EXHIBIT 10.D
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LOAN AGREEMENT
DATED AS OF APRIL 30, 1997
BY AND BETWEEN
HANOVER MARRIOTT LIMITED PARTNERSHIP
AND
HOST MARRIOTT CORPORATION
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TABLE OF CONTENTS
Page
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1. DEFINITIONS................................................ 1
2. THE LOAN................................................... 4
2.1. Making the Loan..................................... 4
2.2. Additional Advances................................. 5
2.3. Mortgage Note....................................... 5
2.4. Use of Loan Proceeds................................ 5
2.5. Payment of Principal and Interest................... 5
3. REPRESENTATIONS AND WARRANTIES OF BORROWER................. 5
3.1. Corporate Authority................................. 6
3.2. Binding Effect, No Violations....................... 6
3.3. Litigation.......................................... 6
3.4. Title to Assets..................................... 6
3.5. No Defaults......................................... 6
3.6. Compliance with Laws................................ 6
3.7. Permits and Licenses................................ 7
4. CONDITIONS PRECEDENT....................................... 7
4.1. Representations, Warranties and Covenants........... 7
4.2. Borrower's Actions.................................. 7
4.3. Delivery of Documents............................... 7
4.3.1. ....................................... 7
4.3.2. ....................................... 8
5. AFFIRMATIVE COVENANTS OF BORROWER.......................... 8
5.1. Proceeds of the Loan................................ 8
5.2. Management Agreement................................ 8
5.3. Financial and Other Information..................... 8
5.4. Maintenance of Existence, Etc....................... 9
5.5. Books and Records; Inspection of Property and Books. 9
5.6. Maintenance of Property............................. 9
6. ENCUMBRANCES............................................... 9
7. EVENTS OF DEFAULT AND REMEDIES............................. 10
7.1. Default; an Event of Default........................ 10
7.1.1. ....................................... 10
7.1.2. ....................................... 10
7.1.3. ....................................... 10
7.1.4. ....................................... 10
7.1.6. ....................................... 11
7.2. Remedies............................................ 11
7.2.1. ....................................... 11
7.2.2. ....................................... 11
7.2.3. ....................................... 11
7.2.4. ....................................... 12
7.3. Remedies Cumulative................................. 12
7.4. Default Interest.................................... 12
7.5. Default Indemnity................................... 12
8. THE SENIOR LOAN............................................ 12
8.1. Permitted Encumbrances.............................. 12
8.2. Execution of Subordination Agreement................ 13
9. MISCELLANEOUS PROVISIONS................................... 13
9.1. Expenses............................................ 13
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9.2. Limitation on Liability............................. 13
9.3. Notices............................................. 14
9.4. Severability........................................ 15
9.5. Survival............................................ 15
9.6. Waivers............................................. 15
9.7. Rights Cumulative................................... 15
9.8. Entire Agreement.................................... 15
9.9. Termination......................................... 15
9.10. Construction....................................... 15
9.11. Pronouns........................................... 16
9.12. Headings........................................... 16
9.13. Business Days...................................... 16
9.14. Execution.......................................... 16
Exhibit A
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Form of Mortgage Note
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "AGREEMENT") is entered into as of April 30,
1997, by and between HANOVER MARRIOTT LIMITED PARTNERSHIP, a Delaware limited
partnership having its principal offices at 10400 Fernwood Road, Bethesda,
Maryland 20817 (the "BORROWER"), and HOST MARRIOTT CORPORATION, a Delaware
corporation, having its principal offices at 10400 Fernwood Road, Bethesda,
Maryland 20817 (the "LENDER").
WHEREAS, the Borrower has requested the Lender to make a loan (the
"LOAN") to the Borrower, and the Lender has agreed to make the Loan to the
Borrower, for the purposes and on the terms and conditions described herein;
WHEREAS, the Loan is evidenced by that certain Mortgage Note dated as
of the date hereof by the Borrower to the order of the Lender and its successors
and assigns in the principal amount of Eleven Million Seven Hundred Thousand and
No/100 Dollars ($11,700,000.00) (subject to reduction as set forth therein),
which is to be secured by a mortgage lien on and security interest in the
Hanover Marriott Hotel, Whippany, New Jersey (the "HOTEL") and all assets
related thereto;
WHEREAS, the parties hereto desire to set forth their agreement
regarding the making of the Loan and the terms and conditions upon which the
Loan shall be made and repaid;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
Unless the context otherwise requires, capitalized terms used herein
shall have the respective meanings specified in this SECTION 1 (such definitions
to be equally applicable to both the singular and plural forms of the terms
defined).
"ACCOUNTING PERIOD" has the meaning ascribed to it in the Management
Agreement.
"AFFILIATE" means, as to any Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote ten percent (10%) or
more of the outstanding equity securities as to the Person in question; (b) any
Person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to vote by the
Person in question; (c) any Person directly or indirectly controlling,
controlled by, or under common control with the Person in question; (d) if the
Person in question is a corporation or limited liability company, any executive
officer, director, member or manager of the Person in question or of any
corporation or limited liability company directly or indirectly controlling,
controlled by, or under common control with the Person in question; and (e) if
the Person in question is a partnership, any general partner of such
partnership. As used in this definition of "AFFILIATE," the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"AGREEMENT" means this Loan Agreement, as it may be amended,
supplemented or modified from time to time.
"AVAILABLE CASH FLOW" has the meaning ascribed to it in the Management
Agreement.
"AWARD" has the meaning ascribed to it in the Mortgage.
"BANKRUPTCY LAW" means title 11, United States Code, or any similar
federal, state or foreign law for the relief of creditors.
"BASE RATE" means fourteen and five-tenths percent (14.5%) per annum.
"BORROWER" means Hanover Marriott Limited Partnership, a Delaware
limited partnership.
"BUSINESS DAY" means a day other than (i) a Saturday or a Sunday or
(ii) a day on which federally insured depository institutions in Maryland are
required or authorized by law, governmental decree or executive order to be
closed.
"CII" means CIGNA Investments, Inc.
"CLOSING" means the making of any advance of the Loan.
"CLOSING DATE" means the date on which any Closing occurs.
"COLLATERAL" means the "PROPERTY" (as defined in the Mortgage) and the
"COLLATERAL" (as defined in the Security Agreement), together with such other
collateral or property as may be pledged, liened or encumbered from time to time
as security for the Loan under any other Security Documents.
"COLLATERAL ASSIGNMENT OF MANAGEMENT AGREEMENT" has the meaning
ascribed to it in the Mortgage.
"DEBT" means the obligations of the Borrower under the Loan Documents
to repay the principal amount of the Loan, together with all interest thereon
and all other sums which may or shall become due under any of the Loan
Documents, including, without limitation, the costs and expenses of enforcing
any provision of the Loan Documents and any other costs that may be reimbursable
hereunder or thereunder.
"DEFAULT" has the meaning ascribed to it in SECTION 7.1 hereof.
"DEFAULT INTEREST RATE" means sixteen and five-tenths percent (16.5%)
per annum.
"DEFERRABLE AMOUNT" has the meaning ascribed to it in SECTION 2.2
hereof.
"DUE DATE" has the meaning ascribed to it in the Mortgage Note.
"ENCUMBRANCE" means any mortgage, deed of trust, deed to secure debt,
lien, claim, option, security interest, pledge, preference, priority,
hypothecation, installment sale agreement, repurchase agreement or other
encumbrance or security arrangement of any kind or nature whatsoever, including,
without limitation, any conditional sale or title retention arrangement, and any
assignment, deposit arrangement, lease or other arrangement intended as, or
having the effect, of security.
"ENVIRONMENTAL INDEMNITY AGREEMENT" has the meaning ascribed to it in
the Mortgage.
"ENVIRONMENTAL LAW" has the meaning ascribed to it in the Mortgage.
"EVENT OF DEFAULT" has the meaning ascribed to it in SECTION 7.1
hereof.
"GENERAL PARTNER" means Marriott Hanover Hotel Corporation, a Delaware
corporation, the sole general partner of the Borrower.
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"GOVERNMENTAL AUTHORITY" means any nation, government, state, or
political subdivision of any thereof, including any court or any other entity
exercising executive, legislative, regulatory, judicial, or administrative
functions of, or pertaining to, government.
"HAZARDOUS MATERIALS" has the meaning ascribed to it in the Mortgage.
"HOTEL" means the Hanover Marriott Hotel, Whippany, New Jersey located
at 1401 Route 10 East, Whippany, New Jersey.
"IMPROVEMENTS" has the meaning ascribed to it in the Mortgage.
"INITIAL CLOSING DATE" means April 30, 1997 or such earlier date as
the Lender may agree to make the first advance of the Loan.
"INSURANCE PROCEEDS" has the meaning ascribed to it in the Mortgage.
"LAND" means the parcel of land on which the Mortgaged Property is
located.
"LIMITED PARTNERS" means the limited partners of the Borrower.
"LOAN" means the loan made by the Lender to the Borrower pursuant to
SECTION 2 hereof.
"LOAN AMOUNT" has the meaning ascribed to it in SECTION 2.1 hereof.
"LOAN DOCUMENTS" means this Agreement, the Mortgage Note, the Security
Agreement, the Mortgage, the Collateral Assignment of Management Agreement, the
Environmental Indemnity Agreement and any and all other documents, agreements,
certificates, notes or other instruments delivered pursuant to, or in connection
with, the Loan.
"MANAGEMENT AGREEMENT" means either (i) that certain Amended and
Restated Lease between the Borrower (as successor in interest to Marriott
Corporation), as "Landlord," and the Manager, as "Tenant," dated as of July 29,
1986, as amended, or (ii) when entered into, any management agreement by and
between the Borrower, as "Owner," and the Mananger, as "Manager," that may be
entered into in place of such Amended and Restated Lease, with respect to the
management of the Hotel.
"MANAGER" means Marriott Hotel Services, Inc., or any successor
thereto, or any other Person who becomes the Tenant or Manager of the Hotel
under the Management Agreement.
"MATURITY DATE" means the date which is fifteen (15) years after the
Initial Closing Date.
"MORTGAGE" means that certain Mortgage, Assignment of Rents and
Leases, Security Agreement and Fixture Filing dated as of the date hereof
between Borrower and Lender with respect to the Mortgaged Property.
"MORTGAGE NOTE" means the promissory note described in SECTION 2.3
hereof.
"MORTGAGED PROPERTY" means the Hotel, including, without limitation,
the Land, the Improvements, and all FF&E (as such term is defined in the
Mortgage).
"PERMITTED ENCUMBRANCES" has the meaning ascribed to it in SECTION 6
hereof.
"PERSON" means an individual, a partnership, a corporation, a trust,
an unincorporated organization, a joint venture or other business entity, a
limited liability company, or a government or any department, agency or
political subdivision thereof.
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"SECURITY DOCUMENTS" means, collectively or individually, as the
context may require, the Mortgage, the Collateral Assignment of Management
Agreement, the Security Agreement and such other documents as are executed and
delivered by any Person to grant additional security for the repayment of the
Loan.
"SENIOR LOAN" means the loan expected to be made by CII to the
Borrower in the principal amount of up to $30 million, or any other loan made to
the Borrower for purposes of paying off the outstanding balance of the Toyo
Loan.
"SENIOR LOAN DOCUMENTS" means the documents governing, evidencing or
relating to the making, securing and repayment of the Senior Loan.
"TAKING" has the meaning ascribed to it in the Mortgage.
"TITLE COMPANY" has the meaning ascribed to it in SECTION 4.3.2
hereof.
"TITLE INSURANCE POLICY" has the meaning ascribed to it in SECTION
4.3.2 hereof.
"THRESHOLD AMOUNT" has the meaning ascribed to it in SECTION 2.1(B)
hereof.
"TOYO LOAN" means the Borrower's existing mortgage indebtedness owed
to the Toyo Trust & Banking Co., Ltd., New York Branch.
"TOYO LOAN DOCUMENTS" means the documents governing, evidencing or
relating to the making, securing and repayment of the Toyo Loan.
2. THE LOAN
2.1. MAKING THE LOAN
(a) Subject to the terms and conditions set forth herein, the Lender
agrees to make a loan (the "LOAN") to the Borrower, which Loan shall be in a
principal amount of up to (1) Eleven Million Seven Hundred Thousand and No/100
Dollars ($11,700,000.00) less (2) the amount by which the net proceeds of the
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Senior Loan exceed Twenty-Seven Million and No/100 Dollars ($27,000,000.00) (the
"LOAN AMOUNT"). Therefore, if the net proceeds of the Senior Loan equal Thirty
Million and No/100 Dollars ($30,000,000.00), the maximum Loan Amount would be
Eight Million Seven Hundred Thousand and No/100 Dollars ($8,700,000.00).
(b) On the Initial Closing Date, the Lender shall make an initial
advance of the Loan to the Borrower in the principal amount of Ten Million and
No/100 Dollars ($10,000,000.00). No further advance of the Loan Amount will be
made until the Borrower has received the proceeds of the Senior Loan and applied
them to the repayment in full of the Borrower's existing mortgage indebtedness.
If the net proceeds of the Senior Loan exceed Twenty-Seven Million and No/100
Dollars ($27,000,000.00) (the "THRESHOLD AMOUNT"), the maximum Loan Amount shall
be the amount calculated in accordance with SECTION 2.1(A), and the Borrower
shall repay to the Lender directly out of the proceeds of the Senior Loan, and
with such other cash as may be necessary for such purpose, (a) the amount by
which the Senior Loan proceeds exceed the Threshold Amount (of which up to One
Million Seven Hundred Thousand and No/100 Dollars ($1,700,000.00) shall be
available for reborrowing in accordance with SECTION 2.2 hereof), together with
(b) all accrued and unpaid interest on the Loan as of the date of such
repayment. If the net proceeds of the Senior Loan are less than the Threshold
Amount, the Lender shall make an additional advance to the Borrower in a
principle amount that is equal to the difference between the Threshold Amount
and the net proceeds of the Senior Loan, provided, however, that in no event
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shall such additional advance cause the total outstanding principal balance of
the Loan to exceed (a) Eleven Million Seven Hundred Thousand and No/100 Dollars
($11,700,000.00) less (b) any principal repayment thereof received by Lender as
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part of the scheduled payments of principal and interest under the Mortgage
Note.
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2.2. ADDITIONAL ADVANCES
After the Closing of the Senior Loan has occurred, and provided no
Default or Event of Default has occurred and is continuing, the Lender agrees to
advance or re-advance to Borrower, at the Borrower's election, up to One Million
Seven Hundred Thousand and No/100 Dollars ($1,700,000.00) (the "DEFERRABLE
AMOUNT") of the Loan Amount, in one or more future advances, which may be used
by Borrower to meet its future needs; provided, however, that no such advance of
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the Loan shall cause the outstanding principal balance of the Loan at any time
to exceed (a) the maximum Loan Amount calculated in accordance with SECTION 2.1
hereof less (b) any principal repayment thereof received by Lender as part of
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the scheduled payments of principal and interest under the Mortgage Note. To
receive an advance of the unadvanced portion of all or any portion of the
Deferrable Amount at any time, the Borrower shall submit a written request to
the Lender specifying the amount requested to be advanced, which amount shall be
advanced, provided all the conditions to the making of an advance specified
herein are satisfied, on the next Business Day following such written request.
Other than the readvance under this SECTION 2.2 of a portion of the repayment of
principal contemplated by SECTION 2.1(B) hereof in connection with the making of
the Senior Loan, no amount of principal of the Loan that is repaid by the
Borrower to the Lender, whether by regularly scheduled payments, by prepayment
or otherwise, may be reborrowed.
2.3. MORTGAGE NOTE
The obligation of the Borrower to repay the full amount of the Loan
that has been advanced at any time, together with interest thereon, and other
charges and expenses, if any, related thereto, shall be evidenced by that
certain Mortgage Note made by the Borrower to the order of the Lender as of the
Closing Date (the "MORTGAGE NOTE"), substantially in the form of EXHIBIT A
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attached hereto and incorporated herein, in the face amount of Eleven Million
Seven Hundred Thousand and No/100 Dollars ($11,700,000.00).
2.4. USE OF LOAN PROCEEDS
The Borrower agrees that the proceeds of the Loan advanced on the
Initial Closing Date shall be used solely for the purpose of repaying the
existing mortgage indebtedness of the Borrower under the Toyo Loan. Advances of
the Loan pursuant to SECTION 2.2 may be used by the Borrower for any purpose.
2.5. PAYMENT OF PRINCIPAL AND INTEREST
All payments made on the Mortgage Note shall be made in the manner,
and subject to the conditions, provided in this Agreement and in the Mortgage
Note. All or any portion of the Mortgage Note may be prepaid at any time
without penalty or premium. To the extent not previously paid, the entire Debt
shall be due and payable in full on the Maturity Date. The Debt shall bear
interest as provided in the Mortgage Note and the other Loan Documents. Any
payments of interest which are due but not paid by reason of an insufficiency of
Available Cash Flow (as set forth in SECTION 7.1.1 hereof) shall be added to the
principal and shall accrue interest at the Base Rate. A failure to pay any
amounts hereunder which are not paid when due for any reason other than an
insufficiency of Available Cash Flow shall bear interest at the Default Interest
Rate beginning on the date such payment becomes past due.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER
To induce the Lender to enter into this Agreement and the other Loan
Documents and to make the Loan to the Borrower, the Borrower makes the following
representations and warranties:
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3.1. CORPORATE AUTHORITY
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
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where its activities or ownership of property require such
qualification, and (c) has the full and unrestricted power and authority,
corporate and otherwise, to own, operate and lease its properties, to carry on
its business as currently conducted, to execute and deliver and perform this
Agreement and the other Loan Documents, to incur the obligations provided for
herein and therein, and to perform the transactions contemplated hereby and
thereby (including, without limitation, the creation of a lien on, and security
interest in favor of the Lender in, the Collateral, all of which have been duly
and validly authorized by all proper and necessary action (all of which actions
are in full force and effect).
3.2 BINDING EFFECT; NO VIOLATIONS
This Agreement and each of the Loan Documents, upon their execution
and delivery, will constitute a legal, valid, and binding obligation of
Borrower, enforceable against Borrower in accordance with their terms. The
execution, delivery, and performance of this Agreement and the other Loan
Documents will not (a) violate, conflict with, or constitute a default under,
any law, regulation, order or any other requirement of any Governmental
Authority, any terms of the partnership agreement of the Borrower, or any
contract, agreement or other arrangement binding upon or affecting Borrower or
any of its property or (b) result in the creation, imposition or acceleration of
any indebtedness or any mortgage, pledge, lien, charge, reservation, covenant,
restriction, security interest, or other encumbrance (individually an
"ENCUMBRANCE" and collectively the "ENCUMBRANCES") of any nature upon, or with
respect to, Borrower or the Collateral, except Encumbrances provided for under
this Agreement or the other Loan Documents.
3.3. LITIGATION
To the best of the Borrower's knowledge, there is no claim,
litigation, proceeding or investigation pending, threatened or reasonably
anticipated against or affecting Borrower or its properties or business, an
adverse determination of which might reasonably be expected to materially and
adversely affect (a) the Hotel or the business, operations, prospects, assets,
properties or condition (financial or otherwise) of the Borrower, (b) the
validity or perfection of the liens securing the Loan or (c) the Borrower's
ability to repay the Loan.
3.4. TITLE TO ASSETS
To the best of the Borrower's knowledge, as of the date hereof,
Borrower has good, valid, and marketable title to all of its properties and
assets (whether real or personal), and there exist no Encumbrances on any of
Borrower's properties or assets, including, without limitation, the Collateral,
other than Permitted Encumbrances. All personal property of Borrower is in good
operating condition and repair, and is suitable and adequate for the purposes
for which it is being used. All inventory of Borrower consists of items which
are good and merchantable and of a quality and quantity presently usable or
salable in the ordinary course of the Borrower's business.
3.5. NO DEFAULTS
To the best of the Borrower's knowledge, no Default or Event of
Default exists hereunder or under the other Loan Documents.
3.6. COMPLIANCE WITH LAWS
The Borrower and the Hotel are in compliance with all applicable laws,
regulations, orders and other requirements of any governmental authority or
arbitrator, except for such non-compliance as would not
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reasonably be expected, singly or in the aggregate, to materially and adversely
affect the Hotel or the business, operations, prospects, assets, properties or
condition (financial or otherwise) of the Borrower.
3.7. PERMITS AND LICENSES
No proceedings are pending or, to the best of the Borrower's
knowledge, threatened seeking the revocation or suspension of any permits,
licenses or approvals issued with respect to the Hotel the revocation of which
might reasonably be expected to result in any material adverse change in the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Borrower or the Hotel.
4. CONDITIONS PRECEDENT
The obligation of the Lender to make any advance of the Loan to the
Borrower and to proceed with any Closing is subject to the satisfaction on or
before such Closing of each and all of the following conditions (and the
occurrence of the Closing shall be conclusive evidence that all such conditions
have been satisfied in full or knowingly waived as of such Closing):
4.1. REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of the Borrower made in this
Agreement and in any other Loan Document shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on the applicable Closing Date, with the same effect as if such
representations and warranties were made on such Closing Date. As of such
Closing Date, the Borrower shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement or by any
other Loan Document to be performed or complied with by the Borrower as of such
date, and no Default or Event of Default shall have occurred and be continuing.
4.2. Borrower's Actions
The Borrower shall have taken all actions under the laws of any state
having jurisdiction over the Borrower necessary to effectuate the transactions
contemplated by this Agreement and by the other Loan Documents.
4.3. Delivery of Documents
The Borrower shall have delivered to the Lender the following
documents, instruments and agreements, each of which shall be in form and
substance reasonably satisfactory to the Lender:
4.3.1.
All Loan Documents, fully executed by the Borrower and, as applicable,
the General Partner, including the following:
(a) This Agreement;
(b) The Mortgage Note (or any necessary replacements thereof);
(c) The Mortgage;
(d) The Security Agreement;
(e) The Collateral Assignment of Management Agreement (and the
Manager's consent to same);
(f) The Environmental Indemnity Agreement; and
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(g) UCC financing statements sufficient for filing in all
jurisdictions where filing is necessary to protect the Lender's
security interest in the Collateral.
4.3.2.
A Mortgagee's form of title insurance policy, or marked-up commitment
evidencing such policy, in form and content reasonably acceptable to the Lender,
and in an amount not less than the Loan Amount, with premiums fully paid (the
"TITLE INSURANCE POLICY"), insuring that (i) the Mortgage constitutes a valid
second mortgage or similar lien on, and security interest in, the Land and the
Improvements and all rights appurtenant thereto described therein, in each case
free and clear of all defects and encumbrances other than as set forth in
EXHIBIT B to the Mortgage, and containing, to the extent such coverage is
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available in New Jersey, (A) full coverage (by affirmative insurance) against
liens of mechanics, materialmen, laborers, and any other Persons who might claim
statutory or other common law liens relating to services performed prior to
Closing; (B) no survey exceptions other than those set forth in EXHIBIT B to the
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Mortgage; (C) such other endorsements as the Lender may deem reasonably
necessary to insure that any off-site easements benefiting the Mortgaged
Property are valid and enforceable in accordance with their terms; and (D) such
other endorsements as the Lender may reasonably request. Such title insurance
policy shall be issued by Chicago Title Insurance Company or any other
nationally recognized title insurance company (the "TITLE COMPANY") reasonably
satisfactory to the Lender.
5. AFFIRMATIVE COVENANTS OF BORROWER
Until all obligations of the Borrower under this Agreement and the
other Loan Documents are paid and performed in full, Borrower hereby covenants
and agrees that it shall, unless the Lender otherwise consents in advance in
writing:
5.1. PROCEEDS OF THE LOAN
Apply the proceeds of the Loan solely for the purposes set forth in
SECTION 2.4 hereof.
5.2. MANAGEMENT AGREEMENT
Duly and punctually pay and perform all of its obligations and enforce
all of its rights under the Management Agreement to the extent failure to
perform or enforce its rights thereunder might materially and adversely affect
the business, operations, prospects, assets, properties or condition (financial
or otherwise) of Borrower or the Hotel.
5.3. FINANCIAL AND OTHER INFORMATION
Furnish to the Lender (a) as soon as available and in any event within
one hundred twenty (120) days after the end of each fiscal year of the Borrower,
the audited balance sheet of the Borrower as of the end of such fiscal year and
the related audited statements of revenues and expenses, statements of assets,
liabilities and partners' capital (deficit), changes in partners' capital and
statement of cash flows of the Borrower for such fiscal year, all prepared in
reasonable detail and on an accrual basis of accounting consistently applied,
and certified by an independent certified public accountant of recognized
standing and acceptable to the Lender; (b) as soon as available, and in any
event within seventy-five (75) days after the end of each fiscal quarter of each
fiscal year of the Borrower, the statement of assets, liabilities and partners'
capital (deficit) and related statements of revenues and expenses, changes in
partners' capital, and statement of cash flows of the Borrower, as of the end of
such quarter, certified by the Borrower's chief accounting officer as having
been prepared on an accrual basis of accounting consistently applied; and (c)
such additional information, reports or statements as the Lender may from time
to time reasonably request.
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5.4. MAINTENANCE OF EXISTENCE, ETC.
At all times (a) maintain its principal place of business, principal
office, and office where it keeps its records and other documents and
instruments, relating to the Hotel (except for certain records, documents and
instruments kept at the Hotel) at its address set forth in the preamble to this
Agreement or such other address of which the Lender may be given written notice
not less than thirty (30) days prior to the date on which a change of location
is to occur; (b) maintain in full force and effect all permits, filings,
authorizations, consents, approvals, and licenses material to the operation of
the Hotel; (c) maintain its legal existence in effect and in good standing; and
(d) comply with all requirements of law material to the conduct of its business
and the performance of its obligations under the Loan Documents.
5.5. BOOKS AND RECORDS; INSPECTION OF PROPERTY AND BOOKS
Keep and maintain adequate and proper records and books of account, in
which complete entries are made on an accrual basis of accounting consistently
applied and in accordance with all laws, and regulations, and permit authorized
representatives of the Lender to discuss the business, operations, prospects,
assets, properties and condition (financial or otherwise) of the Borrower with
its officers and employees and, at reasonable times and on reasonable notice, to
examine, at the Borrower's place of business, its books of account and other
records and make copies thereof or extracts therefrom, all at such reasonable
times as the Lender may request for any purpose reasonably related to the
Lender's interest hereunder.
5.6. MAINTENANCE OF PROPERTY
Keep the Mortgaged Property used or useful in its business, including,
without limitation, the Collateral, in good repair, working order, and
condition, and from time to time make all necessary or desirable repairs,
renewals, and replacements thereof.
6. ENCUMBRANCES
Until all obligations of the Borrower under the Loan Documents are
paid and performed in full, the Borrower hereby covenants and agrees that it
shall not, unless the Lender otherwise consents in advance in writing, create,
assume or suffer to exist, any Encumbrance of any kind, upon any of its
properties, assets or Collateral, whether now owned or hereafter acquired,
except: (i) Encumbrances securing the Toyo Loan; (ii) when the Toyo Loan is
repaid in full, Encumbrances securing the Senior Loan; (iii) the Encumbrances
granted in favor of the Lender under the Mortgage and other Security Documents;
(iv) Encumbrances for taxes, assessments and other governmental charges not yet
due and payable or due and payable, but not yet delinquent, or that are being
contested in good faith by appropriate proceedings; (v) deposits or pledges to
secure the payment of workmen's compensation, unemployment insurance or other
social security benefits or obligations, or to secure the performance of trade
contracts, leases, public or statutory obligations, surety or appeal bonds or
other obligations of a like general nature incurred in the ordinary course of
business; (vi) landlords', mechanics', materialmen's, warehousemen's, carriers',
or other like Encumbrances arising in the ordinary course of business securing
obligations which are not overdue for a period longer than 30 days, or which are
being contested in good faith by appropriate proceedings which are being
diligently pursued or as to which the Encumbrances are bonded to the
satisfaction of the Lender; (vii) easements, rights of way, zoning, similar
restrictions, and other similar encumbrances or title defects that, singly or in
the aggregate, do not in any case materially detract from the value of the
property subject thereto (as such property is used by the Borrower); (viii)
Encumbrances arising by operation of law in connection with judgments, only to
the extent, for an amount, and for a period not resulting in an Event of
Default; (ix) Encumbrances securing capitalized lease obligations insofar as
such Encumbrances cover assets acquired pursuant to such capitalized lease
obligations; (x) Encumbrances described in EXHIBIT B to the Mortgage; and (xi)
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other Encumbrances permitted under the Security Documents (collectively
"PERMITTED ENCUMBRANCES").
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7. EVENTS OF DEFAULT AND REMEDIES
7.1. DEFAULT; AN EVENT OF DEFAULT
The occurrence of any of the following events beyond any applicable
notice and cure period set forth in this SECTION 7.1 shall be an "EVENT OF
DEFAULT" hereunder (and the occurrence of any of the following which, with the
giving of notice or the passage of time, or both, would become an Event of
Default shall, prior to the giving of such notice or the passage of such time,
be a "DEFAULT" hereunder).
7.1.1.
The Borrower shall fail to pay any amount of principal, interest or
other amounts due under this Agreement, the Mortgage Note or any of the other
Loan Documents within five (5) days after receipt of written notice that such
payment is past due; provided, however, that a failure to make interest or
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principal payments on the Mortgage Note by reason of the insufficiency of
Available Cash Flow generated by the Hotel pursuant to the Management Agreement
during the Accounting Period next preceding the Due Date and for which cash has
been received by the Borrower from the Manager, or as a result of any
restrictions agreed to by Lender under any subordination agreement signed by the
Lender in respect of the Toyo Loan or the Senior Loan, as applicable, shall not
be a Default or Event of Default so long as such unpaid amounts together with
interest thereon at the Base Rate, are repaid as soon as possible out of
subsequent advances of Available Cash Flow under the Management Agreement.
7.1.2.
The Borrower shall fail to perform or observe in any material and
adverse respect any of the covenants and agreements of the Borrower set forth in
this Agreement, or any representation and warranty made by the Borrower in this
Agreement or in any of the other Loan Documents shall fail to have been true in
any material and adverse respect when made and, in either case, such failure
shall continue uncured, following the Borrower's receipt of written notice
thereof from the Lender, for a period of more than (i) ten (10) days with
respect to any failure or breach of covenant relating to the payment of taxes or
the maintenance of insurance or (ii) thirty (30) days, with respect to all other
such failures or breaches; provided that, with respect to clause (ii) above, it
shall not be an Event of Default hereunder if (a) such failure is curable but is
not reasonably capable of being cured within such 30-day cure period and
Borrower shall have promptly commenced to cure such failure and thereafter shall
diligently pursue such cure to completion.
7.1.3.
An event of default or "Event of Default" occurs under the Senior Loan
Documents or the Toyo Loan Documents, as applicable.
7.1.4.
Either of the following shall occur with respect to the Borrower or
the General Partner:
(a) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudicating the Borrower or the General Partner
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization of the Borrower or the General Partner under any Bankruptcy
Law, and such decree or order shall have continued undischarged and
unstayed for a period of 60 consecutive days; or a decree, judgment or
order of a court of competent jurisdiction appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency for the
Borrower or the General Partner, or any substantial part of the property of
the Borrower or the General Partner, or for the winding up or liquidation
of the affairs of the Borrower or the General Partner,
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shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days; or
(b) the Borrower or the General Partner shall institute proceedings to
be adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any Bankruptcy Law, or shall consent
to the filing of any such petition, or shall consent to the appointment of
a custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency of it or any substantial part of its assets or property, or
shall make a general assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become
due, or shall, within the meaning of any Bankruptcy Law, become insolvent,
fail generally to pay its debts as they become due, or shall, within the
meaning of any Bankruptcy Law, become insolvent, fail generally to pay its
debts as they become due, or take any corporate action in furtherance of or
to facilitate, conditionally or otherwise, any of the foregoing.
7.1.6.
An Event of Default shall occur under any other Loan Document.
7.2. REMEDIES
If an Event of Default shall have occurred and be continuing, the Lender
shall have the right, in its sole discretion, by written notice to the Borrower
(except upon the occurrence of an Event of Default under SECTION 7.1.4 affecting
the Borrower, in which case all principal and accrued interest thereon will be
immediately due and payable on the Mortgage Note without any declaration or
other act on the part of the Lender) to take one or more of the following
actions:
7.2.1.
To declare the principal of and all amounts accrued but unpaid under
the Mortgage Note, this Agreement and the other Loan Documents to be immediately
due and payable, and such amounts shall thereupon become immediately due and
payable, without presentment, demand, protest or notice of any kind, other than
any notice specifically required by SECTION 7.1 or the first paragraph of this
SECTION 7.2, all of which are hereby expressly waived by Borrower.
7.2.2.
Pursue such rights and remedies against the Borrower, or otherwise, as
are provided under and pursuant to this Agreement, the Mortgage or any of the
other Loan Documents and as may be available to the Lender at law or in equity;
provided, however, that the Lender shall not be entitled to initiate foreclosure
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proceedings unless five (5) Business Days' prior written notice of such
intention is given to Borrower and the Manager.
7.2.3.
If the Event of Default involves the Borrower's failure to pay any
tax, assessment, encumbrance or other imposition binding on the Borrower or any
of the Collateral or to perform its obligation to furnish insurance hereunder,
or to perform or observe any other covenant, condition or term in any Loan
Document, Senior Loan Document or Toyo Loan Document or in the Management
Agreement, the Lender may, at its option, without waiving or affecting any of
its other rights or remedies hereunder, and without any obligation to do so,
pay, perform or observe the same, and all payments made or costs or expenses
incurred by the Lender in connection therewith shall be repaid by Borrower to
the Lender within fifteen (15) days after demand therefor, together with
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interest thereonat the Default Interest Rate, and shall be added to and become a
part of the indebtedness secured by the Mortgage and the other Security
Documents.
7.2.4.
Appoint as a matter of right, without notice, to the fullest extent
permitted under applicable law, a receiver for the Borrower or for all or any
part of the Collateral, whether such receivership be incidental to a proposed
sale of the Collateral or otherwise. All disbursements made by the receiver and
the expenses of receivership, shall be added to and be a part of the principal
amount of the obligations secured by the Security Documents, and, whether or not
said principal sum, including such disbursements and expenses, exceeds the
indebtedness originally intended to be secured thereby, the entire amount of
said sum, including such disbursements and expenses, shall bear interest at the
Default Interest Rate, shall be secured by the Security Documents and shall be
due and payable within fifteen (15) days after demand therefor.
7.3. REMEDIES CUMULATIVE
Each of the rights, powers, and remedies provided herein and in the other
Loan Documents are intended and are hereby deemed to be cumulative, concurrent
and in addition to, and not in limitation of, those rights, powers, and remedies
provided elsewhere herein or in any other Loan Document or now or hereafter
existing at law or in equity or by statute or otherwise. No waiver of any
Default or Event of Default in one instance shall constitute a waiver of any
other or any succeeding Default or Event of Default, except to the extent
provided in such waiver.
7.4. DEFAULT INTEREST
In addition to the provisions of SECTION 2 and SECTION 7.2 hereof, if
Borrower shall fail for any reason (other that as described in the proviso in
SECTION 7.1.1 hereof) to make payment when and as due of any amounts due
hereunder (whether at the stated date for payment, or earlier upon an
acceleration hereunder), Borrower shall pay, to the fullest extent permitted by
applicable law, interest to the Lender on such past due amounts beginning on the
date such payment becomes past due at a per annum rate of interest equal to the
Default Interest Rate.
7.5. DEFAULT INDEMNITY
Borrower hereby agrees to, and shall, indemnify and hold harmless the
Lender against the reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and expenses) which the Lender may sustain or incur
as a consequence of any Default or Event of Default hereunder and in the
enforcement of the Lender's rights and remedies in connection therewith. Lender
shall provide to Borrower a satisfactory statement, signed by an officer of
Lender and supported, where applicable, by documentary evidence, explaining the
amount of all such costs or expenses. Any amounts that Borrower must pay to
Lender under this SECTION 7.5 shall be due and payable fifteen (15) days after
demand therefor accompanied by documentation sufficient to establish the amount
of Borrower's liability, and shall bear interest at the Default Interest Rate
and shall be added to and become a part of the indebtedness secured by the
Mortgage and other Security Documents.
8. THE SENIOR LOAN
8.1. PERMITTED ENCUMBRANCES
Notwithstanding the provisions of SECTION 6 hereof, the Debtor shall
be permitted to enter into the Senior Loan with CII pursuant to which the Debtor
may grant to CII a security interest in and lien on the Mortgaged
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Property and the Collateral which shall be senior to the security interest
granted to and the lien created by the Security Documents in favor of the
Lender.
8.2. EXECUTION OF SUBORDINATION AGREEMENT
On or prior to date of the closing of the Senior Loan, the Lender
agrees to execute a subordination agreement in form and scope reasonably
acceptable to the Lender, which shall provide that the Lender's rights and
interests hereunder shall be subordinated to those granted to CII under the
Senior Loan Documents. In the event that any of the rights of the Lender
arising under this Agreement or any of the other Loan Documents shall be
inconsistent with rights of CII under the Senior Loan Documents, the rights of
CII shall take priority over those of the Lender.
9. MISCELLANEOUS PROVISIONS
9.1. EXPENSES
The Borrower shall reimburse the Lender for all expenses incurred by
the Lender in connection with this Agreement or any of the other Loan Documents,
including without limitation, expenses incurred in the preparation,
consummation, negotiation, administration or enforcement of, or the preservation
or exercise of any rights hereunder or thereunder (including, without
limitation, the right to collect and dispose of the Collateral) and all
reasonable fees and expenses of the Lender's counsel arising in connection with
the Loan.
9.2. LIMITATION ON LIABILITY
Notwithstanding any contrary provision in any of the Loan Documents,
it is hereby expressly agreed that, except as otherwise provided in this SECTION
9.2 or in any section of any Loan Document that is substantially similar to this
SECTION 9.2, there shall be no recourse to the assets of Borrower or any of its
partners (other than against the Collateral and any other property given as
security for the payment of the Mortgage Note) for (i) the payment of principal,
interest or other charges or amounts that are or may become due and owing to the
Lender by Borrower under this Agreement or any other Loan Documents or (ii) the
performance or discharge of any covenant or undertaking hereunder or under the
other Loan Documents, and in the event of any Event of Default hereunder or
thereunder, the Lender agrees to proceed solely against the Collateral and any
other property given as security for payment of the Mortgage Note, and the
Lender shall not seek or claim recourse against Borrower or any of its partners
(other than against the Collateral and any other property given as security for
payment of the Mortgage Note) for any deficiency or for any personal judgment
after a foreclosure of the lien of the Mortgage or other Security Documents or
for the performance or discharge of any covenants or undertakings of Borrower
hereunder or under any of the other Loan Documents (except that Borrower may be
made a party to a proceeding to the extent legally necessary for the conduct of
a foreclosure or the exercise of other similar remedies under the Mortgage or
other Security Documents). Notwithstanding the foregoing, nothing contained in
this SECTION 9.2 shall relieve Borrower or the General Partner of any personal
liability for any loss, cost, expense, damage or liability arising or resulting
from (A) any breach of any representation or warranty made in this Agreement
that was materially incorrect when made and that was made with fraudulent
intent, (B) any amount paid or distributed to the General Partner, the Limited
Partners, the Manager or any Affiliate of any of them in violation of the
provisions of the Loan Documents, (C) fraud or breach of trust, including
misapplication of Loan proceeds or any Insurance Proceeds or Awards or other
sums that are part of the Collateral that may come into the possession or
control of Borrower or the General Partner or any affiliate of any of them, or
(D) liability of such Person under the Environmental Indemnity Agreement. It is
hereby expressly agreed that neither the General Partner nor any director,
officer, shareholder, partner or employee of Borrower or the General Partner,
nor the legal or personal representative, successor or assign of any of the
foregoing, nor any other principal of Borrower or the General Partner, whether
disclosed or undisclosed, shall have any personal liability under this Agreement
or any of the other Loan Documents, except as personal liability may be
specifically imposed upon the General Partner in accordance
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with clauses (A), (B), (C) and (D) of this SECTION 9.2, and in no event shall
any Limited Partners have any liability whatsoever with respect to the Loan or
any monetary obligations with respect thereto, or any of the matters described
in clause (A), (B) (C) or (D) above. It is the intention of the parties hereto
that this SECTION 9.2 shall govern every other provision of the Loan Documents
and that the absence of explicit reference to this SECTION 9.2 in any provision
of the Loan Documents or the absence of any Section similar to this SECTION 9.2
in any Loan Document shall not be construed to deny the application of this
SECTION 9.2 to such provision, notwithstanding the presence of explicit
reference to this SECTION 9.2 in other provisions of the Loan Documents.
9.3. NOTICES
All notices, requests and demands to or upon the respective parties
hereto shall be in writing (except as is otherwise specifically provided in this
Agreement) and shall be deemed to have been duly given or made when received (or
when delivery thereof is refused by the intended recipient) if mailed by first-
class registered or certified mail, return receipt requested, postage prepaid,
or sent by facsimile transmission, with confirmation of receipt or delivery, or
sent by nationally recognized overnight courier, delivery charges prepaid, or
delivered by hand, in each case addressed or directed as follows (or to such
other address or facsimile transmission number as may be hereafter designated in
writing by the respective parties hereto):
(a) If to Borrower:
Hanover Marriott Limited Partnership
10400 Fernwood Road
Bethesda, Maryland 20817
Dept. 923
Attention: Law Dept.
Fax No.: (301) 380-6332
with a copy to:
Hanover Marriott Limited Partnership
10400 Fernwood Road
Bethesda, Maryland 20817
Dept. 908
Attention: Asset Management Dept.
Fax No.: (301) 380-8260
(b) If to Lender:
Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817
Dept. 923
Attention: Law Dept.
Fax No.: (301) 380-6332
with a copy to:
Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817
Dept. 902
Attention: Executive Dept.
Fax No.: (301) 380-6332
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9.4. SEVERABILITY
If fulfillment of any provision of this Agreement or any other Loan
Documents or performance of any transaction related thereto, at the time such
fulfillment or performance shall be due, shall involve transcending the limit of
validity prescribed by law, then the obligation to be fulfilled or performed
shall be reduced to the limit of such validity; and if any clause or provision
contained in this Agreement or any other Loan Document operates or would operate
prospectively to invalidate any Loan Document, in whole or in part, then such
clause or provision only shall be held ineffective, as though not herein or
therein contained, and the remainder of the Loan Documents shall remain
operative and in full force and effect.
9.5. SURVIVAL
It is the express intention and agreement of the parties hereto that
all covenants, agreements, statements, representations, warranties, and
indemnities made by Borrower in the Loan Documents shall survive the execution
and delivery of the Loan Documents and the making of all advances and extensions
of credit thereunder.
9.6. WAIVERS
No waiver by the Lender of, or consent by the Lender to, a variation
from the requirements of any provision of the Loan Documents shall be effective
unless made in a written instrument duly executed on behalf of the Lender by its
duly authorized officer, and any such waiver shall be limited solely to those
rights or conditions expressly waived.
9.7. RIGHTS CUMULATIVE
The rights and remedies of the Lender described in any of the Loan
Documents are cumulative and not exclusive of any other rights or remedies which
the Lender otherwise would have at law or in equity or otherwise. No notice to
or demand on the Borrower in any case shall entitle the Borrower to any other
notice or demand in similar or other circumstances.
9.8. ENTIRE AGREEMENT
This Agreement, the exhibits hereto, and the other Loan Documents
constitute the entire agreement of the parties hereto with respect to the
matters contemplated herein, supersede all prior oral and written agreements
with respect to the matters contemplated herein, and may not be modified,
deleted or amended except by written instrument executed by the parties. All
terms of this Agreement and of the other Loan Documents shall be binding upon,
and shall inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns; provided, however, that Borrower may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Lender.
9.9. TERMINATION
This Agreement shall terminate upon payment in full of all amounts
payable and performance of all other obligations owed by Borrower to the Lender
under this Agreement and under the other Loan Documents.
9.10. CONSTRUCTION
This Agreement and the other Loan Documents, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the State of
Maryland (excluding the choice of law rules thereof). Each party hereto hereby
acknowledges that all
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parties hereto participated equally in the negotiation and drafting of this
Agreement and that, accordingly, no court construing this Agreement shall
construe it more stringently against one party than against the other.
9.11. PRONOUNS
All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
person or entity may require.
9.12. HEADINGS
Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
9.13. BUSINESS DAYS
If any payment or performance of any of the obligations under this
Agreement or any of the other Loan Documents becomes due on a day other than a
Business Day, the due date shall be extended to the next succeeding Business
Day, and interest thereon (if applicable) shall be payable at the then
applicable rate during such extension.
9.14. EXECUTION
To facilitate execution, this Agreement and any of the other Loan
Documents may be executed in as many counterparts as may be required; and it
shall not be necessary that the signatures of, or on behalf of, each party, or
the signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or the signatures of the persons required to bind any party, appear
on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement or any other Loan Document to produce or account for any particular
number of counterparts; but rather any number of counterparts shall be
sufficient so long as those counterparts contain the respective signatures of,
or on behalf of, all of the parties hereto.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
BORROWER:
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ATTEST: HANOVER MARRIOTT LIMITED PARTNERSHIP
By: By: Marriott Hanover Hotel Corporation
----------------------
Its: By: P.K. Brady
--------------------- ------------------------------
Patricia K. Brady,
Vice President
LENDER:
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ATTEST: HOST MARRIOTT CORPORATION
By: By: W. Edward Walter
---------------------- ------------------------------------
W. Edward Walter,
Its: Senior Vice President
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EXHIBIT A
FORM OF MORTGAGE NOTE
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