EXHIBIT 10.e
DEBT SERVICE GUARANTY AGREEMENT
DEBT SERVICE GUARANTY AGREEMENT dated as of July 31, 1990 made by
MARRIOTT CORPORATION, a corporation duly organized and validly existing under
the laws of the State of Delaware (the "Guarantor"), to SUMITOMO TRUST & BANKING
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CO., LTD., NEW YORK BRANCH, the New York branch of a Japanese chartered bank
(the "Bank").
Fairfield Inn by Marriott Limited Partnership, a Delaware limited
partnership (the "Borrower"), and the Bank are parties to a Credit Agreement
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dated as of the date hereof (as modified and supplemented and in effect from
time to time, the "Credit Agreement"), providing, subject to the terms and
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conditions thereof, for loans to be made by the Bank to the Borrower in an
aggregate principal amount not exceeding $164,850,000.
To induce the Bank to make loans under the Credit Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor has agreed (to the extent hereinafter
provided) to guarantee the Guaranteed Obligations (as hereinafter defined).
Accordingly, the parties hereto agree as follows:
Section 1. Defined Terms and Accounting Determinations.
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1.01 Definitions. Unless otherwise defined herein, terms defined in
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the Credit Agreement are used herein as defined therein. In addition, as used
herein:
"Consolidated Subsidiary" shall mean, as to any Person, each
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Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
generally accepted accounting principles.
"Guaranteed Amount" shall mean, at any time, an amount equal to 10% of
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the aggregate principal amount of the Loans made by the Bank at such time
(without giving effect to any payment or prepayment thereof but after giving
effect to Sections 2.08 and 2.09 hereof) but in any event not exceeding
$16,500,000.
"Marriott Agreement" shall mean each Related Agreement to which the
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Guarantor is or is contemplated by the Credit Agreement to become a party.
"Material Consolidated Subsidiary" shall mean any Consolidated
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Subsidiary of the Guarantor which takes any of the actions specified in Sections
5(e) or (f) hereof, or with respect to which any of the events specified in
Sections 5(f), (g) or (h) hereof shall occur, if such actions or events could
have a material adverse effect on the financial condition of the Guarantor.
"Total Capital" shall have the meaning ascribed thereto in the
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Citibank Credit Agreement, the Revolving Credit Agreement or the Other Agreement
(each as hereinafter defined), as the case may be, as applicable under the
provisions of Section 4.07 hereof.
1.02 Accounting Terms and Determinations.
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(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Bank hereunder shall (unless otherwise disclosed to the Bank in writing at the
time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Bank hereunder after the date hereof. All
calculations made for the purposes of determining compliance with the terms of
the provisions incorporated by reference in Section 4.07 hereof shall (except as
otherwise expressly provided herein) be made by application of generally
accepted accounting principles applied on a basis consistent with those used in
the preparation of the annual or quarterly financial statements furnished to the
Bank pursuant to Section 4.01 hereof unless (i) the Guarantor shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements or (ii) the Bank shall so object in writing within 30
days after delivery of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 4.01 hereof, shall mean the
financial statements referred to in Section 3.02 hereof).
(b) The Guarantor shall deliver to the Bank at the same time as the
delivery of any annual or quarterly financial statement under Section 4.01
hereof a description in reasonable detail of any material variation between the
application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above, and reasonable estimates of the difference between such
statements arising as a consequences thereof.
Section 2. The Guarantee.
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2.01 Guarantee. Subject to the limitations set forth in Sections
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2.07, 2.08, 2.09 and 2.10 hereof, the Guarantor hereby guarantees to the Bank
and its successors and assigns the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the principal of and interest
on the Loans made by the Bank to, and the Note held by the Bank of, the
Borrower, in each case strictly in accordance with the terms thereof (such
obligations being herein collectively called the "Guaranteed Obligations"). The
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Guarantor hereby further agrees that if the Borrower shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantor will promptly pay the same, without any
demand or notice whatsoever, and that, in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
2.02 Obligations Unconditional. Subject to the limitation set forth
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in Section 2.07 hereof, the obligations of the Guarantor under Section 2.01
hereof are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of the Credit Agreement, the Note or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 2.02 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder:
(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
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(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement or the Note or any other agreement or instrument referred to herein or
therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit Agreement
or the Note or any other agreement or instrument referred to herein or therein
shall be waived or any other guarantee of any of the Guaranteed Obligations or
any security therefor shall be released or exchanged in whole or in part or
otherwise dealt with; or
(iv) any Lien granted to, or in favor of, the Bank as security for
any of the Guaranteed Obligations shall fail to be perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Bank exhaust
any right, power or remedy or proceed against the Borrower under the Credit
Agreement or the Note or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
2.03 Reinstatement. The obligations of the Guarantor under this
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Section 2 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise and the Guarantor agrees that it will indemnify
the Bank on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Bank in connection with such
rescission or restoration.
2.04 Subrogation. The Guarantor hereby agrees that it shall not
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exercise any right or remedy arising by reason of any performance by it of its
guarantee as provided in Section 2.01 hereof, whether by subrogation or
otherwise, against the Borrower or any other guarantor of any of the Guaranteed
Obligations of any security for any of the Guaranteed Obligations, except as
contemplated by Section 2.08 hereof.
2.05 Remedies. The Guarantor agrees that, as between the Guarantor
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and the Bank, the obligations of the Borrower under the Credit Agreement and the
Note may be declared to be forthwith due and payable as provided in Section 9 of
the Credit Agreement (and shall be deemed to have become automatically due and
payable in the circumstances provided in paragraphs (g) and (h) of said Section
9) for purposes of Section 2.01 hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Guarantor for purposes
of said Section 2.01.
2.06 Continuing Guarantee. The guarantee in this Section 2 is a
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continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
2.07 Limitation on Guarantee. Notwithstanding the foregoing
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provisions of this Agreement, the aggregate amount which the Guarantor may be
required at any time to pay under this Agreement (other than the amounts payable
under Section 6.04 hereof) shall not exceed the Guaranteed Amount after giving
effect to Sections 2.08 and 2.09 hereof, it being understood that all payments
and prepayments of the Guaranteed Obligations by the other Person (other than by
the Guarantor pursuant to a demand by the Bank hereunder) shall, for purposes of
this Section 2.07, be deemed to be applied first to the portion of the
Guaranteed Obligations which exceeds the
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Guaranteed Amount and last to the portion of the Guaranteed Obligations which
does not exceed the Guaranteed Amount.
2.08 Advances to Borrower. Each payment of the Guaranteed
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Obligations or any portion thereof by the Guarantor hereunder shall reduce the
aggregate amount which the Guarantor may be obligated to pay hereunder by an
amount equal to the amount of such payment. Each such payment shall, to the
extent permitted by law, be deemed to be an advance (each an "Advance" and,
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collectively, the "Advances") by the Guarantor to the Borrower as of the date of
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and in an amount equal to such payment (provided that any inability of the
Guarantor to make an advance to the Borrower, by reason of the Borrower's being
the subject of a bankruptcy case or otherwise, shall not affect the obligations
of the Guarantor under Section 2.01 hereof). The Borrower shall pay interest on
each Advance from and including the date of such Advance to but excluding the
date such Advance is repaid in full at a rate equal to the Prime Rate (each
change in the rate of interest on an Advance to take effect as of the time of a
change in the Prime Rate). The Borrower shall repay each Advance in full,
together with all accrued and unpaid interest thereon, on the tenth anniversary
date of such Advance. The Borrower may not prepay, purchase or redeem any
principal of or interest on any Advance before the date on which such Advance is
due as provided in the preceding sentence; provided, however, that subject to
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the last sentence of this Section 2.08, the Borrower may prepay the principal of
and (if the principal of all of the Advances has been paid in full) interest on
any Advance pursuant to Section 8.12 of the Credit Agreement not later than the
45th day after the end of any Accounting Quarter, provided, further, that
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nothing herein contained shall prevent the prepayment of any principal of or
interest on any Advance from Sales Proceeds or Refinance Proceeds (each as
defined in the Partnership Agreement). All payments required to be made by the
Borrower to the Guarantor in respect of the principal of and interest on the
Advances shall be subordinate to the payment of the obligations of the Borrower
under the Credit Agreement and the Note in accordance with the terms of, and
each of the Guarantor and the Borrower hereby agrees to be bound by, the
provisions contained in Annex I hereto, which provisions are hereby incorporated
herein by reference.
2.09 Adjustments of Amount Guaranteed. The aggregate amount which
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the Guarantor may be required to pay hereunder in respect of the Guaranteed
Obligations shall be reinstated and increased by an amount equal to the amount
of such payment or prepayment of principal of the Advances made under Section
2.08 hereof.
2.10 Termination. Except as provided in Section 6.04 hereof, the
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obligations of the Guarantor under this Agreement shall terminate and be of no
further force or effect on the first date on which no Default shall exist (and
as to which the Guarantor shall have certified to the Bank) on or after the
later of (a) July 31, 1993 or (b) the date on which the Debt Service Coverage
for the Subject Hotels (other than the Subject Hotels released pursuant to
Section 8.17(b) of the Credit Agreement) shall have exceeded 1.30 to 1 for each
Accounting Quarter during the period of eight consecutive Accounting Quarters
ending on or most recently prior to such date (and as to which an Authorized
Accounting Officer of the General Partner shall have so certified to the Bank in
reasonable detail).
Section 3. Representations and Warranties. The Guarantor represents
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and warrants to the Bank that:
3.01 Corporate Existence. Each of the Guarantor and its Material
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Consolidated Subsidiaries: (a) is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (c) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a material adverse effect on its financial condition,
operations, business or prospects.
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3.02 Financial Condition. The consolidated balance sheets of the
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Guarantor and its Consolidated Subsidiaries as at December 29, 1989 and the
related consolidated statements of income and retained earnings of the Guarantor
and its Consolidated Subsidiaries for the fiscal year ended on said date with
the opinion thereon (in the case of said consolidated balance sheet and
statements) of Xxxxxx Xxxxxxxx & Co., and the unaudited consolidated balance
sheets of the Guarantor and its Consolidated Subsidiaries as at June 15, 1990
and the related consolidated statements of income and retained earnings of the
Guarantor and its Consolidated Subsidiaries for the Accounting Quarter ended on
such date, heretofore furnished to the Bank, are complete and correct and fairly
present the consolidated financial condition of the Guarantor and its
Consolidated Subsidiaries as at said dates and the consolidated results of their
operations for the fiscal year and Accounting Quarter ended on said dates
(subject, in the case of such financial statements as at June 15, 1990, to
normal year-end audit adjustments), all in accordance with generally accepted
accounting principles and practices applied on a consistent basis. Neither the
Guarantor nor any of its Subsidiaries had on said dates any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in said balance sheets as at said
dates. Since June 15, 1990, there has been no material adverse change in the
consolidated financial condition, operations, business or prospects taken as a
whole of the Guarantor and its Consolidated Subsidiaries from that set forth in
said financial statements as at said date.
3.03 Litigation. Except as disclosed to the Bank in writing prior to
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the date of this Agreement, there are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Guarantor) threatened against the Guarantor
or any of its Subsidiaries which, if adversely determined, could have a material
adverse effect on the financial condition, operations, business or prospects
taken as a whole of the Guarantor or any of its Consolidated Subsidiaries.
3.04 No Breach. The execution and delivery of any Marriott
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Agreement, the consummation of the transactions therein contemplated or
compliance with the terms and provisions thereof will not conflict with or
result in a breach of, or require any consent under, the charter or by-laws of
the Guarantor, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the Guarantor or any of its Subsidiaries is a
party or by which any of them is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor or any of its Subsidiaries pursuant to the terms of any such agreement
or instrument.
3.05 Corporate Action. The Guarantor has all necessary corporate
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power and authority to execute, deliver and perform its obligations hereunder
and under each of the other Marriott Agreements; the execution, delivery and
performance by the Guarantor of this Agreement and the other Marriott Agreements
have been duly authorized by all necessary corporate action on its part; and
this Agreement and the other Marriott Agreements have been duly and validly
executed and delivered by the Guarantor and constitutes its legal, valid and
binding obligation, enforceable in accordance with their respective terms.
3.06 Approvals. No authorizations, approvals and consents of, and no
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filings and registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Guarantor
of this Agreement or any other Marriott Agreement or for the validity or
enforceability hereof or thereof.
3.07 ERISA. Each Plan, and, to the best knowledge of the Guarantor,
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each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other applicable federal or state law, and
no event or condition is occurring or exists concerning which the
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Guarantor would be under an obligation to furnish a report to the Bank in
accordance with Section 4.01(f) hereof. As of the most recent valuation date of
each Plan either (i) each Plan was "fully funded", which for purposes of this
Section 3.07 shall mean that the fair market value of the assets of the Plan is
not less than the greater of (A) the Projected Benefit Obligation, as that term
is defined in Financial Account Standards Board Statement Number 87 ("FASB 87"),
under the Plan, or (B) the Accumulated Benefit Obligation, as that term is
defined in FASB 87, under the Plan, computed assuming no participant turnover
(except on account of death or disablement) and using an interest rate and
mortality basis that satisfies the conditions set forth in 29 C.F.R. Part 2619
of the regulations relating to ERISA, or (ii) each Plan that is not "fully
funded," determined pursuant to (i) above, is not "underfunded" in an amount,
determined pursuant to (i) above, that, when aggregated with the amount of any
such underfunding with respect to any other Plan or Plans, is in excess of
$10,000,000. To the best knowledge of Guarantor, no Plan has ceased to satisfy
the requirements of either (i) or (ii) of the immediately preceding sentence of
this Agreement as of the date these representations are made with respect to any
loan under this Agreement.
3.08 Taxes. United States Federal income tax returns of the
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Guarantor and its Subsidiaries have been examined and closed through the fiscal
year of the Guarantor ended July 26, 1974. The Guarantor and its Subsidiaries
have filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid, or have made
adequate provisions for the payment of, all taxes due pursuant to such returns
or pursuant to any assessment received by the Guarantor or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Guarantor
and its Subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Guarantor, adequate.
3.09 Investment Company Act. The Guarantor is not an "investment
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company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
3.10 Public Utility Holding Company Act. The Guarantor is not a
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"holding company", or an "affiliate" of a "holding company" or a "Subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
3.11 Relation to Guarantor. Each of the Manager and the General
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Partner is a direct or indirect Wholly-Owned Subsidiary of the Guarantor.
Section 4. Covenants. The Guarantor agrees that, until the earlier
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to occur of (i) the payment and satisfaction in full of the Guaranteed
Obligations and the expiration or termination of the Commitment of the Bank
under the Credit Agreement and (ii) the termination of the Guarantor's
obligations hereunder in accordance with the provisions of Section 2.10 hereof:
4.01 Financial Statements. The Guarantor shall deliver to the Bank:
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(a) as soon as practicable and in any event within 60 days after the
end of each of the first three fiscal quarterly periods of each fiscal year of
the Guarantor and its Consolidated Subsidiaries, unaudited consolidated
statements of income and retained earnings of the Guarantor and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
balance sheets as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated figures for the corresponding
period in the preceding fiscal year, all in reasonable detail and certified by
the Authorized Accounting Officer of the Guarantor but subject to year-end audit
and adjustments (the Guarantor may, provided that the foregoing requirements are
in all respects satisfied thereby, comply with this Section 4.01(a) by
delivering to the Bank its Form 10-Q as filed with the Securities and Exchange
Commission (the "SEC");
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(b) as soon as practicable and in any event within 90 days after the
end of each fiscal year of the Guarantor and its Consolidated Subsidiaries,
consolidated statements of income and retained earnings of the Guarantor and its
Consolidated Subsidiaries for such year and the related consolidated balance
sheets as at the end of such year, setting forth in each case in comparative
form the corresponding consolidated figures for the preceding fiscal year, all
in reasonable detail and certified by Xxxxxx Xxxxxxxx & Co., or other
independent certified public accountants of recognized national standing (the
Guarantor may, provided that the foregoing requirements are in all respects
satisfied thereby, comply with this Section 4.01(b) by delivering to the Bank
its Form 10-K as filed with the SEC);
(c) as soon as practicable and in any event within 60 days after the
end of each Accounting Quarter, a certificate of the Authorized Accounting
Officer of the Guarantor (or of the Borrower if so directed by the Guarantor
with the consent of the Bank) certifying as to the maximum aggregate amount that
the Guarantor may be called upon to pay in respect of the Guaranteed Obligations
hereunder, as at the end of such Accounting Quarter, setting forth in reasonable
detail computations necessary to determine such amount (including, without
limitation, the amount of prepayment of any Advance deemed made during such
Accounting Quarter pursuant to Section 2.08 hereof);
(d) upon request, copies of all registration statements and regular
periodic reports, if any, which the Guarantor shall have filed with the
Securities and Exchange Commission (or any governmental agency substituted
therefor) or any national securities exchange;
(e) promptly upon the mailing thereof to the shareholders of the
Guarantor generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) as soon as practicable, and in any event within 20 days after the
Guarantor knows or has reason to know that any of the events or conditions
enumerated below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by the Authorized Accounting Officer of the Guarantor
setting forth details respecting such event or condition and the action, if any,
which the Guarantor or its ERISA Affiliate proposes to take with respect
thereto; provided, however, that if such event or condition is required to be
reported or noticed to the Pension Benefit Guaranty Corporation (the "PBGC"),
such statement, together with a copy of the relevant report or notice to the
PBGC, shall be furnished to the Bank within ten (10) days after it is reported
or noticed to the PBGC, or if such event or condition is a request for a waiver
under Section 412(d) of the Code, as described in paragraph (i), below, filed
with the Internal Revenue Service (the "IRS"), such request for a waiver,
together with a copy of all relevant documents, shall be furnished to the Bank
within ten (10) days after it is filed with the IRS:
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued under such Section, with respect to a Plan, as to which
the PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event (except
that a failure to make a quarterly contribution to a trust established under a
Plan ("Delinquent or Late Quarterly Contributions"), as required by Section
412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the application for or the issuance of any waivers in accordance
with Section 412(d) of the Code, provided the amount of any such Delinquent or
Late Quarterly Contribution, when combined with all other Delinquent or Late
Quarterly Contributions occurring during a calendar year, exceeds $2,500,000)
and any request for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or, if earlier, any board of directors or similar
action taken by the Guarantor or an ERISA Affiliate to terminate any Plan;
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(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Guarantor or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the occurrence of circumstances that may reasonably be deemed
to result in the complete or partial withdrawal from a Multiemployer Plan by the
Guarantor or any ERISA Affiliate that may give rise to a liability in excess of
$10,000,000 under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the receipt
of the Guarantor or any ERISA Affiliate of notice from a Multiemployer Plan that
it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Guarantor or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA would result in the loss
of tax-exempt status of the trust of which such Plan is a part, if the Guarantor
or an ERISA Affiliate fails to timely provide security to the Plan in accordance
with the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Guarantor or any ERISA Affiliate to incur
liability under Sections 4062, 4063, 4064 or 4069 of ERISA, or otherwise, with
respect to any of the Plans, which liability together with any such liability
with respect to any other Plan or Plans, is in an amount in excess of
$10,000,000.
(g) promptly after the Guarantor knows that any Default has
occurred, a notice of such Default describing the same in reasonable detail and,
together with such notice or as soon thereafter as possible, a description of
the action that the Guarantor has taken and proposes to take with respect
thereto; and
(h) from time to time and with reasonable promptness such other
information which is reasonably available regarding the business, affairs or
financial condition of the Guarantor or any of its Subsidiaries (including,
without limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as the Bank may reasonably
request.
The Guarantor will furnish to the Bank, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of
the Authorized Accounting Officer of the Guarantor (i) to the effect that no
Default has occurred and is continuing (or, if any Default has occurred and is
continuing) and no condition, event or act which, with the giving of notice or
lapse of time or both would constitute such a Default, describing the same in
reasonable detail and describing the action that the Guarantor has taken and
proposes to take with respect thereto, and (ii) setting forth in reasonable
detail the computations necessary to determine whether the Guarantor is in
compliance with Sections 4.05, 4.06 and 4.07 hereof as of the end of the
respective fiscal quarter or fiscal year.
4.02 Litigation. The Guarantor will promptly give to the Bank notice
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of all legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, affecting the Guarantor or any
of its Subsidiaries, except proceedings which, if adversely determined, would
not have a material adverse effect on the consolidated financial condition,
operations, business or prospects taken as a whole of the Guarantor and its
Consolidated Subsidiaries.
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4.03 Compliance with Laws; Maintenance of Assets; Etc. The Guarantor
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will comply with the requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities if failure to comply with such
requirements would materially and adversely affect the consolidated financial
condition, operations, business or prospects taken as a whole of the Guarantor
and its Consolidated Subsidiaries except to the extent such laws, rules and
regulations shall currently be contested in good faith by appropriate
proceedings diligently contested and against which adequate reserves are being
maintained; pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its property prior
to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; maintain its principal operating properties in good repair and
working order and condition, and from time to time make all necessary repairs,
replacements, additions, betterments and improvements thereto so that at all
times the efficiency thereof shall be fully preserved and maintained; maintain a
corporate existence under the law of one of the States of the United States;
permit access by the Bank to the books and records of the Guarantor, as the same
relate to the preparation of the financial statements referred to in Section
4.01 hereof, during normal business hours and upon reasonable notice (any
information furnished to the Bank hereunder (other than information publicly
available) shall be kept confidential except to the extent disclosure is
required by applicable law or legal process or to professional advisors or to
Governmental Authorities having jurisdiction over the Bank or in connection with
the enforcement of the Bank's rights hereunder); and keep insured by financially
sound and reputable insurers all property of a character usually insured by
corporations engaged in the same or similar business similarly situated against
loss or damage of the kinds and in the amounts customarily insured against by
such corporations and carry such other insurance as is usually carried by such
corporations.
4.04 Consolidation, Merger and Sale of Assets. The Guarantor will
----------------------------------------
not wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell or otherwise dispose of all or
substantially all of its property or assets, except that the Guarantor may merge
or consolidate with any other corporation if subsequent to such merger or
consolidation, the Guarantor (i) shall be the continuing or surviving
corporation and (ii) shall be in compliance with all of the provisions of this
Agreement.
4.05 Notice of Transactions. The Guarantor will promptly notify the
----------------------
Bank in writing of any proposed purchase, sale, merger or other transaction
(other than in the ordinary course of business) of which the Guarantor is a
party, involving property or assets having a purchase price (in cash, stock or
otherwise) in one transaction or in a series of related transactions in excess
of 10% of Total Capital; provided that any such information furnished to the
Bank shall be kept confidential by the Bank and not disclosed to other Persons,
except (a) that such information may be disclosed (i) to auditors and counsel
for the Bank, (ii) to any Governmental Authority to the extent such disclosure
is required by law or regulation, (iii) in connection with the enforcement of
the Bank's rights under the Related Agreements, (iv) if required by subpoena,
court or regulatory order or otherwise by law or regulation, and (v) to any
actual or prospective assignee of or participant in all or any part of the
Bank's interest in the Loans (provided such assignee or participant first agrees
to comply herewith), and (b) that the restrictions set forth herein shall not
apply to any information that (i) is known to the Bank at any time it is
furnished to the Bank hereunder or (ii) is publicly available.
4.06 Ownership of General Partner and Manager. Marriott shall at all
----------------------------------------
times own directly or indirectly all of the capital stock of the Manager, and
the General Partner. The provisions of this Section 4.05 shall survive the
termination of this Agreement until payment in full of the principal of and
interest on the Loans and all other amounts payable by the borrower under the
Principal Related Agreements.
9
4.07 Incorporation by Reference. Each of the Guarantor's covenants,
--------------------------
agreements and obligations contained in paragraphs (b) through (d), inclusive,
of Section 8 of that certain Revolving Credit Agreement dated as of October 15,
1987, as amended on February 27, 1989, between the Guarantor and Citibank, N.A.,
(as modified, supplemented and in effect from time to time the "Citibank Credit
---------------
Agreement"), or if, the Citibank Credit Agreement shall no longer be in effect,
---------
the corresponding provisions of the next largest revolving credit facility of
the Guarantor in effect from time to time having a commitment of not less than
$10,000,000 utilizing substantially the same form of revolving credit agreement
as the Citibank Credit Agreement and containing covenants similar to those
contained in Section 8(b) through (d) of the Citibank Credit Agreement (as such
revolving credit agreement shall be modified, supplemented and in effect from
time to time the "Revolving Credit Agreement") are hereby incorporated by
--------------------------
reference as hereinafter more specifically described. In the event at any time
there shall be no Revolving Credit Agreement then, the Guarantor shall perform,
comply with and be bound by, for the benefit of the Bank under this Agreement,
as the Bank may elect, (i) each of such provisions of the last Revolving Credit
Agreement as in effect prior to the termination of such Revolving Credit
Agreement with the same effect as if such Revolving Credit Agreement had not
been terminated or (ii) each of the corresponding provisions as set forth in any
other revolving credit facilities (the "Other Agreement") simultaneously or
---------------
subsequently entered into by the Guarantor. Without limiting the generality of
the foregoing, the above-mentioned provisions of the Citibank Credit Agreement,
the Revolving Credit Agreement or the Other Agreement, as the case may be,
together with related definitions, are hereby incorporated herein by reference,
as if set forth herein in full, mutatis mutandis; provided, however, that as
------- -------- -------- -------
incorporated herein, each reference therein to "this Agreement" or "Loans" shall
be deemed to be a reference to the Citibank Credit Agreement, the Revolving
Credit Agreement or the Other Agreement, as the case may be, or the Loans
thereunder, as the case may be, and references to any covenants regarding the
delivery of financial statements (which, in the case of the Citibank Credit
Agreement, such reference is to "Section 8(a)") shall be deemed to be a
reference to Section 4.01 hereof, except that, in the event the Revolving Credit
Agreement is terminated and the Bank makes the election referred to in clause
(i) of the preceding sentence, the term "Agreement" shall refer to this
Agreement and the term "Loans" shall refer to any Indebtedness of the Guarantor.
Section 4.08 Notice of Termination; Copies of Amendments. (a) The
-------------------------------------------
Guarantor shall within 60 days of the close of each of its first three Fiscal
Quarters and within 90 days of the close of each of its Fiscal Years, provide
the Bank with copies of all calculations, certifications or other information as
required by the foregoing provisions incorporated by reference into this Section
4.07, as the same may be amended from time to time or any successor or
replacement provisions, together with (i) notification of any termination of any
revolving credit agreement incorporated pursuant to the provisions of the first
sentence of Section 4.07 or clause (ii) of the second sentence of Section 4.07
hereof, and (ii) copies of the covenants of any Revolving Credit Agreement or
Other Agreement to be incorporated upon such termination and/or any amendments,
modifications, supplements or waivers of such covenants, or (iii) a statement
from an Authorized Accounting Officer of the Guarantor that there have been no
terminations, amendments, modifications, supplements or waivers thereof.
(b) The Guarantor shall promptly notify the Bank in writing of any
default, and provide copies of any notice of default, under the covenants
incorporated by reference pursuant to the provisions of the first sentence of
Section 4.07 or clause (ii) of the second sentence of Section 4.07 hereof.
Section 5. Events of Default. One or more of the following events
-----------------
shall constitute a "Default" under this Agreement:
-------
(a) the Guarantor shall fail to pay any amount payable under this
Agreement within 3 days after such payment shall be due: or
10
(b) any representation, warranty or certification made by the
Guarantor pursuant to this Agreement or any other Marriott Agreement, or any
representation or warranty made or deemed made by the Guarantor in any
certificate, document, financial or other statement furnished to the Bank at any
time under or pursuant to the terms of this Agreement or any other Marriott
Agreement, shall prove to be untrue when made or deemed made and the event or
condition misrepresented affects the validity, binding effect or enforceability
of this Agreement or any other Marriott Agreement or the Guarantor's obligations
hereunder or thereunder or materially and adversely affects the Guarantor's
ability to perform its obligations under this Agreement or any other Marriott
Agreement; or
(c) the Guarantor shall fail to perform or observe any term, covenant,
or agreement contained in (i) Sections 1.02, 4.01 or 4.08(a) hereof and such
failure shall continue unremedied for a period of 30 days after notice thereof
to the Guarantor by the Bank, (ii) Section 4.08(b) hereof and such failure shall
continue unremedied for a period of 10 days after notice thereof to the
Guarantor by the Bank, (iii) Section 4 of this Agreement (other than Section
4.01, 4.03, 4.07 or 4.08 hereof), (iv) Section 4.07 upon the termination of the
last Revolving Credit Agreement and the election by the Bank to incorporate by
reference the covenants described by the provisions of clause (i) of Section
4.07, or (v) Section 4.03 and such failure shall continue unremedied for 30 days
after notice thereof to the Guarantor by the Bank, provided that in the case of
any such default under Section 4.03 which cannot be cured by the payment of
money and cannot reasonably be cured within such 30 day period, if the Guarantor
shall have commenced such cure within such 30 day period and thereafter shall
prosecute the curing of such default with diligence and continuity, then the
time within which such default may be cured shall be extended for such period as
shall be necessary to complete the curing of same; provided, further, however,
-------- ------- -------
that if such default shall be a material default, notwithstanding the foregoing
proviso, such 30 day period shall not be extended for longer than 180 days after
notice of such default to the Guarantor; or
(d) an event of default shall have occurred and be continuing under
the provisions of Section 8(b) through (d) of the Citibank Credit Agreement (or
the corresponding provision of any Revolving Credit Agreement or the Other
Agreement) and the lender or lenders thereto, or any trustee or agent on behalf
of such lender or lenders, shall have declared the Indebtedness of Guarantor
issued thereunder to become due and payable prior to its stated maturity; or
(e) The Guarantor or any of its Material Consolidated Subsidiaries
shall admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
(f) The Guarantor or any Material Consolidated Subsidiary shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
any involuntary case under the Bankruptcy Code, or (vi) take any organizational
action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Guarantor or any Material Consolidated Subsidiary, in any
court of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like of the
Guarantor or a Material Consolidated Subsidiary, as the case may be, or of all
or any substantial part of its assets, or (iii) similar relief in respect of the
Guarantor or such Material Consolidated Subsidiary, as the case may be, under
any law relating to bankruptcy, insolvency,
11
reorganization, winding-up or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for relief
against the Guarantor or such Material Consolidated Subsidiary shall be entered
in an involuntary case under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in excess
of $10,000,000 in the aggregate shall be rendered by a court or courts of
competent jurisdiction against the Guarantor or any Material Consolidated
Subsidiaries and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within 30 days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) An event or condition specified in Section 4.01(f) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
the Guarantor or any ERISA Affiliate shall incur or in the opinion of the Bank
shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan
or the PBGC (or any combination of the foregoing) which is, in the determination
of the Bank, material in relation to the consolidated financial condition,
business operations or prospects taken as a whole of the Borrower; or
(j) The Guarantor shall have ceased to exist.
Section 6. Miscellaneous.
-------------
6.01 No Waiver. No failure on the part of the Bank or any of its
---------
agents to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Bank or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
6.02 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND
ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. EACH OF THE GUARANTOR AND THE BANK HEREBY IRREVOCABLY
WAIVES, THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
6.03 Notices. All notices, requests, consents and demands hereunder
-------
shall be in writing and shall be given in the manner specified in Section 10.02
of the Credit Agreement to the intended recipient at its address specified
beneath its signature hereto or, at such other telecopy number or address as
shall be designated by either party upon 30 days' notice to the other party.
12
6.04 Expenses. The Guarantor agrees to reimburse the Bank on demand
--------
for any and all out-of-pocket costs and expenses in connection with the
enforcement or collection of this Agreement. The provisions of this Section
6.04 shall survive the termination of this Agreement.
6.05 Waivers, etc. The terms of this Agreement may be waived,
------------
altered or amended only by an instrument in writing duly executed by the
Guarantor and the Bank. Any such amendment or waiver shall be binding upon the
Bank, each holder of any of the Guaranteed Obligations and the Guarantor.
6.06 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the respective successors and assigns of the
Guarantor, the Bank and each holder of any of the Guaranteed Obligations
(provided, however, that the Guarantor shall not assign or transfer its rights
or obligations hereunder without the prior written consent of the Bank).
6.07 Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MARRIOTT CORPORATION
By /s/ Xxxxx X. Xxxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxxx
Title: Vice President
Address for Notices:
Marriott Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Law Department
The Borrower hereby agrees to be
bound by the provisions of Section 2.08
hereof (and Annex I as incorporated
therein) as of the day and year first
above written:
FAIRFIELD INN BY MARRIOTT
LIMITED PARTNERSHIP
By Marriott FIBM One Corporation
(Sole General Partner)
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxxx
Title: President
14
ANNEX I
Terms of Subordination
(S)1. Definitions. Capitalized terms used herein and not defined
-----------
herein shall have the meanings assigned thereto in the Debt Service Guaranty
Agreement dated as of July _, 1990 (as from time to time amended, the "Debt
----
Service Guaranty") between Marriott Corporation (the "Guarantor") and Sumitomo
---------------- ---------
Trust & Banking Co., Ltd., New York Branch (together with its successors and
assigns, the "Bank") or the Credit Agreement referred to therein.
----
(S)2. Terms of Subordination.
----------------------
A. Until payment in full by or for account of the Borrower of all of
the Guaranteed Obligations, the Guarantor will not request, demand, xxx for, or
take, accept or receive from the Borrower, by set-off or in any other manner,
and the Borrowed will not make, any payment of any moneys, principal or interest
including, without limitation, post-petition interest), now or hereafter owing
by Borrower to the Guarantor in respect of any Advance, or any security
therefor, except, if no Default shall have occurred and be continuing, as
provided in Section 2.08 of the Debt Service Guaranty and Section 8.12 of the
Credit Agreement.
B. In the event of any distribution, division or application, partial
or complete, voluntary or involuntary, by operation of law or otherwise, of all
or any part of the assets of the Borrower or the proceeds thereof, to creditors
of the Borrower, or upon any indebtedness of the Borrower, by reason of the
liquidation, dissolution or other winding up of the Borrower, or the Borrower's
business, or any sale, receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or any proceeding by or against the
Borrower for any relief under any bankruptcy or insolvency law or laws relating
to the relief of debtors, readjustment of indebtedness, reorganizations,
compositions or extensions, then and in any such event, any payment or
distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to any or
all indebtedness or obligations of the Borrower to the Guarantor in respect of
any Advance (including, without limitation, post-petition interest) shall be
paid or delivered directly to the Bank for application to the Guaranteed
Obligations (including, without limitation, post-petition interest), due or not
due, until the Guaranteed Obligations (including, without limitation, post-
petition interest) shall have first been fully paid in cash. The Guarantor
irrevocably authorizes and empowers the Bank to demand, xxx for, collect and
receive every such payment or distribution and give acquittance therefor and to
file claims and take part in such other proceedings, in the Bank's own name or
in the name of the Guarantor or otherwise, as the Bank may deem necessary or
advisable for the enforcement of the terms and conditions hereof; and the
Guarantor will execute and deliver to the Bank such powers of attorney,
assignments or other instruments as may be requested by the Bank in order to
enable the Bank to enforce any and all claims upon or with respect to any
Advances, and to collect and receive any and all payments or distributions which
may be payable or deliverable at any time upon or with respect to any such
indebtedness or obligations of the Borrower.
C. Should any payment or distribution or security or proceeds thereof
be received by the Guarantor upon or with respect to any Advance contrary to the
foregoing provisions, the Guarantor will forthwith deliver the same to the Bank
in precisely the form received (except for the endorsement or assignment of the
Guarantor where necessary) for application to the Guaranteed Obligations
(including, without limitation, post-petition interest) and, until so delivered,
the same shall be held in trust by the Guarantor as property of the Bank. In
the event of the failure of the Guarantor to make any such endorsement or
assignment, the Bank, or any of its officers or employees, is hereby irrevocably
authorized to make the same.
D. The Guarantor will not assign or transfer to others any claim
which it has or may hereafter have against the Borrower in respect of any
Advance while any of the Obligations (including, without limitation, post-
petition interest) remain unpaid, unless such assignment or transfer is made
expressly subject to the Terms and Conditions in an instrument in form and
substance satisfactory to the Bank. Any purported assignment in violation of
this paragraph D shall be void.
E. The Bank at any time and from time to time may enter into such
agreement or agreements with the Borrower as the Bank may deem proper extending
the time of payment of or renewing or otherwise altering the terms of all or any
of the Obligations without notice to the Guarantor and without in any way
impairing or affecting the obligations of the Guarantor under the terms and
conditions hereof.
F. The Bank shall not be prejudiced in its right to enforce the terms
and conditions hereof in respect of any Advance owing to the Guarantor by any
act or failure to act on the part of the Borrower or anyone in custody of the
Borrower's assets or property.
(S)3. Governing Law.
The terms and conditions hereof shall be governed and construed by, in
accordance with, the law of the State of New York
[END OF ANNEX I]
2
