Lease) and without deduction of FF&E Adjustments under any Lease) payable under
all Leases for the preceding Fiscal Year (with the amount in this clause (ii)
being for Fiscal Year 1999 0.5% of the aggregate Rent (excluding Additional
Charges (as defined in each Lease) and without deduction of FF&E Adjustments
under any Lease) payable under all Leases for Fiscal Year 1999).
"SECONDARY LOCKBOX PERIOD" means the period beginning upon the occurrence
of a Secondary Lockbox Trigger Event and continuing thereafter until the first
day of the first full Accounting Period after (i) the Tangible Net Worth of CCC
is at least equal to the Minimum Net Worth as of the end of each of three
consecutive Accounting Periods, (ii) the Consolidated Coverage Ratio of CCC is
at least 1.8 to 1.0 for each of three consecutive Accounting Periods, and (iii)
no Payment Default under (A) any Lease or (B) any Other Lease with respect to
which the CCC Limit of Liability under the applicable Other Guarantee is greater
than zero and no "Event of Default" (as defined in the applicable Lease) under
Section 12.1(c) of any Lease by reason of a breach of Section 7.1 or 21.6.3 of
such Lease has been in effect as of three consecutive Distribution Dates;
provided that a Secondary Lockbox Period shall not terminate by reason of an
event described in clause (i), (ii), or (iii) if the CCC Limit of Liability
under the Guarantee shall have been reduced to zero.
"SECONDARY LOCKBOX TRIGGER EVENT" means any of the following events:
(i) the Tangible Net Worth of CCC is less than the Minimum Net
Worth as of the end of each of three consecutive Accounting
Periods;
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(ii) the Consolidated Coverage Ratio of CCC is less than 1.8 to 1.0
for each of three consecutive Accounting Periods;
(iii) the occurrence of a Payment Default under (A) any Lease or (B)
any Other Lease with respect to which the CCC Limit of
Liability under the applicable Other Guarantee is greater than
zero, or "Event of Default" (as defined in the applicable
Lease) under Section 12.1(c) of any Lease by reason of a breach
of Section 7.1 or 21.6.3 of such Lease; or
(iv) the CCC Limit of Liability under the Guarantee shall have been
reduced to zero.
"SUBSIDIARY" shall mean, as to any Person, (i) any corporation more than
fifty percent (50%) of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person or one or
more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person or one
or more Subsidiaries of such Person has more than a fifty percent (50%) equity
interest at the time.
"TANGIBLE NET WORTH" means, with respect to any Person on any date, without
duplication, (i) the sum of the shareholders' equity of such Person on a
consolidated basis in accordance with GAAP minus (ii) the sum of all Intangible
Assets (net of accumulated amortization) of such Person and its Subsidiaries,
each as shown on the consolidated balance sheets of such Person.
"TENANT" means each Person named as the lessee under a Lease on Schedule 1
----------
hereto, and each Person that becomes a "Tenant" hereunder pursuant to Section
3.1.
"TENANT MEMBER" means each wholly owned Subsidiary of Pool Parent named as
the sole equity member of a Tenant on Schedule 2 hereto, and each Person that
----------
becomes a "Tenant Member" hereunder pursuant to Section 3.1.
2. CASH COLLATERAL ARRANGEMENTS
2.1 SECURITY AGREEMENT RELATING TO ACCOUNT COLLATERAL
(a) Pledge of Account Collateral. To secure the full and punctual payment
----------------------------
and performance when due of all of the Guaranteed Obligations, Pool Parent
hereby pledges, and grants to the Collateral Agent for the benefit of the
Landlords, a first and continuing security interest in and to, the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located (such property, collectively, the "ACCOUNT
COLLATERAL"):
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(i) all of Pool Parent's right, title and interest in and to any
dividends, distributions or other amounts paid with respect to any
equity interests in a Tenant or Tenant Member;
(ii) all of Pool Parent's right, title and interest in and to the
Pool Cash Collateral Account; and all moneys and Permitted
Investments, if any, from time to time deposited or held in the
aforementioned account; and
(iii) to the extent not covered by clause (i) or (ii) above, all
cash, instruments and other property received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
(b) Financing Statements; Further Assurances. Upon the request of Landlord
----------------------------------------
Representative, Pool Parent will execute and deliver to the Collateral Agent for
filing a financing statement or statements in connection with the Account
Collateral in the form required to properly perfect the Collateral Agent's
security interest for the benefit of the Landlords in the Account Collateral to
the extent that it may be perfected by such a filing. From time to time, at the
expense of Pool Parent, Pool Parent shall promptly execute and deliver all
further instruments prepared by the Landlord Representative, and take all
further action, that the Collateral Agent and the Landlord Representative may
reasonably request, in order to perfect and protect the pledge and security
interest granted or purported to be granted hereby, or to enable the Collateral
Agent to exercise and enforce the Collateral Agent's rights and remedies
hereunder with respect to any Account Collateral. Neither the Collateral Agent
nor the Pool Parent shall be responsible for the determination of the financing
statements and other instruments necessary to perfect such security interest or
for the filing of such financing statements and other instruments at the
locations necessary to perfect and continue such security interest.
(c) Transfers and Other Liens. Pool Parent shall not sell or otherwise
-------------------------
dispose of any of the Account Collateral other than pursuant to the terms
hereof, or create or permit to exist any Lien upon or with respect to all or any
of the Account Collateral, except for the Lien granted to the Collateral Agent
for the benefit of the Landlords under this Agreement.
(d) Continuing Security Interest; Termination. This Section 2.1 shall
-----------------------------------------
create a continuing pledge of and security interest in the Account Collateral
and shall remain in full force and effect so long as the Guarantee remains
outstanding. Upon termination or expiration of the Guarantee and payment of all
Guaranteed Obligations, subject to the limits specified in the Guarantee, Pool
Parent shall be entitled to the return, upon its request and at its expense, of
such of the Account Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof, and, upon written notification by the Landlord
Representative to the Collateral Agent that the Guarantee has terminated or
expired and all outstanding Guaranteed Obligations have been paid in full, the
Collateral Agent shall release any funds then held by it in the Pool Cash
Collateral Account and execute such instruments and documents as may be
reasonably requested by Pool Parent to evidence such termination and the release
of the pledge and lien hereof.
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2.2 ESTABLISHMENT, MAINTENANCE AND FUNDING OF POOL CASH COLLATERAL ACCOUNT
(a) At any time after a Lockbox Notice Date, or in the discretion of
Landlord Representative prior thereto, Landlord Representative shall establish
and thereafter maintain with the Collateral Agent a master collection account
(the "POOL CASH COLLATERAL ACCOUNT") in the name of Pool Parent and the
Collateral Agent for the benefit of the Landlords as secured party.
(b) During any Lockbox Period, Pool Parent shall cause to be promptly
deposited (and in any event, Pool Parent will use its best efforts to cause such
to occur within 24 hours) in the Pool Cash Collateral Account all revenues and
other income that it receives from any source whatsoever. Pool Parent shall not
permit any other funds so to be deposited or commingled in the Pool Cash
Collateral Account, except as required pursuant to paragraph (d) below.
(c) During any Lockbox Period, each Tenant shall distribute to the Pool
Parent (or, if the equity member of such Tenant is a Tenant Member, to the
applicable Tenant Member and such Tenant Member shall distribute to the Pool
Parent) all Distributable Cash on each Rent Payment Date under each Lease to
which such Tenant is a party and Pool Parent shall deposit such funds,
immediately upon receipt, into the Pool Cash Collateral Account.
(d) During any Lockbox Period, CCC and Pool Parent shall deposit all
payments made by either of them under the Guarantee directly into the Pool Cash
Collateral Account, and the deposit of all amounts owing under the Guarantee
into the Pool Cash Collateral Account shall be deemed to constitute payment of
their obligations thereunder.
(e) Pool Parent shall direct the Collateral Agent in writing to invest and
reinvest any balance in the Pool Cash Collateral Account from time to time in
Permitted Investments; provided that (i) the maturities of the Permitted
Investments on deposit in the Pool Cash Collateral Account shall be such that
the amounts required to be withdrawn therefrom pursuant to Section 2.3 shall be
available in cash as of the close of business on the Business Day immediately
preceding the date on which such funds are required to be withdrawn, (ii) all
such Permitted Investments other than during the continuance of an Event of
Default shall be held in the name of Pool Parent and, during the continuance of
an Event of Default, shall be held in the name of the Collateral Agent for the
benefit of the Landlords, and (iii) no Permitted Investment shall be directed to
be made unless the Collateral Agent for the benefit of the Landlords shall
retain a perfected first priority Lien in such Permitted Investment and all
filings and other actions necessary to ensure the validity, perfection, and
priority of such Lien have been taken. Neither the Collateral Agent, the
Landlord Representative nor any Landlord shall have any liability for any loss
in investments of funds in the Pool Cash Collateral Account that are invested in
Permitted Investments (unless, in the case of the Collateral Agent, such funds
are invested contrary to Pool Parent's or the Landlord Representative's written
direction, as applicable) and no such loss shall affect Pool Parent's obligation
to fund, or liability for funding, the Pool Cash Collateral Account. Pool
Parent shall include all earnings on the Pool Cash Collateral Account as income
of Pool Parent for federal and applicable state tax purposes. In the
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absence of any written direction, the Collateral Agent shall invest the balance
of the Pool Cash Collateral Account in the Permitted Investment described in
clause (v) of the definition thereof. Notwithstanding the foregoing, the
Collateral Agent shall be permitted to keep uninvested funds in the Pool Cash
Collateral Account from the day prior to each Rent Payment Date until such Rent
Payment Date.
(f) Pool Parent shall be the owner of the Pool Cash Collateral Account for
all purposes, subject to the security interest therein created by this Agreement
and to the application of all amounts held therein for the account of the Pool
Parent as set forth in this Agreement.
2.3 DISBURSEMENTS FROM POOL CASH COLLATERAL ACCOUNT.
(a) Disbursements Prior to Secondary Lockbox Event. On each Distribution
----------------------------------------------
Date during any Lockbox Period, and provided that no Secondary Lockbox Trigger
Event shall have occurred and be continuing (in which event the provisions of
paragraphs (b) or (c) below shall apply), upon receipt of a certificate signed
by Pool Parent and the Landlord Representative stating that all Rent owing for
the immediately preceding Accounting Period and all prior Accounting Periods
under each Lease and under each Other Lease as to which the CCC Limit of
Liability under the applicable Other Guarantee is greater than zero has been
paid in full, the Collateral Agent shall disburse all funds held in the Pool
Cash Collateral Account to Pool Parent. If, on any such Distribution Date, a
Rent Shortfall exists under any Lease for the immediately preceding Accounting
Period or any prior Accounting Period, upon receipt of a certificate from the
Landlord Representative setting forth the Leases as to which there is a Rent
Shortfall and the amount of each such Rent Shortfall, the Collateral Agent shall
pay to the applicable Landlord an amount equal to such Rent Shortfall; if the
funds available in the Pool Cash Collateral Account are not sufficient to pay
all Rent Shortfalls, then the Collateral Agent shall make payments with respect
to each Rent Shortfall to the extent of available funds ratably based on the
ratio of the amount of each Rent Shortfall to the aggregate amount of Rent
Shortfalls under all Leases. Any funds remaining in the Pool Cash Collateral
Account after satisfying any Rent Shortfall shall be distributed promptly upon
receipt of the certificate referred to in the first sentence of this paragraph.
(b) Disbursements During Secondary Lockbox Period. On each Distribution
---------------------------------------------
Date during a Secondary Lockbox Period, the Collateral Agent shall disburse from
the Pool Cash Collateral Account, to the extent available therein, funds in
amounts sufficient for the following purposes, in the following order of
priority:
First, to the Landlord under each Lease with respect to which there
is a Rent Shortfall for the immediately preceding Accounting Period or any
prior Accounting Period, an amount equal to such Rent Shortfall; if the
funds available in the Pool Cash Collateral Account are not sufficient to
pay all Rent Shortfalls, then the Collateral Agent shall make payments with
respect to each Rent Shortfall to the extent of available funds ratably
based on the ratio of the amount of each Rent Shortfall to the aggregate
amount of Rent Shortfalls under all Leases;
Second, subject to the provisions of Section 2.3(c), to Pool Parent,
an amount equal to (x) $3,077 times the number of Leases as to which there
is no
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Payment Default after application of funds disbursed pursuant to clause
First above times the number of full Accounting Periods that have then
elapsed since the beginning of the applicable Secondary Lockbox Period,
less (y) the aggregate amount of Cash Expenses of all Tenants deducted in
determining Distributable Cash for all Accounting Periods since the
beginning of the applicable Secondary Lockbox Period, less (z) the
cumulative amount of all distributions under this clause Second during such
Secondary Lockbox Period; and
Third, subject to the provisions of Section 2.3(c), to Pool Parent
any remaining funds in excess of the Required Reserve Amount, so long as
there is no Payment Default under any Lease or under any Other Lease as to
which the CCC Limit of Liability under the applicable Other Guarantee is
greater than zero and no Event of Default hereunder shall have occurred and
be continuing; if the remaining funds are less than or equal to the
Required Reserve Amount, the Collateral Agent shall retain all funds
remaining in the Pool Cash Collateral Account.
(c) Disbursements after Default. If a Payment Default under any Lease or
---------------------------
under any Other Lease as to which the CCC Limit of Liability under the
applicable Other Guarantee is greater than zero or an Event of Default hereunder
shall have occurred and be continuing, then the Collateral Agent shall not
disburse any funds from the Pool Cash Collateral Account pursuant to paragraph
Second or Third of Section 2.3(b).
(d) Disbursements at End of Lockbox Period. Promptly after the termination
--------------------------------------
of any Lockbox Period, the Collateral Agent shall disburse to the Pool Parent
any funds then held in the Pool Cash Collateral Account that are not required to
cure any existing Rent Shortfalls.
(e) Reliance on Certificates. During a Secondary Lockbox Period, the
------------------------
Collateral Agent shall make distributions from the Pool Cash Collateral Account
on the basis of, and it shall be entitled to rely on, certificates furnished by
Landlord Representative.
3. ADDITION OF LEASES
3.1 ADDITION OF LEASES, TENANTS, OR TENANT MEMBERS
From time to time, the Landlord Representative and the Pool Parent shall be
entitled to cause an additional lease of a lodging facility under which Host
Marriott, L.P. or a Subsidiary of Host Marriott, L.P. is the lessor and a
Subsidiary of CCC is the lessee to become subject to this Agreement, without the
consent of the Landlords or Tenants, by amending Schedule 1 hereto to add such
----------
lease, provided that the obligations under such lease are guaranteed pursuant to
the Guarantee and the lessee and lessor under such lease agree in writing to be
bound by the respective obligations hereunder of a "Tenant" or "Landlord," as
the case may be. Upon such amendment of Schedule 1 and such agreement by such
----------
the lessor and lessee under such lease, such lease shall be a "Lease" and the
lessee and lessor thereunder shall be a "Tenant" or "Landlord," as the case may
be, under this Agreement.
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4. NEGATIVE COVENANTS APPLICABLE TO POOL PARENT
4.1 INDEBTEDNESS
Pool Parent shall not (i) incur, create or assume any Indebtedness; or (ii)
guarantee or have any consensual contingent obligation for the obligations of
any other Person, other than pursuant to the Guarantee or this Agreement;
provided that, so long as no Event of Default has occurred and is continuing,
Pool Parent may incur, create or assume any Permitted Debt (as defined below).
As used herein, "PERMITTED DEBT" shall mean:
(i) if no Event of Default has occurred and is continuing,
unsecured Indebtedness owing to CCC, with respect to which CCC shall
have agreed in writing, in form and substance satisfactory to Landlord
Representative, that payment of such Indebtedness shall be
subordinated in all respects to performance of Pool Parent's
obligations under this Agreement and that no remedies may be exercised
with respect to enforcement or collection of such Indebtedness until
such time as this Agreement shall have terminated and all obligations
owed by Pool Parent hereunder shall have been discharged in full; and
(ii) if no Event of Default has occurred and is continuing,
Indebtedness solely in respect of surety and appeal bonds, performance
bonds and other obligations of a like nature (to the extent that such
incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of others), all in the
ordinary course of business in accordance with customary industry
practices.
4.2 LIENS
Pool Parent shall not create or suffer to exist any Liens on its assets
other than Permitted Liens. As used herein, "PERMITTED LIEN" shall mean the
Liens created by this Agreement and any other Lien securing obligations under
the Guarantee.
4.3 INVESTMENTS
Pool Parent shall not make any investment in, or advance, loan or extend
credit to, make any capital contribution to, or acquire or own stock or other
equity interests in, any other Person other than advances, loans or extensions
of credit to, capital contributions to, or equity interests in Tenants and
Tenant Members.
4.4 TRANSFERS OF INTERESTS IN TENANTS AND TENANT MEMBERS
Pool Parent shall not (i) transfer or otherwise dispose of any equity
interest in any Tenant other than to a wholly owned Subsidiary of Pool Parent
that agrees in writing
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to be bound by the obligations of a Tenant Member hereunder or (ii) transfer or
otherwise dispose of any equity interest in any Tenant Member.
4.5 AMENDMENT OF ORGANIZATIONAL DOCUMENTS
CCC and Pool Parent shall not modify Sections ____ [SPECIFY SECTIONS
RELATING TO SPE PROVISIONS] of the certificate of incorporation of Pool Parent
and shall not modify, or permit or fail to prevent any modification of, the
limited liability company operating agreement, articles of incorporation,
partnership agreement or similar organizational document of any Tenant in
violation of the applicable Lease or of any Tenant Member without the consent of
the Landlord Representative (such consent not to be unreasonably withheld).
Pool Parent shall not (i) issue any capital stock to any Person other than CCC
and shall not permit any Tenant or Tenant Member to admit any new member or
issue any capital stock to any Person other than Pool Parent or (ii) permit or
suffer to occur any change in the identity of the owner of its capital stock or
the capital stock or membership interests of any Tenant or Tenant Member without
the prior approval of the Landlord Representative (such approval not to be
unreasonably withheld).
4.6 MISAPPLICATION OF FUNDS
Pool Parent shall not make any distribution to or for the benefit of any of
its equity owners while a Event of Default is pending; or fail to remit or cause
to be remitted to the Pool Cash Collateral Account all amounts required so to be
remitted pursuant to this Agreement.
4.7 PLACE OF BUSINESS
Pool Parent shall not change its chief executive office or its principal
places of business without giving the Landlord Representative at least 20 days'
prior written notice thereof and promptly providing the Landlord Representative
such information as the Landlord Representative may reasonably request in
connection therewith.
5. SPE COVENANTS
5.1 BUSINESS OF POOL PARENT
Pool Parent shall not engage in any business other than the ownership of
equity interests in the Tenants and Tenant Members.
5.2 SEPARATE EXISTENCE
Pool Parent shall (i) maintain its books and records and bank accounts
separate from any other Person (except that, for accounting and reporting
purposes, Pool Parent may be included in the CCC Consolidated Financial
Statements in accordance with GAAP);
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(ii) maintain an arm's length relationship with its stockholders, Affiliates and
any other party furnishing services to it; (iii) maintain its books, records,
resolutions and agreements as official records; (iv) conduct its business in its
own name and through its own authorized officers and agents; (v) maintain its
financial statements, accounting records and other corporate documents separate
from those of any other Person (except for inclusion in the CCC Consolidated
Financial Statements); (vi) pay its own liabilities out of its own funds and
other assets, including funds contributed to its capital by its equity holders,
and all such capital contributions shall be reflected properly in its books and
records; (vii) observe all corporate formalities, as applicable, necessary to
maintain its identity as an entity separate and distinct from its stockholders,
CCC, and all other Affiliates; (viii) participate in the fair and reasonable
allocation of any and all overhead expenses and other common expenses for
facilities, goods or services provided to multiple entities; (ix) use its own
stationery, invoices and checks (except when acting in a representative
capacity); (x) hold and identify itself as a separate and distinct entity under
its own name and not as a division or part of any other Person (except for
inclusion in the CCC Consolidated Financial Statements); and (xi) hold its
assets in its own name.
5.3 INDEPENDENT DIRECTOR
Pool Parent shall have an Independent Director at all times, or if the
Independent Director has resigned, Pool Parent shall not take any action which
may not be taken pursuant to the organizational documents of Pool Parent without
the consent of the Independent Director until such time as a replacement
Independent Director has been appointed to the board of directors of Pool
Parent.
5.4 FUNDAMENTAL CHANGES
Pool Parent shall not merge or consolidate with any other Person, liquidate
or dissolve, or permit any Tenant or Tenant Member to merge or consolidate with
any other Person or liquidate or dissolve.
6. EVENTS OF DEFAULT; REMEDIES
6.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall be an
"EVENT OF DEFAULT" hereunder:
(a) A failure by CCC or Pool Parent to make any payment under the Guarantee
when due;
(b) Pool Parent or any Tenant is in default of any of its obligations under
Article 2 hereof and such default is not cured within (i), with respect to their
respective obligations under Section 2.2, 5 Business Days after the occurrence
thereof, or (ii), with
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respect to any other obligations under Article 2, 10 Business Days after receipt
of notice of such default;
(c) Pool Parent is in default of any of its obligations under Article 4 or
5 hereof;
(d) Any Change of Control occurs;
(e) Any obligation of Pool Parent in respect of any Indebtedness in a
principal amount in excess of $1,000,000 for money borrowed or for the deferred
purchase price of any material property or services, is declared to be, or as a
result of acceleration becomes, due and payable prior to the stated maturity
thereof;
(f) Pool Parent or CCC is generally not paying its debts as they become
due, or Pool Parent or CCC makes a general assignment for the benefit of
creditors;
(g) A petition is filed by or against Pool Parent or CCC under the federal
bankruptcy laws, or any other proceeding is instituted by or against Pool Parent
or CCC seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment 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, custodian or other similar official for Pool Parent or CCC or
for any substantial part of the property of Pool Parent or CCC, and, in the case
of any involuntary petition filed or proceeding instituted against Pool Parent
or CCC only, such proceeding is not dismissed within sixty (60) days after
institution thereof, or Pool Parent or CCC takes any action to authorize or
effect any of the actions set forth above in this paragraph;
(h) Pool Parent or CCC causes or institutes any proceeding for its
dissolution or termination; or
(i) CCC fails to maintain for each of three (3) consecutive Accounting
Periods either (i) a Tangible Net Worth equal to or greater than (x) the CCC
Limit of Liability under the Guarantee from time to time less (y) amounts held
in any lockbox or cash collateral account under any Lease, any Other Lease, this
Agreement or any pooling and security agreement relating to Other Leases,
immediately after the Distribution Date for the preceding Accounting Period, or
(ii) a Consolidated Coverage Ratio of at least 1.4 to 1.0.
6.2 REMEDIES IN CASE OF AN EVENT OF DEFAULT
(a) If an Event of Default shall have occurred and be continuing, in
addition to such other rights and remedies as may be available at law or in
equity, the Collateral Agent shall be entitled to exercise all of the rights,
powers and remedies (whether vested in it by this Agreement, the Guarantee or by
law) for the protection and enforcement of its rights in respect of the Account
Collateral, including, without limitation, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code of the State of
Maryland, and the Collateral Agent shall be entitled, without limitation, to
exercise any
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or all of the following rights, which Pool Parent hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the Account
Collateral otherwise payable to Pool Parent; and
(ii) to transfer all or any part of the Account Collateral into the
Collateral Agent's name or the name of its nominee or nominees.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent may, upon prior written notice from the Landlord
Representative and without notice or liability to Pool Parent, apply any or all
amounts in the Pool Cash Collateral Account for any of the following purposes
relating to the Guaranteed Obligations, in the following order:
(i) reimbursement of the Landlord Representative, the Collateral
Agent and the Landlords for all losses and reasonable expenses
(including without limitation reasonable legal fees) actually suffered
or incurred by such Persons as a result of such Event of Default;
(ii) payment of any reasonable amount expended in exercising rights
and remedies available to the Collateral Agent, the Landlord
Representative or the Landlords at law or in equity or under this
Agreement or under the Guarantee; and
(iii) payment of any Guaranteed Obligations then due and payable
(and if the amount available in the Pool Cash Collateral Account is
insufficient to pay all such amounts in full, then the amounts then
due and payable to each Landlord in respect of Guaranteed Obligations
will be paid pro rata based on the respective amounts of Guaranteed
Obligations then due to each Landlord).
(c) Every right and remedy granted to the Collateral Agent under this
Agreement or by law may be exercised by the Collateral Agent at any time and
from time to time as and when provided hereby, and as often as the Collateral
Agent may deem it expedient. Any and all of the Collateral Agent's rights with
respect to the pledge of and security interest in the Account Collateral granted
hereunder shall continue unimpaired, and Pool Parent shall be and remain
obligated in accordance with the terms hereof, notwithstanding (i) any
proceeding of Pool Parent, CCC, or any Tenant under the United States Bankruptcy
Code or any bankruptcy, insolvency or reorganization laws or statutes of any
state, (ii) the release or substitution of Account Collateral at any time, or of
any rights or interests therein pursuant to this Agreement, or (iii) any delay,
extension of time, renewal, compromise or other indulgence granted by the
Collateral Agent at the written direction of the Landlord Representative in the
event of any Event of Default with respect to the Account Collateral or
otherwise hereunder.
(d) Collateral Agent Appointed Attorney-In-Fact. Pool Parent hereby
-------------------------------------------
irrevocably constitutes and appoints the Collateral Agent as Pool Parent's true
and lawful attorney-in-fact, with full power of substitution, at any time after
the occurrence and
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during the continuation of an Event of Default, to execute, acknowledge and
deliver any instruments and to exercise and enforce every right, power, remedy,
option and privilege of Pool Parent with respect to the Account Collateral, and
do in the name, place and stead of Pool Parent, all such acts, things and deeds
for and on behalf of and in the name of Pool Parent with respect to the Account
Collateral, which Pool Parent could or might do in the absence of such Event of
Default or which the Landlord Representative may deem necessary or desirable to
more fully vest in the Collateral Agent the rights and remedies provided for
herein with respect to the Account Collateral and to accomplish the purposes of
this Agreement. For so long as the Guarantee remains outstanding, the foregoing
powers of attorney are irrevocable and coupled with an interest.
6.3 REMEDIES, ETC. CUMULATIVE
Each right, power and remedy of the Collateral Agent provided for in this
Agreement or the Guarantee now or hereafter existing at law or in equity or by
statute shall be cumulative and concurrent and shall be in addition to every
other such right, power or remedy. The exercise or beginning of the exercise by
the Collateral Agent of any one or more of the rights, powers or remedies
provided for in this Agreement or the Guarantee or now or hereafter existing at
law or in equity or by statute or otherwise shall not preclude the simultaneous
or later exercise by the Collateral Agent of all such other rights, powers or
remedies, and no failure or delay on the part of the Collateral Agent to
exercise any such right, power or remedy shall operate as a waiver thereof.
6.4 INDEMNITY
Pool Parent agrees (i) to indemnify and hold harmless the Collateral Agent
from and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature arising out
of the performance of its duties hereunder, and (ii) to reimburse the Collateral
Agent, the Landlord Representative and the Landlords for all reasonable costs
and expenses, including reasonable attorneys' fees, growing out of or resulting
from the exercise by the Collateral Agent of any right or remedy granted to it
hereunder or under the Guarantee except, with respect to clauses (i) and (ii)
above, for those claims, demands, losses, judgments and liabilities arising from
the Collateral Agent's gross negligence, bad faith, fraud or willful misconduct.
In no event shall the Collateral Agent be liable, in the absence of gross
negligence, bad faith, fraud or willful misconduct on its part, for any matter
or thing in connection with this Agreement other than to account for moneys or
other property actually received by it in accordance with the terms hereof or
thereof. If and to the extent that the obligations of Pool Parent under this
Section are unenforceable for any reason, Pool Parent hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.
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7. MISCELLANEOUS PROVISIONS
7.1 TERMINATION
This Agreement shall terminate on the date that the obligations of the Pool
Parent under the Guarantee terminate (other than with respect to Special
Guarantee Obligations (as defined in the Guarantee)), as provided in Section
10(a) of the Guarantee. Upon termination of this Agreement, any funds remaining
in the Pool Cash Collateral Account, after application in accordance with this
Agreement, including pursuant to the provisions of Section 6.2(b), and
satisfaction of any Guaranteed Obligations to the extent of such funds, shall be
released by the Collateral Agent to the Pool Parent.
7.2 FINANCIAL REPORTING
(a) On each Distribution Date, CCC shall furnish to Landlord Representative
a certificate of the chief financial officer, controller, chief accounting
officer or treasurer of CCC setting forth the Tangible Net Worth, Consolidated
Coverage Ratio, and Minimum Net Worth of CCC as of the last day of the
immediately preceding Accounting Period and the CCC Limit of Liability under the
Guarantee and each Other Guarantee as of such date.
(b) CCC shall furnish to Landlord Representative, (i) within 40 days after
the end of each of the first three quarters of a Fiscal Year, the most recent
unaudited CCC Consolidated Financial Statements accompanied by a Financial
Officer's Certificate and, (ii) within 80 days after the end of each Fiscal
Year, the CCC Consolidated Financial Statements for such Fiscal Year, certified
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or another independent certified public accountant
reasonably satisfactory to Landlord and accompanied by a Financial Officer's
Certificate.
(c) Except as otherwise provided herein, the cost for one consolidated
audit with respect to CCC per Fiscal Year and one quarterly unaudited statement
with respect to CCC for each of the first three fiscal quarters in the Fiscal
Year as may be required by the Securities and Exchange Commission for regular
reporting requirements of Landlord Representative or Host REIT under the
Securities and Exchange Act of 1934 shall be borne by Pool Parent. Except as
otherwise provided herein, the cost of any other audits or financial statements
requested by Landlord Representative or any Landlord shall be borne by Landlord
Representative and the Landlords. CCC Consolidated Financial Statements shall
be accepted by Landlord Representative if prepared on a combined basis along
with all of the other hotels leased from Landlord Representative or any of its
Affiliates by a wholly owned Subsidiary of Pool Parent or CCC.
(d) Any financial report or certificate delivered hereunder by CCC in a
timely manner that includes the information required to be furnished under a
Lease shall be deemed to satisfy the obligation to provide such report or
certificate under such Lease.
(e) If Landlord Representative does not object to the calculation of the
CCC Limit of Liability under the Guarantee or any Other Guarantee within 30 days
after receipt of the Financial Officer's Certificate accompanying any audited
annual CCC
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Consolidated Financial Statements, Landlord Representative will not be permitted
to object to such calculation at any time thereafter.
7.3 NOTICES
(a) Any and all notices, demands, consents, approvals, offers, elections
and other communications required or permitted under this Agreement shall be
deemed adequately given if in writing and the same shall be delivered either in
hand, by telecopier with computer generated acknowledgment of receipt, or by
mail or Federal Express or similar expedited commercial carrier, addressed to
the recipient of the notice, postpaid and certified with return receipt
requested (if by mail), or with all freight charges prepaid (if by Federal
Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed
to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Lease a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed:
if to any Landlord, addressed to such Landlord at:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
--------------------------
with a copy to:
Host Marriott, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to Landlord Representative, to:
Host Marriott, L.P.
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to Pool Parent or any Tenant, addressed to Pool Parent or such
Tenant, as the case may be, at:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to:
Crestline Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time to
change their respective addresses effective upon receipt by the other parties of
such notice and each shall have the right to specify as its address any other
address within the United States of America.
7.4 WAIVER; AMENDMENT
None of the terms and conditions of this Agreement may be changed, waived,
modified or varied in any manner whatsoever unless in writing duly signed by
CCC, Pool Parent and the Landlord Representative (with the consent of the
Collateral Agent if such change or waiver imposes any new duties on the
Collateral Agent or would adversely affect the Collateral Agent); provided,
however, that no such change, waiver, modification or variance shall be made to
Section 2.2(c) hereof or this Section 7.4 without the consent of each Tenant
adversely affected thereby.
7.5 BENEFIT
This Agreement shall create a continuing security interest in the Account
Collateral and shall (i) be binding upon Pool Parent, CCC, each Tenant, each
Tenant Member, the Landlord Representative and each Landlord, and the Collateral
Agent and their respective successors and assigns; and (ii) inure to the
benefit of the Collateral Agent, the Landlord Representative and each Landlord
and their respective successors and assigns; provided that no Landlord shall be
permitted to assign its rights hereunder to any Person to which such Landlord
sells or conveys any hotel subject to a Lease, other than a Subsidiary of the
Landlord Representative.
7.6 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF MARYLAND, REGARDLESS OF THE LAWS THAT MIGHT GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
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7.7 HEADINGS
The headings of the several sections and subsections in this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof.
7.8 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party.
7.9 ASSIGNMENT
The rights of the Collateral Agent under this Agreement may be assigned to
a successor Collateral Agent.
7.10 WAIVER OF JURY TRIAL
THE PARTIES HERETO, TO THE FULLEST EXTENT PERMITTED BY LAW, EACH HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
7.11 DELAY NOT A WAIVER
Neither any failure nor any delay on the part of the Collateral Agent in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, shall operate as
or constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right, power,
remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the due date of any amount payable under this Agreement or the
Guarantee, neither the Landlord Representative, any Landlord, nor the Collateral
Agent shall be deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement or the Guarantee or to
declare a default for failure to effect prompt payment of any such other amount.
7.12 SEVERABILITY
Any term or provision of this Agreement which is invalid or unenforceable
in any applicable jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other applicable jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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7.13 PREFERENCES
Neither the Collateral Agent, the Landlord Representative nor any of the
Landlords shall have any obligation to marshal any assets in favor of Pool
Parent, CCC or any other party or against or in payment of any or all of the
obligations of Pool Parent or CCC pursuant to the Guarantee or this Agreement.
To the extent Pool Parent makes a payment or payments to the Collateral Agent,
the Landlord Representative or the Landlords, which payment or proceeds or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by the Collateral Agent, the Landlord Representative or the
Landlords.
7.14 WAIVER OF NOTICE.
Pool Parent shall not be entitled hereunder to any notices of any nature
whatsoever from the Collateral Agent, the Landlord Representative or the
Landlords except with respect to matters for which this Agreement specifically
and expressly provides for the giving of notice by such Person to Pool Parent
and except with respect to matters for which Pool Parent is not, pursuant to
applicable legal requirements, permitted to waive the giving of notice. To the
extent permitted by applicable legal requirements, Pool Parent hereby expressly
waives the right to receive any notice hereunder from the Collateral Agent, the
Landlord Representative or the Landlords with respect to any matter for which
this Agreement does not specifically and expressly provide for the giving of
notice by any one or more of such Persons to Pool Parent.
7.15 REMEDIES OF POOL PARENT, CCC, OR TENANTS
In the event that a claim or adjudication is made that the Collateral Agent
has unreasonably delayed acting in any case where, by law or under this
Agreement, the Collateral Agent has an obligation to act promptly, Pool Parent,
CCC and Tenants agree that the Collateral Agent shall not be liable for any
monetary damages, and their sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment, so long as the
Collateral Agent acted without gross negligence, bad faith, fraud or willful
misconduct.
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IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Security Agreement to be duly executed in their names, all as of the date first
written above.
[POOL PARENT]
By:________________________
Name:______________________
Title:_____________________
CRESTLINE CAPITAL CORPORATION
By:________________________
Name:______________________
Title:_____________________
EACH OF THE TENANTS NAMED ON
SCHEDULE 1 HERETO, BY THEIR DULY
APPOINTED ATTORNEY IN FACT
______________________________
Name:______________________
Attorney in Fact
HOST MARRIOTT, L.P., AS LANDLORD
REPRESENTATIVE
By: Host Marriott Corporation, its general
partner
By:___________________
Name:_________________
Title:________________
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EACH OF THE LANDLORDS NAMED ON
SCHEDULE 1 HERETO, BY THEIR DULY
APPOINTED ATTORNEY IN FACT
_______________________________
Name:______________________
Attorney in Fact
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