Exhibit 10.6
MODIFICATION, SUBORDINATION AND NON-DISTURBANCE AGREEMENT,
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ESTOPPEL, ASSIGNMENT AND CONSENT
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[Marriott Rivercenter Hotel, San Antonio, Texas]
This Agreement (this "Agreement"), dated as of September 23, 1996,
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among MARRIOTT HOTEL SERVICES, INC., a Delaware corporation ("Manager"), having
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an office at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, NOMURA ASSET CAPITAL
CORPORATION (the "Lender"), having an address at 2 World Financial Center,
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Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000, and MARRIOTT HOTEL PROPERTIES II LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Borrower"), having an office
at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
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WHEREAS:
A. Pursuant to the provisions of that certain Loan Agreement, dated as
of the date hereof, between Borrower and Lender (as the same may hereafter be
modified, amended or supplemented from time to time, the "Borrower Loan
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Agreement"), Borrower is executing and delivering to Lender its promissory notes
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in the aggregate principal amount of $222,500,000 (collectively, as the same may
hereafter be modified, amended or supplemented from time to time, the "Borrower
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Note"); and
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B. Pursuant to the provisions of that certain Loan Agreement, dated as
of the date hereof, between Santa Xxxxx Marriott Hotel Limited Partnership (the
"Santa Xxxxx Partnership") and Lender (as the same may hereafter be modified,
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amended or supplemented from time to time, the "Santa Xxxxx Loan Agreement"; the
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Borrower Loan Agreement and the Santa Xxxxx Loan Agreement being referred to
collectively as the "Loan Agreements"), the Santa Xxxxx Partnership and Borrower
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are executing and delivering to Lender their promissory note in the principal
amount of $43,500,000 (as the same may hereafter be modified, amended or
supplemented from time to time, the "Santa Xxxxx Note"); and
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C. The Borrower Note will be secured by, among other things, (i) a deed
of trust, dated as of the date hereof (as the same may hereafter be modified,
amended or supplemented from time to time, the "Deed of Trust"), from Borrower
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to Lender, which Deed of Trust creates a lien on the hotel property more
particularly described in Exhibit A annexed hereto (the "San Antonio Property"),
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(ii) mortgages or deed of trust (collectively, as the same may hereafter be
modified, amended or supplemented from time to time, the "Other Mortgages"),
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from
Borrower to Lender, which Other Mortgages create liens on the hotel
properties more particularly described in Exhibits B and C annexed hereto (the
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"Other Borrower Properties"), (iii) a pledge of Borrower's 50% limited
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partnership interest in the Santa Xxxxx Partnership (the "Santa Xxxxx Pledge"),
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and (iv) certain other documents executed and delivered in connection with the
Deed of Trust, the Other Mortgages, and the Santa Xxxxx Pledge (together with
the Borrower Loan Agreement, the Borrower Note, the Deed of Trust, the Other
Mortgages, and the Santa Xxxxx Pledge, and any other documents executed and
delivered by Borrower in connection with the Borrower Note and the loan
evidenced thereby, as the same may be modified, amended, restated, consolidated,
replaced or supplemented from time to time, the "Borrower Loan Documents"); and
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D. The Santa Xxxxx Note will be secured by, among other things, (i) a
deed of trust, dated as of the date hereof (as the same may hereafter be
modified, amended or supplemented from time to time, the "Santa Xxxxx Deed of
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Trust"), from the Santa Xxxxx Partnership to Lender, which Deed of Trust creates
a lien on the hotel property more particularly described in Exhibit D annexed
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hereto (the "Santa Xxxxx Property"), (ii) mortgages or deeds of trust of the San
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Antonio Property and the Other Borrower Properties (collectively, as the same
may hereafter be modified, amended or supplemented from time to time, the
"Collateral Mortgages"), and (iii) certain other documents executed and
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delivered in connection with the Santa Xxxxx Deed of Trust (together with the
Santa Xxxxx Loan Agreement, the Santa Xxxxx Note, the Santa Xxxxx Deed of Trust,
the Collateral Mortgages, and any other documents executed and delivered in
connection with the Santa Xxxxx Note and the loan evidenced thereby, as the same
may be modified, amended, restated, consolidated, replaced or supplemented from
time to time, the "Santa Xxxxx Loan Documents"); and
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E. The obligations of Borrower under the Borrower Loan Documents and
the Santa Xxxxx Partnership under the Santa Xxxxx Loan Documents are
cross-defaulted; and
F. Manager has agreed, pursuant to a certain Management Agreement dated
as of March 20, 1989 between Marriott International, Inc. and Borrower (as
amended by that certain First Amendment to Management Agreement dated as of the
date hereof, as assigned by Marriott International, Inc. to Manager by an
Assignment and Assumption of Management Agreement dated as of the date hereof,
and as further amended or modified from time to time, the "Management
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Agreement") to manage the hotel located on the San Antonio Property; and
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G. Manager has agreed, pursuant to the Management Agreements described
in Exhibit N annexed hereto (collectively, as the same may hereafter be
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modified, amended or supplemented from time to time, the "Other Management
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Agreements") to manage
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the Other Borrower Properties and the Santa Xxxxx Property; and
H. Pursuant to the Collateral Assignment of Documents and Property
Rights, dated as of the date hereof (the "Collateral Assignment of Documents"),
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Borrower is assigning its rights under, among other things, the Management
Agreement to Lender; and
I. It is a condition precedent to Lender making the Loans (as
hereinafter defined) that Manager execute and deliver to Lender this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
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(a) Capitalized terms used in this Agreement and not otherwise
defined in this Agreement shall have the respective meanings ascribed to them in
the Management Agreement.
(b) References in this Agreement to "Cash Management Procedures"
shall mean the Cash Management Procedures in effect as of the date hereof (as
set forth in Exhibit E annexed hereto) and any modifications thereto approved by
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Lender, Borrower and Manager in writing.
(C) As used herein:
(1) "Adjusted Rate" shall mean the Base Rate adjusted in
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accordance with paragraph 4(e) of the Borrower Note, as such paragraph is
in effect as of the date hereof. A copy of paragraph 4(e) of the Borrower
Note is annexed hereto as Exhibit K.
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(2) "Base Rate" shall mean 8.19% per annum.
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(3) "Business Day" shall mean a day on which banks and foreign
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exchange markets are open for business in New York, New York.
(4) "Capital Expenditure and FF&E Reserve Account" shall have the
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meaning set forth in the Cash Management Procedures.
(5) "Cash Collateral Account" shall have the meaning set forth in
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the Cash Management Procedures.
(6) "Cure Notice" shall mean a written notice delivered to
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Manager by Lender acknowledging that an Event
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of Default has been cured (and such cure has been accepted by Lender) or
waived, which notice Lender agrees to deliver promptly upon any such cure
(if accepted by Lender) or waiver.
(7) "Debt Service Payment Date" shall mean the 11th day of each
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calendar month or, if such date is not a Business Day, the next Business
Day immediately thereafter.
(8) "Deed in Lieu of Foreclosure" shall mean an instrument
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transferring title to all or a portion of a Property from Borrower (or
the Santa Xxxxx Partnership, as the case may be) to Lender or a Lender
Affiliate or from Borrower (or the Santa Xxxxx Partnership, as the case
may be) to a third party as the result of an Event of Default under the
Borrower Loan Documents or the Santa Xxxxx Loan Documents.
(9) "Default Interest Rate" shall mean a rate per annum equal to
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the lesser of (a) two percent (2%) above the Base Rate or Adjusted Rate,
as applicable, and (b) the maximum rate allowed by law.
(10) "Default Notice" shall mean any notice of a Payment Event of
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Default or Non-Payment Event of Default from Lender or the Servicer to
Manager.
(11) "Deferred Fees" shall mean, collectively, (a) the Deferred
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Incentive Management Fees payable as of the last day of Fiscal Year 1995,
as set forth in Exhibit G annexed hereto, and (b) the cumulative total
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(which shall not bear interest) of those portions of any Incentive
Management Fees for each Fiscal Year (or portion thereof) thereafter,
which are not paid to Manager on a current basis owing to the limitations
set forth (i) in Section 5.03 of the Management Agreement or (ii) this
Agreement.
(12) "Defeasance Deposits" shall have the meaning set forth in
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Section 2.3(f) of the Borrower Loan Agreement, as in effect as of the
date hereof, as set forth in Schedule II to the Cash Management
Procedures.
(13) "Event of Default" shall have the meaning set forth in
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Section 4.1A of the Borrower Loan Agreement.
(14) "Excess Cash Flow" shall have the meaning set forth in the
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Cash Management Procedures.
(15) "Excess Contributions" shall have the meaning set forth in
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Section 3(h) hereof.
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(16) "Financial Information" shall have the meaning set forth in
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Section 3(m) hereof.
(17) "General Partner" shall mean Marriott MHP Two Corporation,
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the general partner of the Borrower and Santa Xxxxx Partnership.
(18) "Lender Affiliate" shall mean a nominee or designee
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controlled by Lender which shall acquire a Property on behalf of Lender
at a foreclosure sale or by Deed in Lieu of Foreclosure.
(19) "Loans" shall mean the loans evidenced by the Notes.
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(20) "Marriott" shall mean Marriott International, Inc., the
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corporate parent of Manager.
(21) "Marriott Affiliate" shall mean any corporation of which
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Marriott, either directly or indirectly through one or more intermediary
corporations, owns fifty one percent (51%) or more of the voting stock.
Notwithstanding the foregoing and for purposes of this Agreement, in no
event shall Host Marriott Corporation or any entity directly or
indirectly controlled by Host Marriott Corporation (including, without
limitation, Borrower, the Santa Xxxxx Partnership or the General Partner)
constitute a Marriott Affiliate.
(22) "Monthly Debt Service Payments" shall mean interest at the
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Base Rate or Default Interest Rate, as applicable, then due and payable
under the Notes, and principal then due and payable under the Notes, as
the same may be adjusted pursuant to paragraph 4(c) of the Notes as such
paragraph is in effect as of the date hereof. A copy of paragraph 4(c) of
each of the Notes is annexed hereto as Exhibit L, and a schedule of
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Monthly Debt Service Payments is annexed hereto as Exhibit I.
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(23) "Mortgages" shall mean, collectively, the Deed of Trust, the
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Other Mortgages, the Santa Xxxxx Deed of Trust, and the Collateral
Mortgages and "Mortgage" means any one of the aforesaid.
(24) "Non-Payment Event of Default" shall mean any Event of
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Default other than a Payment Event of Default.
(25) "Notes" shall mean, collectively, the Borrower Note and the
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Santa Xxxxx Note.
(26) "Operating Account" shall have the meaning set forth in the
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Cash Management Procedures.
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(27) "Optional Prepayment Date" shall have the meaning set forth
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in the Cash Management Procedures.
(28) "Paid in Full" shall mean, with respect to the Notes, that
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all indebtedness evidenced by the Notes has been paid, provided, however,
that the Notes shall be deemed to have been Paid in Full for purposes of
this Agreement (but not for purposes of the Transaction Documents) at
such time as all of the Properties have been transferred to Lender or a
Lender Affiliate, or to one or more third party purchasers, through
foreclosure or Deeds in Lieu of Foreclosure, it being understood that the
Notes shall not be deemed to have been Paid in Full (unless all
indebtedness evidenced by the Notes shall actually have been paid) so
long as any Property remains subject to the lien of a Mortgage.
(29) "Payment Blockage Period" shall have the meaning set forth
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in Section 8(d) hereof.
(30) "Payment Event of Default" shall mean any Event of Default
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resulting from a default in payment required under any of the Transaction
Documents.
(31) "Properties" shall mean, collectively, the San Antonio
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Property, the Other Borrower Properties, and the Santa Xxxxx Property.
"Property" shall mean any one of the aforesaid.
(32) "Rating Agency" shall mean one or more of Standard & Poor's
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Rating Services, Fitch Investors Services Inc., Duff & Xxxxxx Credit
Rating Co., and Xxxxx'x Investor Service, Inc. that are, at the time of
determination, selected by Lender to rate the Securities.
(33) "Rating Comfort Letter" shall mean a letter from each Rating
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Agency pursuant to which it confirms that the taking of the action
referred to therein will not result in a withdrawal, qualification or
downgrade of the then existing ratings of the Securities.
(34) "Refinancing Debt" shall mean any refinancing in an amount
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not to exceed the balance of the Secured Obligations at the time of such
refinancing after reduction of such balance resulting from liquidations
of all U.S. Obligations purchased with Defeasance Deposits, together with
indebtedness incurred to finance the reasonable costs of any such
refinancing (but not in excess of three percent (3%) of the principal
amount of any simultaneous refinancing), so long as the amount refinanced
does not exceed $266,000,000.
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(35) "Release Prices" means the amount of the proceeds of the
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Loans allocated to the San Antonio Property and the Other Borrower
Properties as set forth in Exhibit J annexed hereto. Release Prices will
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be adjusted as follows: If the principal amount of the Borrower Note is
prepaid as a result of (i) the release of a Property (other than the
Santa Xxxxx Property) pursuant to Section 2.6 of the Borrower Loan
Agreement, (ii) the application of U.S. Obligations pursuant to Section
2.3 of the Borrower Loan Agreement, or (iii) optional prepayment pursuant
to the last sentence of Section 3.1 of the Borrower Loan Agreement, the
Release Price for each such Property (other than the Santa Xxxxx
Property) shall equal the product of (x) a fraction the numerator of
which is the Release Price of such Property immediately before such
adjustment and the denominator of which is the aggregate Release Prices
for all Properties (other than the Santa Xxxxx Property) immediately
before such adjustment, times (y) the outstanding principal amount of the
Borrower Note immediately after such adjustment that will be subject to
the lien of the Deed of Trust or any Other Mortgage immediately after
such repayment.
(36) "Secured Obligations" shall mean all payments of debt
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service under the Transaction Documents, including, without limitation,
(A) Monthly Debt Service Payments, (B) the application of Excess Cash
Flow after the Optional Prepayment Date to the reduction of the principal
amount of the Notes (as provided for in the Cash Management Procedures),
(C) balloon payments, whether payable on the Optional Prepayment Date,
the Maturity Date, or in connection with the acceleration of the Notes,
(D) Yield Maintenance Premiums, and (E) default interest as set forth in
Paragraph 3(b) of each of the Notes as the same is in effect as of the
date hereof.
(37) "Securities" shall have the meaning set forth in Section 13
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hereof.
(38) "Securitization" shall have the meaning set forth in Section
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13 hereof.
(39) "Servicer" shall mean any nationally recognized servicer of
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commercial mortgage loans selected by Lender.
(40) "Subordinated Fees" shall mean, collectively, all Incentive
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Management Fees and all Deferred Fees.
(41) "Successor Owner" shall mean, with respect to any Property,
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any purchaser at a foreclosure sale (including, without limitation,
Lender or a Lender Affiliate, if applicable) or other sale under any
Mortgage or any transferee by Deed in Lieu of Foreclosure (including,
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without limitation, Lender or a Lender Affiliate, if applicable), and
their successors in interest and assigns.
(42) "Trade Names" shall mean the name "Marriott" and the other
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words, trademarks, trade names, symbols, logos, designs, referred to in
Section 10.01A of the Management Agreement.
(43) "Transaction Documents" shall mean, collectively, the
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Borrower Loan Documents and the Santa Xxxxx Loan Documents.
(44) "Trustee" shall have the meaning set forth in Section 12
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hereof.
(45) "U.S. Obligations" shall have the meaning set forth in
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Section 2.3(f) of the Loan Agreements, as set forth in Schedule II to the
Cash Management Procedures.
(46) "Yield Maintenance Premiums" shall mean an amount in cash
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that would be necessary to purchase U.S. Obligations in an amount that
would be sufficient, together with U.S. Obligations that could be
purchased with the unpaid principal of and accrued interest on the Notes
paid to Lender upon an acceleration of the Notes pursuant to Section 4.2
of each of the Loan Agreements, to provide the payments due on or prior
to, but as close as possible to, all successive Debt Service Payment
Dates after the receipt of such amount in respect of (1) the remaining
Monthly Debt Service Payments that would be required under the Notes
through and including October 11, 2007, and (2) a balloon payment of the
outstanding principal balance of the Notes and accrued and unpaid
interest as of such date as if such balloon payment were then due and
payable. A copy of Section 4.2 of each of the Loan Agreements is annexed
hereto as Exhibit M.
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2. Cash Management Procedures.
(a) So long as (i) the Notes have not been Paid in Full, or (ii)
Lender or a Lender Affiliate shall hold title to any Property as the result of a
foreclosure or Deed in Lieu of Foreclosure, Lender (and Servicer on its behalf),
Borrower and Manager shall comply at all times with the Cash Management
Procedures, whether or not such provisions are consistent with provisions of the
Management Agreement, and whether or not specific reference to such provisions
is made in this Agreement. At such time as (x) the Notes have been Paid in Full,
and (y) Lender or a Lender Affiliate no longer holds title to any Property as
the result of a foreclosure or Deed in Lieu of Foreclosure, all funds then held
by Lender or Servicer with respect to the Properties shall be turned over to
Manager to be held, applied or disbursed in accordance with the terms of the
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Management Agreement.
(b) Notwithstanding the provisions of Section 2(a), Manager shall
not be required to comply with the Cash Management Procedures unless and until
Servicer and each succeeding Servicer has agreed in writing for the benefit of
Manager to be bound by the terms of the Cash Management Procedures.
(c) If, after the initial Securitization, the Loans are sold as a
whole loan and thereafter, so long as the Loans are no longer subject to a
Securitization, the Cash Management Procedures will no longer apply to Manager.
(d) Section 7.12 of the Cash Management Procedures shall not apply
to Manager.
(e) Borrower and Manager agree that notwithstanding the priority of
payments set forth in Sections 4.3, 4.4, 7.9.3 and 7.10 of the Cash Management
Procedures, the calculation and payment of Incentive Management Fees, Manager
Loans and Deferred Fees shall be made pursuant to the Management Agreement,
except that if the amounts distributed to Manager pursuant to such Sections are
insufficient to pay on a current basis the amount owed Manager pursuant to such
calculation, then any unpaid Incentive Management Fees shall become a Deferred
Fee and any Manager Loans shall continue to be outstanding.
(f) Notwithstanding the terms of the Cash Management Procedures,
Lender agrees that, in the event Manager withdraws funds from that certain
Supplemental Cash Reserve (as defined in and to be established pursuant to the
terms of that certain Cash Management Supplemental Agreement for the New
Orleans, San Antonio Rivercenter, San Xxxxx, and Santa Xxxxx Marriott Hotels,
dated as of the date hereof, between Borrower and Manager (the "Cash Management
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Supplemental Agreement")) or makes any Manager Loan to Borrower, Manager shall
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not be required, at any time, to deposit either such funds into the Manager's
Account, the Lockbox Account, the Cash Collateral Account (as such terms are
defined in the Cash Management Procedures), or any other account held or
controlled by the Servicer, but shall be entitled, instead, to deposit and
maintain such funds in the Operating Account (as defined in the Cash Management
Procedures) to be used as additional Working Capital pursuant to the Management
Agreement. Further, notwithstanding the terms of the Cash Management Procedures,
Manager shall be entitled, without the need to obtain any consent from Lender,
to redeposit into the Supplemental Cash Reserve funds withdrawn from such
Supplemental Cash Reserve at such time, if any, as the Working Capital becomes
adequate again.
3. Modification of Management Agreement. Borrower and Manager hereby
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acknowledge and agree that so long as (i) the Notes have not been Paid in Full,
or (ii) (except as to sub-parts (d), (e), (f), (g), (l), (m), (n), (p) and (q)
of this Section
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3), Lender or a Lender Affiliate shall hold title to the San Antonio Property as
the result of a foreclosure or a Deed in Lieu of Foreclosure:
(a) All Chain Services shall be performed at Manager's cost, without
xxxx-up or profit, it being understood that Manager's cost includes both
Manager's out-of-pocket expenditures and allocations, determined on a fair and
equitable basis, in Manager's reasonable judgment, of Manager's, Marriott's, and
any Marriott Affiliate's overhead costs related to providing Chain Services.
(b) Notwithstanding anything to the contrary contained in the
Management Agreement, all accounting shall be done under generally accepted
accounting principles in the United States of America (as such principles may
change from time to time) applied on a consistent basis, both as to
classification of items and amounts.
(c) All third party transactions entered into by Manager in
connection with the San Antonio Property shall reflect arms' length terms that
are competitive with terms available from reputable and reliable contractors and
suppliers.
(d) Lender shall have the right, at any time, in the place and stead
of Borrower, to exercise the termination rights of Borrower under Section 4.02
and 16.02 of the Management Agreement, and shall have the right at any time
following the occurrence of an Event of Default and delivery of a Default Notice
with respect thereto and until a Cure Notice has been received by Manager with
respect to such Event of Default, to exercise any termination rights of Borrower
under the Management Agreement (including, without limitation, those set forth
in Section 4.02 and 16.02 thereof), it being agreed, however, that the rights of
Manager to manage the Property under the Management Agreement shall not be
terminated other than in accordance with the terms thereof.
(e) In calculating "Net Sales Proceeds", all payments to Lender,
including, without limitation, Defeasance Deposits, Release Prices, and Yield
Maintenance Premiums, shall be deducted from cumulative net proceeds received by
Borrower as the result of the events described in the definition of Sales
Proceeds in the Management Agreement.
(f) Following notice from Lender to Manager that Borrower has failed
to provide to Lender any Repairs and Equipment Estimates, Building Estimates or
Annual Operating Projections that Manager has provided to Borrower or was
obligated to provide to Borrower under the Management Agreement, Manager shall
promptly provide copies of the same to Lender.
(g) Following the occurrence of an Event of Default
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and delivery of a Default Notice with respect thereto, and until a Cure Notice
has been received by Manager with respect to such Event of Default, Manager
shall promptly provide to Lender copies of all Repairs and Equipment Estimates,
Building Estimates and Annual Operating Projections as and when the same are
required to be submitted to Borrower under the Management Agreement.
(h) Notwithstanding the provisions of Section 8.02E of the
Management Agreement, Manager shall not reduce the percentage contributions to
the Capital Expenditure and FF&E Reserve Account to less than the applicable
percentages of Gross Revenues specified in Section 8.02B of the Management
Agreement without the prior written consent of Lender, nor increase the
percentage contributions for the Capital Expenditure and FF&E Reserve Account to
more than 5% of Gross Revenues without the prior written consent of Lender,
provided, however, that from and after the Fiscal Year commencing on or about
January 1, 2003, Manager may increase the percentage contributions for the
Capital Expenditure and FF&E Reserve Account to not more than 6% of Gross
Revenues (or a greater percentage, provided that any contribution in excess of
6% (the "Excess Contributions") shall be subordinate to the Secured Obligations)
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in accordance with the provisions of Section 7(c) of this Agreement.
(i) To the extent that Manager in its good faith discretion
ascertains that amounts on deposit in the Capital Expenditure and FF&E Reserve
Account are in excess of the amounts anticipated to be necessary (taking into
account anticipated future deposits into the Capital Expenditure and FF&E
Reserve Account) for present or future replacements, renewals and other items
provided for in Section 8.02 of the Management Agreement, Manager will use such
excess amounts in the Capital Expenditure and FF&E Reserve Account for repairs
approved (or deemed approved) by Borrower under Section 8.03 of the Management
Agreement.
(j) Any assignment of the Management Agreement by Manager pursuant
to Section 18.01 thereof shall be subject to the prior receipt by Lender of (i)
a Rating Comfort Letter, and any such assignment in the absence of such Rating
Comfort Letter shall be void, and (ii) a guarantee by Marriott International,
Inc. of the obligations of the assignee in form reasonably satisfactory to
Lender.
(k) Following the occurrence of a Payment Event of Default and
delivery of a Default Notice with respect thereto and until receipt of a Cure
Notice with respect thereto, the following provisions shall apply:
(i) (aa) Manager shall submit to Lender for its approval (which
approval shall not be unreasonably withheld, conditioned or delayed), at
least thirty (30) days prior to the beginning of each such Fiscal Year, a
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proposed Annual Operating Projection for such Fiscal Year prepared by
Manager in good faith. Additionally, with respect to any Fiscal Year
during which Manager receives, on or prior to June 30, a Default Notice
regarding a Payment Event of Default, Lender shall have the right to
approve (which approval shall not be unreasonably withheld, conditioned
or delayed) the Annual Operating Projection applicable to such Fiscal
Year as it relates to the remainder of such Fiscal Year. Lender's
approval shall be deemed to have been given if Manager has received no
notice from Lender to the contrary within thirty (30) days after Lender's
receipt of any such proposed or then existing Annual Operating Projection
(it being understood that upon receipt of a Default Notice containing a
request for the then-current Annual Operating Projection, Manager shall
promptly send to Lender a copy of the then current Annual Operating
Projection). Any notice of disapproval delivered by Lender shall specify
the items listed in the proposed (or then existing) Annual Operating
Projection of which Lender, in good faith, disapproves. Any items not so
specified shall be deemed approved. In preparing the Annual Operating
Projection for each Fiscal Year, Manager's goal will be the maximization
of the long-term and short-term Operating Profit of the Hotel, in keeping
with Manager's standards for full service first-class Marriott hotels,
taking into account, among other factors, any new standards being
established by Manager for such hotels. Manager agrees to take reasonable
steps to ensure that, at Lender's request, qualified personnel from
Manager's staff are available to discuss with Lender any proposed Annual
Operating Projection and the Annual Operating Projection applicable to
the Fiscal Year in which the Payment Event of Default occurs. A meeting
(or meetings) for such purpose shall be held, at Lender's request, within
a reasonable period of time after Lender's request. Manager will at all
times give good faith consideration to Lender's suggestions regarding any
such proposed (or then existing) Annual Operating Projection.
(bb) Lender shall not be entitled to withhold its approval of
any item in any proposed (or then existing) Annual Operating Projection
based on its objection to: (w) Manager's reasonable projections of either
Gross Revenues or the components thereof, (x) projected costs and
expenses that are "system charges" (that is, costs and expenses that are
generally uniform among the Marriott hotels operated by Manager, Marriott
and any Marriott Affiliate, such as: the charges for Chain Services, and
employee benefits and other compensation programs); (y) costs and
expenses that are
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not within the control of Borrower, Lender or Manager, such as
Impositions and the cost of utilities; or (z) increases in projected
costs and expenses of operating the Hotel, which increases are primarily
attributable to projected increases in occupancy at the Hotel. The
approval of Lender (as set forth in Section 3(k)(i)(aa) above) shall not
be required if, and to the extent that, the proposed (or then existing)
Annual Operating Projection for a given Fiscal Year is, in all material
respects, the same as the Annual Operating Projection for the preceding
Fiscal Year with adjustments for inflation. If Lender and Manager fail to
mutually agree on any item in any proposed (or then existing) Annual
Operating Projection within the thirty (30) day period described in the
first or second sentence of Section 3(k)(i)(aa), as applicable, Lender
shall have the right to submit to arbitration (in accordance with Section
3(k)(iii) below) the issue of whether or not the Lender's disapproval of
the contested item in the proposed (or then existing) Annual Operating
Projection is reasonable, given, among other factors, the goals set forth
in the sixth sentence of Section 3(k)(i)(aa). While such arbitration
proceedings are pending, Manager shall operate the Hotel, as to the items
approved or deemed approved, in accordance with the proposed (or then
existing) Annual Operating Projection and, as to the items that were
disapproved, in accordance with the Annual Operating Projection for the
preceding Fiscal Year, with adjustments for inflation and changes in
occupancy. If Lender fails to notify Manager within ten (10) days after
expiration of the above-stated thirty (30) day period that it is
submitting a specific contested item to arbitration, then Lender shall be
deemed to have rescinded its disapproval of such contested item and such
item shall be deemed approved. The proposed (or then existing) Annual
Operating Projection shall be considered final with respect to all items
approved or deemed approved pursuant to Section 3(k)(i)(aa) and this
Section 3(k)(i)(bb) or in accordance with the decision of the arbitrators
in accordance with Section 3(k)(iii).
(cc) Each Annual Operating Projection will constitute a
standard to which Manager shall use its reasonable best efforts to
adhere. It is understood, however, that the Annual Operating Projection
is an estimate only and that unforeseen circumstances such as, but not
limited to, the costs of labor, materials, services and supplies,
casualty, operation of law, or economic and market conditions may make
adherence to the Annual Operating Projection impracticable, and Manager
shall be entitled to reasonable departures therefrom for such reasons and
consistent with the goal
13
of maximizing long-term and short-term Operating Profit, in keeping with
Manager's standards for full service first-class Marriott hotels, taking
into account, among other factors, any new standards being established by
Manager for such hotels; provided, however, that nothing herein shall be
deemed to authorize Manager to take any action prohibited by this
Agreement or the Management Agreement nor to reduce Manager's other
rights or obligations hereunder or thereunder.
(dd) Manager shall notify Lender of any significant variations
from the Annual Operating Projection promptly after Manager learns of the
same but in no event later than the date on which Manager is required to
deliver the interim accounting statement (pursuant to Section 5.05A of
the Management Agreement) covering the period in which such variation
occurs. Lender and Manager shall, at Lender's request, meet to review
such variations and their cause and to discuss appropriate action with
respect to correcting the variations or preventing or minimizing their
occurrence or effect.
(ii) (aa) Manager shall submit to Lender for its approval (which
approval shall not be unreasonably withheld, conditioned or delayed), at
the same time as submission of the proposed Annual Operating Projection,
a proposed Repairs and Equipment Estimate prepared by Manager in good
faith. Lender's approval shall be deemed to have been given if Manager
has received no notice from Lender to the contrary within thirty (30)
days after Lender's receipt of such proposed Repairs and Equipment
Estimate. Any notice of disapproval delivered by Lender shall specify the
items shown on the proposed Repairs and Equipment Estimate of which
Lender, in good faith, disapproves. Any items not so specified shall be
deemed approved. Manager agrees to take reasonable steps to ensure that,
at Lender's request, qualified personnel from Manager's staff are
available to discuss the proposed Repairs and Equipment Estimate with
Lender. A meeting (or meetings) for such purpose shall be held, at
Lender's request, within a reasonable period of time after the submission
to Lender of the proposed Repairs and Equipment Estimate. Manager will at
all times give good faith consideration to Lender's suggestions regarding
any such proposed Repairs and Equipment Estimate that Manager is required
to submit to Lender.
(bb) Lender shall not be entitled to withhold its approval of
any particular item described in any proposed Repairs and Equipment
Estimate if such
14
item is reasonably required to enable the Hotel to be or remain in
compliance with Manager's standards for full service first-class Marriott
hotels, taking into account, among other factors, any new standards being
established by Manager for such hotels. If Lender and Manager fail to
mutually agree on any particular item in the proposed Repairs and
Equipment Estimate within thirty (30) days after the submission to Lender
of the proposed Repairs and Equipment Estimate described in the first
sentence of Section 3(k)(ii)(aa), Lender shall have the right to submit
to arbitration (in accordance with Section 3(k)(iii) below) the issue of
whether or not the contested item in the Repairs and Equipment Reserve is
reasonably required to enable the Hotel to be or remain in compliance
with Manager's standards for full service first-class Marriott hotels,
taking into account, among other factors, any new standards being
established by Manager for such hotels. While such arbitration
proceedings are pending, Manager shall be entitled to make the repairs
and replacements described in the proposed Repairs and Equipment Estimate
to which Lender did not timely object, but it shall not make any of the
repairs or replacements described in the proposed Repairs and Equipment
Estimate to which Lender timely objected. If Lender fails to notify
Manager within ten (10) days after expiration of the above-stated thirty
(30) day period that it is submitting a specific contested item to
arbitration, then Lender shall be deemed to have rescinded its
disapproval of such contested item and such item shall be deemed
approved. The proposed Repairs and Equipment Estimate shall be considered
final with respect to all items approved or deemed approved pursuant to
Section 3(k)(ii)(aa) and this Section 3(k)(ii)(bb) or in accordance with
the decision of the arbitration in accordance with Section 3(k)(iii).
(iii) (aa) Disputes described in Sections 3(k)(i)(bb) and
3(k)(ii)(bb) above shall be resolved in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then
pertaining. The decision of the arbitrators shall be binding, final and
conclusive on the parties.
(bb) Lender and Manager shall each appoint, within twenty (20)
days after receipt by Manager of Lender's notice that it is submitting a
specific contested item to arbitration, a reputable, fit and impartial
person as arbitrator who shall have had at least ten (10) years' recent
professional experience in hotel management or hotel management
consulting who is not at such time employed by any competitor of Manager
15
or by Manager or any of its Affiliates. Notice of such appointment shall
be sent in writing by each party to the other, and the arbitrators so
appointed, in the event of their failure to agree within thirty (30) days
after the appointment of the second arbitrator upon the matter submitted,
shall appoint a third arbitrator. If either Lender or Manager shall fail
to appoint an arbitrator, as aforesaid, for a period of twenty (20) days
after written notice from the other party to make such appointment, then
the arbitrator appointed by the party having made such appointment shall
appoint a second arbitrator and the two so appointed shall, in the event
of their failure to agree upon any decision within thirty (30) days
thereafter, appoint a third arbitrator. If such arbitrators fail to agree
upon a third arbitrator within forty-five (45) days after the appointment
of the second arbitrator, then such third arbitrator shall be appointed
by the American Arbitration Association from its qualified panel of
arbitrators, and shall be a person having the same qualifications as
described above. The costs and fees of the arbitrators and the
arbitration shall be paid out of Gross Revenues and shall constitute a
Deduction in the year in which the arbitration is completed, provided,
however, that the fees of respective counsel engaged by the parties and
the costs and fees of expert witnesses and other witnesses called for the
parties shall be paid by the respective party engaging such counsel or
calling or engaging such witnesses.
(cc) The decision of the arbitrators shall be rendered within
thirty (30) days after appointment of the third arbitrator. Such decision
shall be in writing and in duplicate, one counterpart thereof to be
delivered to Lender and one to Manager and shall be final and binding on
the parties.
(dd) If in Manager's good faith judgment the decision of the
arbitrators would require the Manager to operate the Hotel at a standard
that is materially below Manager's standards generally applied with
respect to full service first-class Marriott hotels, taking into account,
among other factors, any new standards being established by Manager for
such hotels, Manager shall be entitled to terminate the Management
Agreement as of a date three (3) months after the date of Manager's
notice of termination to Lender and Borrower.
(l) Following (i) notice from Lender to Manager that Borrower has failed
to provide to Lender any information that Borrower has obtained or could have
obtained from an inspection of Manager's books and records (as they relate to
the San Antonio
16
Property), or (ii) the occurrence of an Event of Default and delivery of a
Default Notice with respect thereto (unless and until a Cure Notice has been
received by Manager with respect to such Event of Default), Lender and its
agents shall have the same rights to inspect Manager's books and records (as
they relate to the San Antonio Property) and to the receipt of information
regarding the San Antonio Property from Manager as are afforded to Borrower
under the Management Agreement.
(m) Following (i) notice from Lender to Manager that Borrower has
failed to provide the financial information ("Financial Information") to Lender
---------------------
that Borrower is entitled to receive under the Management Agreement at the times
specified in the Management Agreement, or (ii) the occurrence of an Event of
Default and delivery of a Default Notice with respect thereto, and until a Cure
Notice has been received by Manager with respect to such Event of Default,
Manager shall promptly provide Financial Information to Lender, as and when the
same is required to be submitted to Borrower under the Management Agreement.
(n) Lender and its agents and designees shall have the right to inspect
the San Antonio Property at reasonable times on reasonable advance notice.
(o) Manager will provide to Lender, upon thirty (30) days' prior written
notice, a written estoppel certificate (A) stating whether or not the following
statements are correct, indicating in reasonable detail, where applicable, the
circumstances causing any of the statements not to be correct:
(i) the Management Agreement and this Agreement are in full force
and effect;
(ii) Manager is not aware of any default under the Management
Agreement or this Agreement, or any event which, with the giving of
notice, the passage of time, or both, would constitute an event of
default thereunder, nor has Manager commenced any action or served any
notice for the purpose of terminating the Management Agreement; and
(iii) all sums then due and payable to Manager under the Management
Agreement or under this Agreement have been paid in full; and
(B) setting forth a schedule of all Deferred Fees.
(p) Without the prior written consent of Lender in each instance, Manager
shall not (i) terminate (except as specifically permitted in the Management
Agreement or under this Agreement) or consent to the cancellation or surrender
of the Management Agreement, or (ii) modify the Management Agreement so as to
shorten the unexpired term thereof, or change any renewal
17
option therein, or in any other material respect, or subject to the provisions
of the last sentence of this Section 3(p), in any manner impair the title to the
San Antonio Property or the validity or priority of the Deed of Trust or any
other Transaction Document. Any purported modification, amendment, termination
(except as specifically permitted in the Management Agreement or under this
Agreement), cancellation, surrender or impairment made without the prior written
consent of Lender in each instance shall be null and void as against Lender at
its option. Notwithstanding the foregoing, Manager shall not have any obligation
to expend its own funds to prevent or cure any impairment of the title to the
San Antonio Property or the validity or priority of the Deed of Trust or other
Transaction Documents, unless such impairment was caused by the acts or
omissions of Manager that were outside of the scope of its obligations under the
Management Agreement or resulted directly from the breach by Manager of its
obligations under the Management Agreement.
(q) If any act or omission by Borrower or any other act, condition or
event would give Manager the right, immediately or after notice or lapse of time
or both, to cancel or terminate the Management Agreement, Manager will not
exercise any such right and no notice of cancellation shall be effective until
(i) Manager has given written notice of such act or omission to Lender
(referring to the provisions of this Section 3(q) and the obligation to respond
thereto within the time periods hereinafter provided) and Lender has received
such notice, and (ii) a time period for remedying such act or omission equal to
(A) 60 days for any act or omission under Section 8.02 or 8.03 of the Management
Agreement, (B) 15 days for any failure to supply additional Working Capital or
cure any monetary default (except as provided in clause (A) of this Section
3(q)), (C) 45 days as to any nonmonetary act, omission, condition or event
which, in the reasonable judgment of Manager (as set forth in such notice) will,
if not cured, have a material and adverse impact on Manager's ability to operate
the Hotel in the manner required by the Management Agreement (as modified by
Sections 2 and 3 of this Agreement), and (D) 90 days for any nonmonetary act,
omission, condition or event other than as set forth in clause (C) of this
Section 3(q), shall have elapsed, which period (whether under clause (A), (B),
(C), or (D) of this Section 3(q)) shall commence on a date which shall be the
later of (x) the date of expiration of the cure period available to Borrower
under the Management Agreement, or (y) the date of Lender's receipt of the
notice referred to in Section 3(q)(i). Lender shall, within ten (10) days after
its receipt of Manager's notice of an act or omission referred to in clause (B)
above, or within thirty (30) days of its receipt of any other Manager's notice,
give Manager notice of its intention to, and with reasonable diligence
thereafter commence and continue to, remedy such act or omission or to cause the
same to be remedied. If, after delivery of such notice, Lender fails to remedy
the act or omission that it undertook in
18
such notice to remedy, Lender shall have no liability of any kind under such
notice for such failure and Manager's sole right against Lender under this
Section 3(q), or in respect of such notice, shall be to exercise its rights
under the Management Agreement as if such notice had never been delivered. It is
recognized that Lender does not have the ability to cure the following defaults
by Borrower: bankruptcy, assignment for the benefit of creditors, or the
appointment of a receiver or trustee. Therefore, foreclosure of (or the exercise
of the power of sale pursuant to or acceptance of a Deed in Lieu of Foreclosure
thereof) the Deed of Trust or any Other Mortgage covering the San Antonio
Property shall constitute cure of such default under the Management Agreement,
and Lender shall have a reasonable period (not to exceed one (1) year) to effect
the same. Manager shall promptly give Lender copies of all notices of default
given to Borrower under the Management Agreement, but the failure of Manager to
comply with the provisions of this sentence shall not affect the efficacy of any
notice to Borrower and shall not constitute a default hereunder.
(r) Manager will not enter into any leases of FF&E other than in
accordance with the parameters set forth in Section 8.02C of the Management
Agreement.
(s) Manager shall make no Manager Loans that, when added to the
outstanding balance of previous Manager Loans, would cause the total outstanding
balance of Manager Loans to exceed the sum of (i) average amount of Deductions
for each Accounting Period during the preceding full 13 Accounting Periods, and
(ii) an amount equal to the Hotel's pro-rata share of one Monthly Debt Service
Payment then in effect (pro-rata share based on the proportion of the Hotel's
Qualifying Mortgage Debt to the amount of the Permanent Loan).
(t) References in the Management Agreement to the Debt Service Guaranty
shall be of no force and effect.
(u) The provisions of the last sentence of Section 4.01 and the last
sentence of Section 9.01(A) and (B) of the Management Agreement shall be of no
force and effect.
(v) The words "subject to the provisions of any mortgage of the Hotel"
shall be deemed added to the end of Section 15.02(B) of the Management
Agreement.
4. Assignment; Consents of Manager.
-------------------------------
(a) Manager hereby acknowledges that Borrower has, pursuant to the
Collateral Assignment of Documents, assigned and pledged its right, title and
interest in, to and under the Management Agree ment to Lender. Manager
acknowledges and consents to the express terms of the Collateral Assignment of
Documents as it relates to the Management Agreement.
19
(b) To effectuate the rights set forth in Section 3(d) of this Agreement
as they relate to Section 4.02 of the Management Agreement, Borrower hereby
presently and absolutely grants, assigns, transfers and sets over unto Lender
Borrower's rights to terminate the Management Agreement under Section 4.02
thereof, until such time as the Notes are Paid in Full.
(c) Manager hereby consents to the assignment set forth in Section 4(b)
hereof.
(d) Manager hereby consents to the Secured Obligations and agrees that
both the Secured Obligations and any Refinancing Debt shall constitute
indebtedness on which all [or a portion] of the payments constitute Qualifying
Debt Service for the purposes of Section 3.01A(2)(i) and subpart (ii)(a) of
Section 18.02 of the Management Agreement, and that all conditions set forth in
Sections 3.01 and 18.02 of the Management Agreement are deemed satisfied by the
Permanent Loan.
5. Certifications, Representations and Agreements of Manager. Manager
---------------------------------------------------------
hereby certifies, represents and agrees to and with Lender as of the date
hereof, as follows:
(a) Manager is the manager under the Management Agreement, pursuant
to which the San Antonio Property is operated as a full service first-class
Marriott hotel.
(b) Annexed hereto as Exhibit F is a true and correct copy of the
---------
Management Agreement. The Management Agreement and this Agreement constitute the
entire agreement between Manager and Borrower with respect to the San Antonio
Property, other than the Cash Management Supplemental Agreement, which agreement
does not affect the rights of Lender under this Agreement or under the Cash
Management Procedures. The Management Agreement is in full force and effect as
against Manager and has not been amended or modified in any way, except as
otherwise stated in this Section 5(b) or Sections 2 or 3 of this Agreement.
(c) Manager is not aware of any default under the Management Agreement,
or any event which, with the giving of notice, the passage of time or both,
would constitute an event of default thereunder, nor has Manager commenced any
action or served any notice for the purpose of terminating the Management
Agreement. Unless earlier terminated or extended as provided therein, the
Management Agreement will terminate on December 28, 2018.
(d) All fees currently payable under the Management Agreement have
been paid in full through the last day of the eighth (8th) Accounting Period of
Fiscal Year 1996. Except as otherwise set forth in Exhibit G there are no
---------
Deferred Fees outstanding.
20
(e) Except as otherwise set forth in Exhibit H annexed hereto, as of
---------
the date hereof, the San Antonio Property complies with all operating standards
and, to the best of Manager's knowledge, all property condition standards,
generally employed by Manager for full service first-class Marriott hotels.
(f) There are no property condition and operating standards generally
employed by Manager for full service first-class Marriott hotels as of the date
hereof which are not already satisfied or reflected in work provided for in the
Repairs and Equipment Estimate for Fiscal Year 1996 unless the same are
otherwise set forth in Exhibit H annexed hereto.
---------
(g) Manager has the right to use the Trade Names in connection with the
management and operation of the Hotel.
(h) To the best of Manager's knowledge, all interim and annual
accounting statements given by Manager to Borrower with respect to the San
Antonio Property are true and complete in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(i) The Owner has no remaining obligations under Article VI of the
Management Agreement.
(j) Any assignment of the Management Agreement shall be subject to (i)
the provisions of Section 3(j) of this Agreement, and (ii) the assumption in
writing of the terms of this Agreement by the assignee.
6. Obligations of Lender to Provide Notices to Manager.
---------------------------------------------------
(a) Lender shall promptly give Manager copies of all Default Notices,
and Borrower acknowledges that Manager may, for purposes of this Agreement, rely
on any Default Notices.
(b) None of the provisions of this Agreement that become effective on an
Event of Default shall apply until Lender has delivered a Default Notice with
respect thereto to Manager.
(c) Lender shall give Manager copies of any material modifications to
the Borrower Loan Documents.
(d) Lender shall give Manager notice of all adjustments to the Release
Prices.
(e) The failure of Lender to comply with the provisions of this
Section 6 shall not affect the efficacy of any notice or documents as to
Borrower.
7. Subordination.
-------------
21
(a) The Management Agreement and all right, title and interest of
Manager in and to the San Antonio Property and the Hotel are and shall be
subject and subordinate to the lien of the Deed of Trust and any Other Mortgage
covering the San Antonio Property; provided, however, that, notwithstanding the
foregoing subordination, neither Lender nor any successor or assignee thereof
shall name or join Manager as a party defendant in any foreclosure or otherwise
in any suit, action or proceeding commenced or maintained for the purpose of
foreclosure of the Deed of Trust or any Other Mortgage covering the San Antonio
Property or to recover possession of the San Antonio Property unless Manager or
any person claiming through or under Manager is deemed a necessary party under
the law of the applicable jurisdiction or by the court, in which event such
party may be so named or joined but such naming or joinder shall not otherwise
be in derogation of the rights of Manager set forth in this Agreement, and the
Management Agreement shall not be subject to forfeiture or termination, other
than in accordance with the terms thereof, by reason of any such suit, action or
proceeding or any judgment rendered therein, provided that nothing contained in
this Section 7(a) shall impair the exercise of any remedies by Lender under the
Borrower Loan Documents, at law or in equity, or by statute, including, without
limitation, the right to foreclose and the right to appointment of a receiver.
Should the exercise of any such remedies impair, by events not within the
control of Lender (such as operation of law or actions taken by a receiver other
than at the request of Lender), the rights of Manager under this Section 7(a) or
Section 9 hereof, Lender shall have no liability or obligation to Manager
(subject, however, to the rights of Manager under Section 9 of this Agreement
once Lender or a Successor Owner has obtained possession of the San Antonio
Property).
(b) Manager agrees that payment of all Subordinated Fees is hereby
subordinated to the Secured Obligations and, except as set forth in Section 8,
Manager will not take, retain, or receive from Borrower any Gross Revenues or
other funds of Borrower by setoff or in any other manner, in payment of the
whole or in part of the Subordinated Fees, nor any security for any of the
foregoing, unless and until the Notes have been Paid in Full and the Cash
Management Procedures are no longer operative.
(c) Manager agrees that payment of all Excess Contributions is
hereby subordinated to the Secured Obligations, and Manager will not take,
retain, or receive from Borrower any Gross Revenues or other funds of Borrower
by setoff or in any other manner (other than funds advanced by Borrower from
sources other than Gross Revenues or Operating Profit, or funds payable to
Borrower under the Cash Management Procedures), in payment of the whole or in
part of the Excess Contributions, nor any security for any of the foregoing,
unless and until the Notes have been Paid in Full and the Cash Management
Procedures are no
22
longer operative.
(d) Upon the foreclosure or conveyance by Deed in Lieu of
Foreclosure of the San Antonio Property, the payment of any Subordinated Fees
(including, without limitation, any Deferred Fees) and any obligation of
Borrower to repay Manager Loans shall be deemed to have been waived as to
Lender, any Lender Affiliate, and any Successor Owner, and as to the San Antonio
Property, but shall not be deemed to have been waived as to Borrower.
8. Payment of Subordinated Fees and Manager Loans.
----------------------------------------------
(a) Subject to the provisions of this Section 8, Manager, shall,
for any period prior to the earlier to occur of (i) the occurrence of an Event
of Default and receipt by Manager of a Default Notice, or (ii) the Optional
Prepayment Date, be entitled to accept from Borrower, Lender or Servicer (as
applicable), repayment of Manager Loans and accrued interest thereon, and
payments of Subordinated Fees, each of which shall be payable (in the order of
priority set forth in and to the extent payable under Section 5.03 of the
Management Agreement) solely from funds (if any) payable to Manager under
Section 4.3(G) or 7.9.3(C) (whichever is then applicable) of the Cash Management
Procedures.
(b) Following the Optional Prepayment Date, Manager shall not be
entitled to and shall not accept from Borrower, Lender or Servicer (as
applicable), repayment of Manager Loans or accrued interest thereon or payments
of any Subordinated Fees (other than (i) repayment of Manager Loans and accrued
interest thereon, provided that for such purpose the principal balance of any
Manager Loan shall be amortized on a five year straight line basis, from the
later of (x) the date funds were advanced, or (y) the Optional Prepayment Date,
and (ii) payment of Incentive Management Fees for the then current Fiscal Year),
which shall be payable (in the order of priority set forth in and to the extent
payable under Section 5.03 of the Management Agreement) solely from funds (if
any) payable to Manager under Section 4.4(G) or 7.10(C) (whichever is then
applicable) of the Cash Management Procedures).
(c) Upon the occurrence of any Payment Event of Default and
receipt by Manager of a Default Notice with respect thereto, Manager shall not
be entitled to and shall not accept from Borrower, Lender or Servicer (as
applicable), repayments of Manager Loans or accrued interest thereon, or
payments of any Subordinated Fees, unless and until a Cure Notice in respect of
such Payment Event of Default shall have been received by Manager, after which
Manager shall again, subject to all of the other terms and conditions of this
Agreement, be entitled to repayments of Manager Loans and accrued interest
thereon and payments in respect of Subordinated Fees (excluding Deferred Fees,
if subsequent to the Optional Prepayment Date), including
23
any such payments not previously made for the period commencing with the giving
of the Default Notice and ending with the giving of the Cure Notice, each of
which shall be payable (in the order of priority set forth in and to the extent
payable under Section 5.03 of the Management Agreement) solely from funds (if
any) payable to Manager under Section 4.3(G), 7.9.3(C), 4.4(G) or 7.10(C)
(whichever is then applicable) of the Cash Management Procedures.
(d) Upon any Non-Payment Event of Default and receipt by Manager
of a Default Notice with respect thereto, Manager shall not be entitled to and
shall not accept from Borrower, Lender or Servicer (as applicable), repayment of
any Manager Loans or accrued interest thereon, or payments of any Subordinated
Fees, for a period (a "Payment Blockage Period") commencing on the date of the
-----------------------
receipt by Manager of such Default Notice and ending upon the earliest of the
date (x) 180 days thereafter, (y) the date on which a Cure Notice with respect
to such Non-Payment Event of Default shall have been received by Manager, or (z)
such Payment Blockage Period shall have been terminated by notice to Manager
from Lender, after which Manager shall again, subject to all of the other terms
and conditions of this Agreement, be entitled to repayments of Manager Loans and
accrued interest thereon and payments in respect of the Subordinated Fees
(excluding Deferred Fees if subsequent to the Optional Prepayment Date),
including any such payments not previously made during the Payment Blockage
Period, each of which shall be payable (in the order of priority set forth in
and to the extent payable under Section 5.03 of the Management Agreement) solely
from funds (if any) payable to Manager under Section 4.3(G), 7.9.3(C), 4.4(G) or
7.10(C) (whichever is then applicable) of the Cash Management Procedures.
(e) No Non-Payment Event of Default under any Secured Obligation
that existed on the date of the commencement of any Payment Blockage Period
shall be made the basis for the commencement of a second Payment Blockage
Period, but the occurrence of a similar Non-Payment Event of Default (such as,
for example, the failure by Borrower or the Santa Xxxxx Partnership, as the case
may be, to comply, on a second occasion, with the same obligation as gave rise
to the initial Non-Payment Event of Default) shall be the basis for the
commencement of a second Payment Blockage Period.
(f) Notwithstanding anything in Section 8(d) hereof to the
contrary, in the event that the maturity of any Secured Obligation is
accelerated by Lender, or Lender commences an action (judicial or nonjudicial)
to foreclose on any of the Mortgages as a result of an Event of Default, or
Lender commences an action or proceeding for the appointment of a receiver or
receivers with respect to all or any portion of any Property as the result of an
Event of Default, then any Non-Payment Event of Default shall, for purposes of
this Section 8, be deemed to have
24
the effect of a Payment Event of Default, in which event the payment or non-
payment of Manager Loans and accrued interest thereon and Subordinated Fees
shall be governed by Section 8(c) hereof, provided, however, that if all such
receivers are discharged prior to the time at which (A) the maturity of any
Secured Obligation is accelerated by Lender or (B) Lender commences an action
(judicial or nonjudicial) to foreclose on any of the Mortgages, then upon the
discharge of all such receivers (and until such time as the maturity of any
Secured Obligation is accelerated by Lender, or Lender commences an action
(judicial or nonjudicial) to foreclose on any of the Mortgages) Manager shall
again, subject to all of the other terms and conditions of this Agreement, be
entitled to repayments of Manager Loans and accrued interest thereon and
payments in respect of the Subordinated Fees (excluding Deferred Fees if
subsequent to the Optional Prepayment Date), including any such payments not
previously made during the Payment Blockage Period, each of which shall be
payable (in the order of priority set forth in and to the extent payable under
Section 5.03 of the Management Agreement) solely from funds (if any) payable to
Manager under Section 4.3(G), 7.9.3(C), 4.4(G) or 7.10(C) (whichever is then
applicable) of the Cash Management Procedures.
(g) In the event that there are insufficient funds available to
make permitted repayment of all Manager Loans and accrued interest thereon and
permitted payments of all Subordinated Fees, payment shall be made in the
following order of priority: (i) accrued interest on Manager Loans, (ii) the
outstanding principal balance of Manager Loans, (iii) current Incentive
Management Fees, and (iv) Deferred Fees, if applicable.
(h) If Manager is entitled under Sections 8(a), (b), (c), (d) or
(f) hereof to repayment of Manager Loans and accrued interest thereon or
payments of Subordinated Fees, Borrower (or the Servicer on its behalf) shall
make such payments from available cash subject to, and in accordance with, the
Cash Management Procedures.
(i) In the event that, notwithstanding the foregoing, Borrower,
Lender or Servicer, as applicable, shall make any payment to Manager to which
Manager is not entitled by this Section 8 or the Cash Management Procedures,
then such payment shall be received in trust by the Manager and paid over and
delivered forthwith by the Manager to Lender for deposit into the Cash
Collateral Account.
9. Non-Disturbance and Attornment.
------------------------------
(a) If, at any time, a Successor Owner shall succeed to the rights
of Borrower under the Management Agreement or otherwise obtain possession of the
San Antonio Property as a result of the exercise of Lender's rights upon the
occurrence of an Event of Default (whether voluntary, involuntary or by
25
operation of law) prior to the expiration date of the Management Agreement,
Lender agrees (which agreement shall be binding on all Successor Owners) that
the terms of the Management Agreement shall be binding on each Successor Owner
if, at the time such Successor Owner succeeds to the rights of Borrower (1)
Manager is in compliance with the terms and provisions of this Agreement in all
material respects, the Management Agreement is in full force and effect (or has
been terminated as a result of Borrower's bankruptcy or the actions of a
receiver, and such Successor Owner has or is in the process of obtaining a new
Management Agreement pursuant to the provisions of Section 9(b) hereof) and
Manager is not then in default in any material respect under the Management
Agreement beyond any applicable grace periods provided for therein, or (2) if
the provisions of clause (1) above are not satisfied but the Successor Owner
nevertheless waives such provisions in writing, then (i) all Successor Owners
shall recognize the rights of Manager under the Management Agreement, (ii)
Manager shall not be disturbed in its right to manage the San Antonio Property
pursuant to the Management Agreement, (iii) the Management Agreement shall not
terminate as a result of Lender's actions (or if terminated as set forth in
clause (1) above, shall, subject to the provisions of Section 9(b) hereof, be
reinstated), (iv) Manager shall attorn to and recognize the Successor Owner as
the "Owner" under the Management Agreement, and (v) the Successor Owner shall
accept such attornment and recognize Manager as the manager of the San Antonio
Property under the Management Agreement. Upon such attornment and recognition,
the Management Agreement shall continue in full force and effect as, or as if it
were, a direct Management Agreement between the Successor Owner and Manager upon
and subject to all of the then executory terms, conditions and covenants as are
set forth in the Management Agreement (as amended by Sections 2 and 3 of this
Agreement, if the Successor Owner is Lender or a Lender Affiliate) and which
shall be applicable to the San Antonio Property after such attornment and
recognition. Manager further agrees that the following shall apply following a
foreclosure of the San Antonio Property or a Deed in Lieu of Foreclosure:
(i) No Successor Owner shall be liable for any act or
omission of Borrower under the Management Agreement;
(ii) No Successor Owner shall be subject to any offsets,
defenses or counterclaims accruing prior to the date or dates of
foreclosure or delivery of a Deed in Lieu of Foreclosure that Manager
might have against Borrower under the Management Agreement;
(iii) No Successor Owner, in its capacity as Successor
Owner, shall be liable for payment of any Deferred Fees or Manager Loans
or accrued interest thereon accruing or made prior to the date on which
such Successor Owner acquires title to the San Antonio Property;
26
(iv) No Successor Owner shall be bound by any amendment or
modification of the Management Agreement or by any waiver or forbearance
on the part of Borrower under the Management Agreement requiring the
consent of Lender made or given without the prior written consent of
Lender;
(v) Except as set forth in Section 9(a)(vi) hereof, and
except with respect to the obligations of Lender (or the Servicer, on
Lender's behalf) under the Cash Management Procedures, neither Lender nor
any Lender Affiliate shall in any event or at any time be personally
liable for the payment or performance of the obligations required by or
permitted of the Owner under the Management Agreement or in any document
executed in connection with the Management Agreement by Lender or such
Lender's Affiliate, and the sole recourse of Manager shall be against the
interest of Lender or such Lender Affiliate in the Management Agreement
or the San Antonio Property (or portion thereof so acquired), and no
attachment, execution, writ or other process for enforcement of a
judgment for damages shall be initiated by or on behalf of Manager
against Lender or such Lender Affiliate personally (other than such
interest as Lender or Lender Affiliate may have in the Management
Agreement or the San Antonio Property) as a result of any such breach or
default;
(vi) Lender and any Lender Affiliate shall be bound by the
covenants and agreements contained in the Management Agreement on the
part of the Owner only with respect to the period beginning with the date
of the transfer of the Owner's interest in the Management Agreement to
Lender or such Lender Affiliate and ending on the date of its subsequent
transfer of such interest to its successors;
(vii) No Successor Owner shall be bound by the covenants
and agreements contained in the Management Agreement on the part of the
Owner for any period following its subsequent transfer of the Owner's
interest to its successors;
(viii) No Successor Owner shall have any liability for a
breach by Borrower (but not by any prior Successor Owner) or Manager of
the Cash Management Procedures, provided that this provision shall not in
any way release Lender or Servicer of their respective obligations under
the Cash Management Procedures; and
(ix) No Successor Owner shall have any liability or
obligation for any application or transfer fee in connection with the
substitution of such party as Owner under the Management Agreement.
(b) If the Management Agreement shall be rejected or
27
disaffirmed pursuant to any bankruptcy law or any other law affecting creditors'
rights, or suspended or terminated by the actions of a receiver, Lender or any
Successor Owner and Manager shall, within sixty (60) days after such Successor
Owner obtains possession of the San Antonio Property or portion thereof, enter
into a new agreement for the management thereof on the same terms and conditions
as are contained in the Management Agreement (as amended to reflect the
provisions of Sections 3 and 10 hereof, if such Successor Owner is Lender or a
Lender Affiliate), and other applicable provisions of this Agreement for the
remainder of the term of the Management Agreement, provided, however, that (i)
neither Lender nor any Successor Owner shall have such obligation if the
conditions set forth in Section 9(a) hereof have not been satisfied by Manager,
and (ii) neither Lender nor any Successor Owner nor Manager shall have such
obligation as to the San Antonio Property if Lender or the Successor Owner shall
not have obtained possession of the San Antonio Property within one (1) year
after the date of termination or suspension of the Management Agreement. Neither
Lender nor any Successor Owner shall have any liability or obligation for any
application or transfer fee in connection with such new agreement.
10. Modifications Following Foreclosure:
-----------------------------------
(a) The restrictions in Section 19.01 of the Management Agreement
shall not apply to any acquisition of the Hotel at a foreclosure sale or by Deed
in Lieu of Foreclosure by Lender or a Lender Affiliate.
(b) The provisions of Section 19.02 of the Management Agreement
(giving Manager a right of first refusal to purchase the Hotel) shall not apply
to any foreclosure sale in connection with the Deed of Trust or any Other
Mortgage covering the San Antonio Property, any Deed in Lieu of Foreclosure, or
any sale of the Hotel by Lender or a Lender Affiliate.
11. No Litigation, No Bankruptcy Filings. Manager agrees not to
------------------------------------
bring any action against Borrower nor to cause the filing of a petition in
bankruptcy against Borrower for non-payment to Manager of any Base Management
Fee, Incentive Management Fee, Deferred Fee, Manager Loans or accrued interest
thereon or other amounts payable to Manager under the Management Agreement until
the Notes have been Paid in Full, and (as to the filing of a petition in
bankruptcy) the expiration of a period equal to the applicable preference period
under the Federal Bankruptcy Code (Title 11 of the United States Code) plus ten
(10) days following the date on which the Notes have been Paid in Full. The
foregoing shall not in any way affect the rights of Manager to bring an action
against Lender or the Servicer, or Lender to bring an action against Manager,
for breach of their respective obligations under this Agreement.
12. Assignment by Lender. Manager acknowledges that Lender
--------------------
28
may assign all (but not less than all) of its right, title and interest in, to
and under this Agreement in connection with a sale or assignment of the Notes
and the other Transaction Documents to a third party, including, without
limitation, to an agent for one or more participants, or a trustee (the
"Trustee") for the benefit of holders (the "Holders") of the Securities, and
------- -------
Manager agrees that all of the covenants and agreements made by Manager in this
Agreement (and in the Management Agreement if Lender succeeds to the rights of
the Owner thereunder) are also for the benefit of, and that all of the rights of
Lender hereunder shall inure to the benefit of, the successors and assigns of
the Lender in connection with any such sale or assignment of the Notes and other
Borrower Loan Documents and Santa Xxxxx Loan Documents, including, without
limitation, a Trustee and any Holders. Except as set forth above, Lender shall
not assign its rights hereunder without Manager's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed.
13. Securitization.
--------------
(a) Manager shall use commercially reasonable efforts to cooperate
with Lender in its activities in connection with the sale of the Loans as a
whole loan or any securitization of the Loans (the "Securitization"), including
--------------
obtaining ratings of the Loans or the Securities by the Rating Agencies and
annual rating reviews of the Loans or the Securities by the Rating Agencies. The
Securitization will involve the issuance of rated single- or multi-class
securities secured by or evidencing ownership interests in the Transaction
Documents (the "Securities"). Such cooperation shall include, without
----------
limitation, the obligation to cooperate with Lender in providing to the Rating
Agencies such information as is customarily provided by a property manager on
behalf of a borrower in connection with annual reviews conducted in commercial
mortgage backed securities transactions similar to the Securitization, provided,
however, that in no event shall Manager be required to cooperate in any request
for Manager, Marriott or any Marriott Affiliate to be rated by any Rating Agency
that, as of the date hereof, does not rate Manager, Marriott, or any Marriott
Affiliate.
(b) Lender shall indemnify, defend and hold Manager, Marriott and
all Marriott Affiliates (and their respective directors, officers, shareholders,
employees and agents) harmless from and against all loss, costs, liability and
damage, including attorneys' fees and expenses, and the costs of litigation
related thereto (collectively "Losses") to which any such persons may become
------
subject under the Securities Act of 1933, as amended, or otherwise, insofar as
the Losses arise out of or are based upon any untrue statement of material fact
contained in the offering documents used in the offering of the Securities or
any other securities issued by Lender with respect to the Loans or arise out of
or are based upon the omission or alleged omission to
29
state in such offering documents a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, however, that the
-------- -------
indemnification contained herein shall not be operative if such untrue statement
or omission was made in reliance upon any information given by Manager to
Borrower or the Santa Xxxxx Partnership.
14. Disclosure. Borrower, Lender, the Servicer, and the Trustee may
----------
disclose information regarding the Management Agreement and this Agreement and
the operation of the Hotel, and provide copies of the Management Agreement, this
Agreement, and any financial statements or reports delivered by Manager pursuant
to the Management Agreement or this Agreement to Lender, the Trustee and
Servicer or any holder of the Securities, and any counsel to or agents,
officers, employees, and representatives of any such Person, and may disclose
and describe the terms hereof and of the Management Agreement in any offering
memorandum, prospectus, or registration statement or other filing required under
applicable law, provided, however, that (i) Borrower, the Servicer, Lender, and
-------- -------
the Trustee, shall implement procedures to restrict the dissemination of
information to the holders of the Loan or the Securities concerning revenues per
available rooms, Gross Revenues, Operating Profit, and occupancy and room rate
statistics of the Hotel to the extent reasonably practicable, giving due regard
to the desire of holders of the Securities to have access to such information
and to the requirements of applicable securities laws and (ii) any disclosure of
information in any offering memorandum, prospectus, or registration statement,
or other filing which is accessible to the general public ("disclosure
document") required under applicable law or to any prospective holder of the
Securities concerning revenue per available rooms, Gross Revenues, Operating
Profit, occupancy and room rate statistics shall be made in the following
format: (A) such information (excluding Operating Profit) may be disclosed in a
narrative description in the text of a disclosure document, on a property by
property basis identifying the San Antonio Property and each of the Other
Properties by name, but only for the thirteen (13) Accounting Periods
immediately preceding the disclosure, and (B) such information (including
Operating Profit) may be disclosed in tabular form in an exhibit to a disclosure
document that is not immediately adjacent to the foregoing narrative description
(in the case of a prospectus, the degree of separation between exhibit and
narrative description will be substantially similar to that in the Prospectus
Supplement dated March 25, 1996, for Nomura Asset Securities Corporation,
Commercial Mortgage Pass-Through Certificates, Series 1996-MD V), on a property
by property basis referring to the Property and each of the Other Properties by
use of codes so that the actual identity is not disclosed (e.g. "Property A",
"Property B", "Property C" and "Property D"), but only for the preceding two
Fiscal Years.. Notwithstanding the foregoing, any such offering memorandum,
prospectus, registration or other
30
filing required under applicable law or given to any prospective holder of the
Securities, may identify the Hotel by specific location, number of rooms, date
of opening, appraised value, average occupancy, average daily room rate, and
revenue per available rooms, and such other information as is required by
applicable securities laws.
15. Default by Manager. A failure by Manager (i) to make good faith
------------------
efforts to comply with all material provisions of the Cash Management Procedures
that are within the control of Manager, which failure shall continue for more
than ten (10) days after written notice thereof from Lender or the Servicer (it
being understood that Manager's obligation to make transfers of Operating Profit
is conditioned on the Servicer's compliance in all material respects with its
obligation to transfer funds to Manager in accordance with the requirements of
the Cash Management Procedures) or (ii) to comply in all material respects with
the provisions of Sections 3(l), 3(m), 3(n) or 13 of this Agreement, which
failure shall continue for more than thirty (30) days after written notice
thereof from Lender or the Servicer, shall be deemed by Borrower and Manager to
constitute an "event of default" of Manager under the Management Agreement and
an Event of Default under the Loan Agreements. In addition, a purported
assignment by Manager of the Management Agreement without receipt of the Rating
Comfort Letter referred to in Section 3(j) of this Agreement shall be deemed an
"event of default" of Manager under the Management Agreement and an Event of
Default under the Loan Agreements if either Manager or the purported assignee of
the Management Agreement claims that such assignment is valid.
16. Miscellaneous.
-------------
(a) Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Deed of Trust or any Other Mortgage covering the
San Antonio Property. The provisions of this Section 16(a) are not intended to
modify the rights of Manager under Sections 7, 8 and 9 hereof.
(b) Manager and Borrower each acknowledge that nothing contained
in the Management Agreement shall be deemed an amendment to the Borrower Loan
Documents, or to constitute a waiver by Lender of any provisions thereof.
(c) Manager shall have no obligation to perform the obligations of
Borrower under the Borrower Loan Documents, except to the extent such
obligations constitute obligations of Manager under the Management Agreement or
this Agreement. In no event shall Manager have any liability for payment of the
Secured Obligations (but the provisions of this sentence shall not affect the
obligations of Manager under the Cash Management Procedures).
(d) This Agreement shall bind and inure to the benefit
31
of the parties hereto, and every reference herein to the parties shall be deemed
to refer to each of those parties and their respective successors in interest
and assigns as permitted hereunder and under the Management Agreement.
Notwithstanding the provisions of the immediately preceding sentence, in the
event of the assignment or transfer of the interest of Lender in and to all of
the Borrower Loan Documents, all obligations and liabilities of Lender under
this Agreement shall terminate, and thereupon all obligations and liabilities
shall be the sole responsibility of the party to whom the interest of Lender has
been assigned or transferred, which assignee shall be deemed to have assumed all
of the obligations and liabilities of Lender hereunder. Acceptance of any such
assignment shall be deemed an acknowledgement by the assignee that it has so
assumed all of the obligations and liabilities of Lender hereunder.
Notwithstanding the foregoing, there shall be no termination of obligations and
liabilities incurred prior to the assignment by or termination of a Servicer
with respect to the obligations of such Servicer under the Cash Management
Procedures.
(e) Manager agrees that this Agreement satisfies any condition or
requirement in the Management Agreement relating to the granting of a
non-disturbance agreement (including, without limitation, Section 18.02 thereof)
from the holder of the Deed of Trust or any Other Mortgage covering the San
Antonio Property.
(f) All notices and other communications hereunder (including,
without limitation, notices that Lender is obligated to give to Manager under
Section 6 hereof) shall be in writing and shall be delivered by recognized
overnight courier service or mailed by certified or registered mail, return
receipt requested, postage prepaid, and shall be deemed to have been duly given
or made when received (or when delivery is refused), addressed to each of the
parties at the following addresses (provided, however, such addresses may be
changed by giving like notice for such purpose to the other parties):
If to Lender:
Nomura Asset Capital Corporation
2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Att:Xxxxxx X. Xxxxxx, Director
With a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att:Xxxxxx X. Xxxxxx, Esq.
and
32
Nomura Asset Capital Corporation
2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Att:Xxxxxx XxXxxx
If to Manager:
Marriott Hotel Services, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Att:Law Department - Dept. 52.923/Lodging Operations
With a copy to:
Marriott International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Att:Lodging Finance - Dept. 51.911.01
If to Borrower:
Marriott Hotel Properties II Limited Partnership
c/o Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Att:Law Department 923/Deputy General Counsel
With a copy to:
Marriott Hotel Properties II Limited Partnership
c/o Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Att:Asset Management Department 908
(g) The provisions of this Agreement shall be self-operative and no
further instrument shall be necessary to effect the aforementioned
non-disturbance, attornment, recognition and subordination. Nevertheless, in
confirmation thereof, Manager or Lender shall execute and deliver appropriate
certificates to confirm such non-disturbance, attornment, recognition and
subordination upon request of the other.
(h) The parties hereto will, from time to time upon the request of
any other party, execute all reasonable instruments of further assurance and all
such reasonable supplemental instruments with respect to this Agreement as the
other may specify.
(i) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO NEW
YORK'S PRINCIPLES OF
33
CONFLICTS OF LAW). NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL AFFECT
THE CHOICE OF LAW PROVI SIONS OF THE TRANSACTION DOCUMENTS.
(j) No amendment, modification, supplement, termination or waiver of
or to any provi sion of this Agreement, or consent to any departure by Manager
there from, shall be effective unless in writing and signed by Lender or its
successors and assigns and Manager. Any amendment, modification or supplement of
or to any provision of this Agree ment, any waiver of any provision of this
Agreement, and any consent to any departure by Manager from the terms of any
provi sion of this Agreement shall be effec tive only in the specific instance
and for the specific purpose for which made or given.
(k) This Agreement and any amendments, waivers, consents or
supplements hereto may be exe cu xxx in any number of counterparts and by
different parties here to in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such
counterparts shall constitute one and the same agreement.
(l) TO THE EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY SUIT, ACTION, OR PROCEEDING
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF.
(m) Wherever there is any conflict or inconsistency between any
terms or provisions of this Agreement and the Management Agreement, the terms
and provisions of this Agreement shall control.
(n) Manager and Borrower each acknowledge that Lender is relying on
the matters contained herein.
(o) Any party to this Agreement may cause a short form or memorandum
hereof, in form reasonably satisfactory to all parties (or the Agreement in its
entirety, if required by applicable law) to be recorded in the land records of
the jurisdiction in which the San Antonio Property is located.
(p) At such time as the Deed of Trust and any Other Mortgage
covering the San Antonio Property is released pursuant to the provisions of
Section 2.3 or 2.6 of the Borrower Loan Agreement, the security interest in the
Management Agreement granted to Lender under the Collateral Assignment of
Documents and the rights granted to Lender by this Agreement shall be
terminated, and all obligations of Manager hereunder owed to the Lender shall
terminate and Lender shall, on Manager's request, deliver a written instrument
in recordable form acknowledging such termination.
(q) In consideration for and as an inducement to
34
Lender entering into this Agreement, Marriott International, Inc. (i) represents
that Manager is its wholly owned subsidiary and is controlled by Marriott
International, Inc., and (ii) guarantees to Lender and any Lender Affiliate, and
their respective successors and assigns, the full performance and observance of
all of the covenants, conditions and agreements of Manager contained in this
Agreement and in the Management Agreement, as each may, from time to time, be
amended (whether or not notice of such amendment is delivered to Marriott
International, Inc.).
(Signature page follows)
35
IN WITNESS WHEREOF, we have set our hands as of the day and year first
above written.
MARRIOTT HOTEL SERVICES, INC., a
Delaware corporation
Attest:
__________________ By: /s/ Xxxxx X. Best
--------------------------------------
Name: Xxxxx X. Best
Title: Vice President
NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation
Attest:
___________________ By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
MARRIOTT HOTEL PROPERTIES II LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: Marriott MHP Two Corporation,
General Partner
Attest:
____________________ By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
For the purposes of Section 16(q) hereof:
MARRIOTT INTERNATIONAL, INC., a Delaware
corporation
By: /s/ Xxxxx X. Best
Name: Xxxxx X. Best
Title: Vice President
This document was prepared by/after recording return to:
Xxxxxxx X. Xxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
36
STATE OF MARYLAND )
) ss:
COUNTY OF XXXXXXXXXX )
Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared Xxxxx X. Best who is personally known
to me to be a person named in and who signed the legal instrument to which this
acknowledgment is attached and which was produced to me in the State and County
aforesaid, and being by me first duly sworn did acknowledge, depose and say to
me that he resides at Xxxxxxxxxx County, Maryland, that he is a Vice President
of Marriott Hotel Services, Inc., a Delaware corporation and one of the parties
to the aforementioned legal instrument; that after being duly informed of the
contents and import of such legal instrument he had signed such legal instrument
as the Vice President of such entity indicated above; that he had signed the
same in the name of and on behalf of such entity by the authority, order and
resolution thereof; that he had signed his name thereto on behalf of said entity
by like order; that the execution of said legal instrument was his free and
voluntary act and deed of said entity for the consideration, purposes, and uses
set forth in such legal instrument; that he had delivered such legal instrument
to the other parties thereto as such; and that on behalf of said entity he had
received a true copy of such legal instrument without charge.
IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the 13th day
of November, 1996.
/s/ Xxxxx X. Skoftleland
------------------------
Notary Public
My commission expires: November 1, 1998
----------------
Notary Seal
Print Name: Xxxxx X. Xxxxxxxxxx
-------------------
37
STATE OF MARYLAND )
) ss:
COUNTY OF XXXXXXXXXX )
Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared Xxxxx X. Best who is personally known
to me to be a person named in and who signed the legal instrument to which this
acknowledgment is attached and which was produced to me in the State and County
aforesaid, and being by me first duly sworn did acknowledge, depose and say to
me that he resides at Xxxxxxxxxx County, Maryland, that he is a Vice President
of Marriott International, Inc., a Delaware corporation, the general partner of
Marriott Hotel Properties II Limited Partnership, a Delaware limited
partnership, and one of the parties to the aforementioned legal instrument; that
after being duly informed of the contents and import of such legal instrument he
had signed such legal instrument as the Vice President of such entity indicated
above; that he had signed the same in the name of and on behalf of such entity
by the authority, order and resolution thereof; that he had signed his name
thereto on behalf of said entity by like order; that the execution of said legal
instrument was his free and voluntary act and deed of said entity for the
consideration, purposes, and uses set forth in such legal instrument; that he
had delivered such legal instrument to the other parties thereto as such; and
that on behalf of said entity he had received a true copy of such legal
instrument without charge.
IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the 13th day
of November, 1996.
/s/ Xxxxx X. Skoftleland
------------------------
Notary Public
My commission expires: November 1, 1998
----------------
Notary Seal
Print Name: Xxxxx X. Xxxxxxxxxx
-------------------
00
XXXXX XX XXX XXXX )
) ss:
COUNTY OF NEW YORK )
Before me, Xxxxxx X. Xxxxx, Notary Public on this day personally
appeared Xxxxxx X. Xxxxxx, know to me (or proved to me on his oath) to be the
person whose name is subscribed to the foregoing instrument, and know to me to
be a director of Nomura Asset Capital Corporation, a Delaware corporation, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation. Given under
my hand and official seal this 23rd day of September, 1996, A.D.
/s/ Xxxxxx X. Xxxxx
------------------------
Notary Public
My commission expires: April 15, 1998
--------------
Notary Seal
Print Name: Xxxxxx X. Xxxxx
---------------
39
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Before me, Xxxxxx X. Xxxxx, Notary Public on this day personally
appeared Xxxxxxx X. Xxxxx, know to me (or proved to me on his oath) to be the
person whose name is subscribed to the foregoing instrument, and know to me to
be a Vice President of MHP Two Corporation, a Delaware corporation which is the
general partner of Marriott Hotel Properties II Limited Partnership, a Delaware
limited partnership, and acknowledged to me that he executed said instrument for
the purposes and consideration therein expressed, and as the act of said limited
partnership. Given under my hand and official seal this 23rd day of September,
1996, A.D.
/s/ Xxxxxx X. Xxxxx
------------------------
Notary Public
My commission expires: April 15, 1998
--------------
Notary Seal
Print Name: Xxxxxx X. Xxxxx
---------------
40
Exhibits
A - Legal Description (San Antonio)
B - Legal Description (New Orleans)
C - Legal Description (San Xxxxx)
D - Legal Description (Santa Xxxxx)
E - Cash Management Procedures
F- Management Agreement and Amendments
G - Outstanding Deferred Fees
H - Non-compliance by Property with current Marriott Hotel standards
I - Monthly Debt Service Payments (Schedule)
J - Release Prices
K - Paragraph 4(e) of Borrower Note (text)
L - Paragraph 4(c) of Notes (text)
M - Section 4.2 of Loan Agreements (text)
N - Other Management Agreements
41
