<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-15097.
WESTIN HOTELS LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charters)
Delaware 91-1328985
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2001 Sixth Avenue, Seattle, Washington 98121
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 443-5000
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares (units) outstanding of each of the issuer's
classes of common stock (units), as of the latest practicable date (applicable
only to corporate issuers).
135,600 limited partnership units issued and outstanding
<PAGE> 2
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
REPORT ON FORM 10-Q
For the Quarter Ended June 30, 1997
INDEX
<TABLE>
<CAPTION>
Part l. FINANCIAL INFORMATION Page No.
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<S> <C>
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statement of Partners' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13- 14
SIGNATURES 15
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
-----------------------------
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
---------------------- ----------------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents, including restricted cash $ 14,255 $ 14,752
of $1,048 in 1997 and $540 in 1996
Guest and trade accounts receivable, less allowance for
doubtful accounts of $270 in 1997 and $232 in 1996 11,057 6,511
Other receivables 241 450
Inventories 529 516
Prepaid expenses and other current assets 1,270 1,281
--------- ---------
TOTAL CURRENT ASSETS 27,352 23,510
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $101,234 in 1997 and $97,355 in 1996 233,547 233,257
RESTRICTED CASH 8,539 6,018
OTHER ASSETS 712 363
--------- ---------
TOTAL ASSETS $ 270,150 $ 263,148
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade and other $ 2,030 $ 1,937
Westin and affiliates 1,774 1,171
--------- ---------
Total accounts payable 3,804 3,108
Accrued expenses 10,197 9,274
Current maturities of long-term obligations 144 159
Other current liabilities 1,079 1,353
--------- ---------
TOTAL CURRENT LIABILITIES 15,224 13,894
LONG-TERM OBLIGATIONS 127,877 127,085
LONG-TERM OBLIGATION TO GENERAL PARTNER 32,245 30,795
DEFERRED INCENTIVE MANAGEMENT FEES PAYABLE
TO WESTIN 20,776 19,425
--------- ---------
TOTAL LIABILITIES 196,122 191,199
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS 3,622 3,568
PARTNERS' EQUITY (DEFICIT):
General Partner (2,182) (2,026)
Limited Partners (135,600 Units issued and outstanding) 72,588 70,407
--------- ---------
TOTAL PARTNERS' EQUITY 70,406 68,381
--------- ---------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 270,150 $ 263,148
========= =========
</TABLE>
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except per Unit Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Rooms $21,528 $18,727 $38,113 $32,609
Food and beverage 7,839 6,883 15,295 12,425
Other operating departments 2,817 2,767 5,170 5,097
------- ------- ------- -------
TOTAL OPERATING REVENUES 32,184 28,377 58,578 50,131
------- ------- ------- -------
OPERATING EXPENSES:
Rooms 5,563 4,811 10,553 9,116
Food and beverage 5,916 5,232 11,801 9,926
Other operating departments 790 694 1,576 1,358
Administrative and general 2,101 2,224 4,671 4,378
Management fees 2,332 1,402 4,136 2,524
Advertising and business promotion 1,978 1,859 3,971 3,636
Property maintenance and energy 2,025 2,008 4,086 4,002
Local taxes and insurance 2,512 1,776 4,504 3,544
Rent 200 184 405 376
Depreciation and amortization 2,189 1,821 4,434 3,789
------- ------- ------- -------
TOTAL OPERATING EXPENSES 25,606 22,011 50,137 42,649
------- ------- ------- -------
OPERATING PROFIT 6,578 6,366 8,441 7,482
------- ------- ------- -------
OTHER INCOME (EXPENSE):
Interest income 293 142 516 308
Interest expense (2,680) (2,709) (5,413) (5,399)
Interest expense on long-term obligation
to General Partner (746) (663) (1,450) (1,310)
Other, net (5) (68) (15) (68)
------- ------- ------- -------
NET OTHER EXPENSE (3,138) (3,298) (6,362) (6,469)
------- ------- ------- -------
INCOME BEFORE
MINORITY INTERESTS 3,440 3,068 2,079 1,013
MINORITY INTERESTS (52) (46) (54) (41)
------- ------- ------- -------
NET INCOME $ 3,388 $ 3,022 $ 2,025 $ 972
======= ======= ======= =======
NET INCOME PER UNIT
(135,600 Units issued and outstanding) $ 24.99 $ 22.29 $ 14.93 $ 7.17
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 5
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners
------- --------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1996 $(2,026) $70,407
Net income (loss) (156) 2,181
-------- -------
BALANCE AT JUNE 30, 1997 $ (2,182) $72,588
======== =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1997 1996
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Funds provided by operations $10,011 $ 8,195
Net change in receivables, inventories,
prepaid expenses and other current assets,
net of accounts payable, accrued expenses
and other current liabilities (2,994) 707
------- -------
Net cash provided by operating activities 7,017 8,902
------- -------
INVESTING ACTIVITIES:
Acquisition of property and equipment, net of sales (4,724) (8,127)
Increase in restricted cash (7,539) (5,948)
Decrease in restricted cash to fund acquisition of
property and equipment 5,178 7,682
(Increase) decrease in other assets (57) 18
------- -------
Net cash used in investing activities (7,142) (6,375)
------- -------
FINANCING ACTIVITIES:
Repayment of long-term obligations (78) (87)
Deferred financing costs (294) -
------- -------
Net cash used in financing activities (372) (87)
------- -------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (497) 2,440
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 14,752 10,345
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,255 $12,785
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 7
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Westin Hotels Limited Partnership, a Delaware limited partnership (the
"Partnership"), and its subsidiary limited partnerships, The Westin St. Francis
Limited Partnership and The Westin Chicago Limited Partnership. The Westin St.
Francis Limited Partnership owns and operates The Westin St. Francis in downtown
San Francisco, California, and The Westin Chicago Limited Partnership owns and
operates The Westin Michigan Avenue, Chicago (formerly The Westin Hotel,
Chicago) in downtown Chicago, Illinois. All significant intercompany
transactions and accounts have been eliminated. Certain of the prior periods'
amounts have been reclassified to conform with the 1997 presentation.
The consolidated financial statements and related information for the
periods ended June 30, 1997 and June 30, 1996 are unaudited. In the opinion of
management, all adjustments necessary for a fair statement of the results of
these interim periods have been included. All such interim adjustments are of a
normal recurring nature. The results of operations for the periods ended June
30, 1997 and June 30, 1996 should not be regarded as indicative of the results
that may be expected for the full year.
(2) FURTHER INFORMATION
Reference is made to "Notes to Consolidated Financial Statements" contained
in the Partnership's Annual Report on Form 10-K filed for 1996 for information
regarding significant accounting policies, Partnership organization, restricted
cash, accrued expenses, long-term obligations, operating leases, commitments and
contingencies, and related party transactions.
(3) LONG-TERM OBLIGATIONS
On May 27, 1997 an agreement to restructure the existing mortgage loans on
The Westin St. Francis and The Westin Michigan Avenue, Chicago was completed.
The parties to this restructuring agreement are The Teacher Retirement System of
Texas (the lender), The Westin St. Francis Limited Partnership, The Westin
Chicago Limited Partnership, Westin Hotels Limited Partnership, St. Francis
Hotel Corporation (general partner of The Westin St. Francis Limited
Partnership), 909 North Michigan Avenue Hotel Corporation (general partner of
The Westin Chicago Limited Partnership), Westin Realty Corp. (general partner of
Westin Hotels Limited Partnership) and Westin Hotel Company (the management
company).
The agreement provides for an extension of the maturity date for each of
the Hotel's existing mortgage loans from August 31, 2001 to November 30, 2006.
The interest rates on the principal balances of the original mortgage loans will
be reduced to 8.85% per annum from 10.0% per annum for the period from December
1, 1997 through November 30, 1998 and to 8.85% per annum from 10.25% per annum
from December 1, 1998 through maturity. The restructuring resulted in a decrease
in the effective interest rate on the mortgage loans from 8.55% per annum to
8.06% per annum from the date of the agreement through maturity.
Through November 30, 1999, the restructured loans require the payment of
interest only each quarter in arrears. From December 1, 1999 to November 30,
2006 the loans require blended payments of principal and interest each quarter
in arrears in such amount necessary to repay the principal balance of each note
(together with interest at the fixed interest rate) on the basis of a 25 year
amortization schedule. On the maturity date, the entire principal balance plus
all accrued and unpaid interest will be due and payable.
The prepayment provisions have been amended. Under the terms and conditions
of this restructuring, the prepayment penalty for The Westin Michigan Avenue,
Chicago loan has been reinstated except in the case of a repayment resulting
from a sale to a third party. The termination date for the prepayment penalty
for The Westin St. Francis loan generally has been extended to the year 2006
from the year 2001. With respect to a hotel sale to a third party, however,
there will be no prepayment penalty if the sale occurs after August 31, 2001.
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<PAGE> 8
(4) Accrued Expenses
In July 1997, The Westin St. Francis received notification of an increase
of approximately $1,000,000 in property taxes for the tax years ended June 30,
1997 and 1996. Management intends to appeal the additional tax; however, the
ultimate disposition of the proceeding cannot be predicted with any certainty,
and The Westin St. Francis recorded an additional provision of $500,000 for
property taxes during the quarter ended June 30, 1997.
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<PAGE> 9
WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The primary market focus of The Westin St. Francis and The Westin Michigan
Avenue, Chicago (individually a "Hotel", collectively the "Hotels") is on
business travelers, tourists, conventions and other groups. In January 1997 the
Westin Hotel, Chicago was renamed The Westin Michigan Avenue, Chicago to
distinguish it from The Westin River North, Chicago, also located in downtown
Chicago. Both The Westin St. Francis and The Westin Michigan Avenue, Chicago
experience seasonal trends, with the lowest occupancy levels occurring during
the first quarter, followed by increased occupancies throughout the remainder of
the year.
Westin Hotel Company owns 100% of Westin Realty Corp., the sole General
Partner of Westin Hotels Limited Partnership (the "Partnership"), as well as
100% of the St. Francis Hotel Corporation and 909 North Michigan Avenue
Corporation, the respective general partners of the subsidiary limited
partnerships, The Westin St. Francis Limited Partnership and The Westin Chicago
Limited Partnership, that directly own and operate the Hotels.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------
Combined 1997 1996 1997 1996
------------------------- ---------- --------- --------- -------
<S> <C> <C> <C> <C>
REVPAR (Revenue
Per Available Room) $122.64 $106.51 $109.16 $92.74
Operating Profit as a
Percentage of Revenues:
Rooms 74.2% 74.3% 72.3% 72.0%
Food and Beverage 24.5% 24.0% 22.8% 20.1%
EBITDA (In Thousands) $ 9,055 $ 8,261 $ 13,376 $ 11,511
</TABLE>
EBITDA is net earnings (loss) before interest expense, depreciation and
amortization, and minority interests. The General Partner considers EBITDA to be
a measure of the Partnership's operating performance due to the significance of
the Partnership's long-lived assets and because such data can be used to measure
the Partnership's ability to service debt, fund capital expenditures and pay
cash distributions. EBITDA is not intended to represent cash flow from
operations as defined by generally accepted accounting principles and such
information should not be considered as an alternative to net income, cash flow
from operations or any other performance measure prescribed by generally
accepted accounting principles.
Three months ended 1997 compared with 1996
Operating profit of $6.6 million for the second quarter of 1997 represents
a 3.3% improvement over the same quarter of the prior year. The Partnership's
second quarter EBITDA of $9.1 million improved 9.6% over EBITDA of $8.3 million
in the prior year period.
Combined rooms revenues for the second quarter of 1997 were $21.5 million
and represent a 15.0% increase over the same 1996 quarter. Combined REVPAR
advanced 15.1% in the quarter to $122.64. The Westin St. Francis' REVPAR
increase of 16.6% to $129.21 was due primarily to an increase in average room
rate and an increase in room nights in the group segment partially offset by a
decline in room nights in the transient segment. The Westin Michigan Avenue,
Chicago's REVPAR increase of 12.5% to $112.08 was due
-9-
<PAGE> 10
to an increase in average room rates offset, in part, by a slight decrease
in room nights in both the group and transient segments. At The Westin St.
Francis the average room rate for the second quarter of 1997 increased 16.1%
over the second quarter of 1996 to $166.81 and the occupancy rate increased
slightly from 77.2% to 77.5%. At The Westin Michigan Avenue, Chicago the average
room rate increased 13.1% to $144.03 whereas the occupancy rate declined
slightly from 78.2% to 77.8%.
Combined rooms profit increased 14.7% or $2.0 million to $16.0 million over
the same 1996 quarter. This improvement was attributable to the REVPAR growth
previously noted.
Combined food and beverage revenues of $7.8 million in the second three
months of 1997 represent a $1.0 million, or 13.9%, increase when compared to the
same 1996 period. The $0.7 million increase in food and beverage revenues at The
Westin St. Francis was a direct result of the increased banquet business
associated with the increase in group business. The Westin Michigan Avenue,
Chicago, benefiting from the recently remodeled banquets rooms, reported a $0.3
million increase.
Combined food and beverage profit for the second quarter of 1997 increased
16.5% or $0.3 million over 1996.
Operating expenses for the second quarter increased to $25.6 million, a
16.3% increase over 1996. The most significant increase was attributable to
incentive management fees which increased as a result of improved Partnership
Net Operating Cash Flow, as defined. Local taxes and insurance expense increased
$0.7 million, primarily due to the accrual of $0.5 million based upon a notice
of assessment of property taxes at The Westin St. Francis. (See Footnote No. 4
of the Consolidated Financial Statements.)
Six months ended 1997 compared with 1996
Combined 1997 year-to-date operating profit of $8.4 million was $1.0
million higher than the corresponding 1996 period. Both Hotels, continuing to
benefit from their improved rooms product and favorable trends in the up-scale
hotel industry, reported increases in both occupancies and average room rates.
The Partnership generated EBITDA of $13.4 million, a 16.2% increase over the
first six months of 1996.
Combined rooms revenues of $38.1 million for the first six months of 1997
were $5.5 million higher than the prior year period. Both Hotels reported an
increase in average room rate in both the individual and group segments which,
coupled with an increase in room nights in the group segment, offset declines in
room nights in the individual segment. The result was a combined REVPAR increase
of 17.7% to $109.16 for the first six months of 1997 over 1996. REVPAR at The
Westin St. Francis rose from $102.28 to $121.63 and REVPAR at The Westin
Michigan Avenue, Chicago rose from $77.37 to $89.12.
For the first half of 1997 combined rooms profit increased to $27.6 million
from $23.5 million in 1996. The Westin St. Francis contributed $3.0 million to
this increase, a 19.2% improvement over year-to-date 1996; The Westin Michigan
Avenue, Chicago contributed $1.1 million, a 13.5% improvement.
Combined 1997 year-to-date food and beverage revenues were $15.3 million
versus $12.4 million in 1996, as the Hotels continue to benefit from the recent
improvements in their food and beverage facilities. Of the $2.9 million increase
in food and beverage revenues, $1.3 million came from the increase in banquet
revenues at The Westin St. Francis and $0.4 million from banquet revenues at The
Westin Michigan Avenue, Chicago.
The combined food and beverage profit increase of $1.0 million to $3.5
million for the first six months of 1997 was a 39.8% improvement over that of
the corresponding 1996 period. Food and beverage profit at The Westin St.
Francis of $2.2 million represents a 48.0% improvement and food and beverage
profit at The Westin Michigan Avenue, Chicago of $1.3 million represents a 27.2%
improvement, both the result of strong group demand combined with successful
cost containment strategies.
Other operating departments contributed $3.6 million to 1997 year-to-date
operating profit. At both Hotels, increases in revenues from the
telecommunications departments due to increased pricing and occupancies were
offset by a decline in revenues from their respective garages.
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<PAGE> 11
Management fees increased $1.6 million during the first six months of 1997
over the same period in 1996. This increase resulted from improved Partnership
Net Operating Cash Flow, as defined. Approximately half of the $1.0 million
increase in local taxes and insurance resulted from the additional property tax
accrual previously noted.
Liquidity and Capital Resources
As of June 30, 1997, the Partnership had cash and cash equivalents of $14.3
million, a $0.5 million decrease from December 31, 1996. Total net cash provided
by operating activities for the six months ended June 30, 1997 equaled $7.0
million.
The Hotels mortgage loans were restructured under an agreement (the "1994
Restructuring Agreement") entered into in 1994. Pursuant to the 1994
Restructuring Agreement, the Partnership is required to make quarterly deposits
to the FF&E Reserve Accounts of 5.0% of gross revenue through maturity of the
mortgage loan in 2006 to fund capital improvements. Therefore, on or before
August 14, 1997, $1.6 million will be deposited in the FF&E Accounts. During the
six months ended June 30, 1997, The Westin St. Francis and The Westin Michigan
Avenue, Chicago, expended $3.8 million and $1.4 million, respectively, from
their FF&E Reserve Accounts. The combined balance of the Hotels' FF&E Reserve
Accounts are included in Restricted Cash on the Consolidated Balance Sheets.
Commencing in 1996, the 1994 Restructuring Agreement terms require that
both Hotels make deposits into Tax Escrow Accounts for payment of real and
personal property taxes. The combined balances of these Tax Escrow Accounts are
included in Cash and Cash Equivalents under Current Assets on the Consolidated
Balance Sheets.
The Hotels will spend approximately $11.3 million for capital expenditures
in 1997. The Westin St. Francis will spend approximately $5.1 million on capital
improvements in 1997, of which $0.4 million is to be spent on renovating suites,
$0.6 million on food and beverage banquet rooms, $1.3 million in other areas
including EDP equipment, ADA compliance, and fire/life safety upgrades, and $2.8
million on the facade project. The Westin Michigan Avenue, Chicago expects to
spend $6.2 million for capital improvements during 1997. This Hotel will
renovate its tower rooms at a cost of $2.0 million, which will enhance the
Hotel's ability to compete in the highly competitive Chicago market. In
addition, $0.7 million will be spent on the facade, sidewalks and planters, $1.3
million for EDP equipment and updating of engineering systems, and $2.2 million
for food and beverage outlets.
On May 27, 1997 an agreement to restructure the existing mortgage loans on
the Partnership's Hotels (the "1997 Restructuring Agreement") was completed. The
interest rates on the principal balances of the original mortgage loans will be
reduced to 8.85% per annum from 10.0% per annum for the period from December 1,
1997 to November 30, 1998 and to 8.85% per annum from 10.25% per annum from
December 1, 1998 through maturity. The 1997 Restructuring Agreement provides for
an extension of the maturity date for each of the Hotel's existing mortgage
loans from August 31, 2001 to November 30, 2006. Through November 30, 1999 the
restructured loans require the payment of interest only each quarter in arrears.
From December 1, 1999 to November 30, 2006 the loans require blended payments of
principal and interest each quarter in arrears in such amount necessary to repay
the principal balance of each note (together with interest at the fixed interest
rate) on the basis of a 25 year amortization schedule. On the maturity date, the
entire principal balance plus all accrued and unpaid interest will be due and
payable. Under the terms of the mortgage loans, as restructured, the Partnership
is scheduled to make interest payments of $9.2 million in 1997.
The General Partner anticipates that the cash flow from operations will
provide the funds necessary for 1997 operating and interest expenses and that
the contributions to the FF&E Reserve Accounts will provide adequate funding for
1997 capital expenditures. The General Partner also believes that existing cash
and net cash to be provided from operations will be sufficient for distributions
to the limited partners. Therefore, on July 7, 1997 the General Partner
announced cash distributions of $47.50 per unit payable on each of September 15
and December 15, 1997. In accordance with the Partnership agreement, one-half of
the 1997 incentive management fees will be paid to Westin Hotel Company. The
General Partner estimates that incentive management fees totaling $2.8 million
will be paid to Westin in 1997.
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<PAGE> 12
In 1997 the General Partner will continue to focus on the completion of
renovations at both Hotels and on the improvement of the Hotels' operations in
order to bolster the value of the Hotels. The General Partner will review the
opportunities to sell or refinance the Hotel properties when it reasonably
believes that such action is in the best interest of the Partnership. As the
real estate market for upscale hotel properties continues to improve, the
General Partner will monitor the market conditions for appropriate opportunities
to sell or refinance the properties. By the end of 2001, the General Partner
must use its best efforts to sell or refinance the Hotel properties.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) EXHIBITS.
<S> <C>
4. Instruments defining the rights of security holders.
4.1 Amended and Restated Agreement of Limited Partnership of
Westin Hotels Limited Partnership.(1)
4.2 Amended and Restated Agreement of Limited Partnership of The
Westin St. Francis Limited Partnership.(1)
4.3 First Amendment to Amended and Restated Agreement of Limited
Partnership of The Westin St. Francis Limited Partnership.(3)
4.4 Amended and Restated Agreement of Limited Partnership of The
Westin Chicago Limited Partnership.(1)
4.5 First Amendment to Amended and Restated Agreement of Limited
Partnership of The Westin Chicago Limited Partnership.(3)
10. Material contracts.
10.1 Restructuring Agreement dated as of June 2, 1994.(3)
10.2 Second Restructuring Agreement dated as of May 27, 1997.
10.3 Amended and Restated Management Agreements between The Westin
St. Francis Limited Partnership and Westin Hotel Company, and
between The Westin Chicago Limited Partnership and Westin
Hotel Company, for property management services.(2)
10.4 First Amendments to Amended and Restated Management Agreements
of The Westin St. Francis Limited Partnership and of The
Westin Chicago Limited Partnership.(3)
10.5 Contribution Agreement between St. Francis Hotel Corporation
and The Westin St. Francis Limited Partnership, and between
909 North Michigan Avenue Corporation and The Westin Chicago
Limited Partnership, for contribution of Hotel assets and the
transfer of limited partnership interests.(2)
10.6 Promissory Note of St. Francis Hotel Corporation dated
August 21, 1986 to Teacher Retirement System of Texas.(1)
10.7 First Amendment to Promissory Note of St. Francis Hotel
Corporation dated as of June 2, 1994.(3)
10.8 Second Amendment to Promissory Note of St. Francis Hotel
Corporation dated as of May 27, 1997.
10.9 Deed of Trust, Financing Statement, Security Agreement and
Fixture filing dated August 21, 1986 respecting The Westin
St.Francis. (1)
10.10 First Amendment to Deed of Trust, Financing Statement,
Security Agreement and Fixture Filing dated as of June 2,
1994.(3)
10.11 Second Amendment to Deed of Trust, Financing Statement,
Security Agreement and Fixture Filing (With Assignment of
Rents and Leases) dated as of May 27, 1997.
10.12 Promissory Note of 909 North Michigan Avenue Corporation dated
August 21, 1986 to Teacher Retirement System of Texas.(1)
10.13 First Amendment to Promissory Note of 909 North Michigan
Avenue Corporation dated as of June 2, 1994.(3)
10.14 Second Amendment to Promissory Note of 909 North Michigan
Avenue Corporation dated as of May 27, 1997.
</TABLE>
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<PAGE> 14
10.15 Mortgage and Security Agreement dated August 21, 1986 for
The Westin Hotel, Chicago.(1)
10.16 First Amendment to Mortgage and Security Agreement dated as
of June 2, 1994.(3)
10.17 Second Amendment to Mortgage and Security Agreement dated as
of May 27, 1997.
10.18 St. Francis FF&E Escrow Agreement dated as of June 2, 1994.(3)
10.19 Chicago FF&E Escrow Agreement dated as of June 2, 1994.(3)
10.20 Promissory Note dated June 2, 1994 in favor of Westin Realty
Corp. by Westin Hotels Limited Partnership.(3)
10.21 Loan Agreement dated as of June 2, 1994 between Westin Hotels
Limited Partnership and Westin Realty Corp.(3)
27. Financial Data Schedule.
- --------------------
(1) Incorporated by reference to Exhibits 4.1, 4.2, 4.3, 10.4, 10.5, 10.6
and 10.7, respectively, to the Partnership's 1986 Annual Report on
Form 10-K.
(2) Incorporated by reference to Exhibits 10.1 and 10.3, respectively, of
the Partnership's Registration Statement on Form S-11 (No. 33-3918).
(3) Incorporated by reference to Exhibits 4.3, 4.5, 10.1, 10.4, 10.7,
10.10, 10.13, 10.16, 10.18, 10.19, 10.20 and 10.21, respectively, to
the Partnership's Form 10-Q for the period ending June 30, 1994.
(b) REPORTS ON FORM 8-K.
On July 8, 1997, the Partnership filed a report on Form 8-K dated June
16, 1997, announcing two special mailings to limited partners - one in
response to another offer from Kalmia Investors LLC to purchase their
Units and the other announcing that the Board of Directors of the
General Partner had authorized a $95 per Unit cash distribution to the
limited partners.
On June 12, 1997, the Partnership filed a report on Form 8-K dated May
27, 1997, announcing that an agreement to restructure the existing
mortgage loans on the Partnership's Hotels was completed.
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Seattle, State of
Washington, on the 6th day of August, 1997.
WESTIN HOTELS LIMITED PARTNERSHIP
(a Delaware limited partnership)
By: WESTIN REALTY CORP.,
Its sole General Partner
By: /s/ RICHARD MAHONEY
-------------------------------------
Richard Mahoney, Director,
Vice President, Chief Financial
Officer and Treasurer
-15-
<PAGE> 1
EXHIBIT 10.8
SECOND AMENDMENT TO PROMISSORY NOTE
This Second Amendment To Promissory Note ("Second Amendment")
is entered into as of May 27, 1997 (the "Second Amendment Effective Date"), by
Teacher Retirement System of Texas (the "Holder") and the St. Francis Hotel
Corporation (the "Hotel Corporation") and The Westin St. Francis Limited
Partnership (the "Hotel Partnership"), as assignee of the Hotel Corporation (the
Hotel Corporation and Hotel Partnership, individually and collectively, the
"Maker") in connection with that certain Promissory Note dated as of August 21,
1986, by Hotel Corporation (and Hotel Partnership as assignee) in favor of
Holder in the original principal amount of $83,325,000, as amended by that
certain First Amendment To Promissory Note dated as of June 2, 1994 (the "First
Amendment") (as amended, the "Note").
R E C I T A L S
A. On or about August 21, 1986, Holder made a loan (the
"Loan") to Hotel Corporation in the principal amount of $83,325,000. The Loan is
evidenced by the Note and is secured by a first-priority, properly recorded lien
on The Westin St. Francis (the "St. Francis Hotel") and other Mortgaged Property
(as defined in the Deed of Trust, as hereinafter defined) pursuant to the Deed
of Trust. Unless otherwise defined herein, all capitalized terms used herein
shall have the respective meanings given such terms in the Note.
B. Contemporaneously with the making of the Loan, pursuant to
that certain Agreement for the Contribution of Assets and the Transfer of
Limited Partnership Interests dated as of August 28, 1986, between Hotel
Corporation and Hotel Partnership, Hotel Corporation transferred all of its
right, title and interest in and to the St. Francis Hotel
1
<PAGE> 2
and the Property (as defined therein) to Hotel Partnership. As the assignee of
Hotel Corporation, Hotel Partnership became subject to all of the provisions of
the Note, the Deed of Trust and the other Loan Documents (as hereinafter
defined) in the same capacity as Hotel Corporation, and consequently became
jointly and severally liable with Hotel Corporation for all of Hotel
Corporation's obligations and liabilities under the Note, the Deed of Trust and
the other Loan Documents (as hereinafter defined).
C. Holder, Hotel Corporation, Hotel Partnership, Westin Hotels
Limited Partnership ("WHLP"), Westin Hotel Company ("Westin") and certain other
parties have entered into that certain Second Restructuring Agreement of even
date herewith (the "Second Restructuring Agreement"), which, among other things,
requires the execution and delivery of this Second Amendment.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
1. Amendments.
1.1 Modification of Interest Rate. Paragraph 1 of the
Note is hereby amended and restated in its entirety to read as follows:
"For the period commencing on the date hereof and
terminating upon the maturity or earlier repayment of the loan
evidenced hereby (the "Loan"), interest shall be due on the
unpaid principal amount from time to time outstanding
(including, without limitation, all accrued interest added to
principal pursuant to Paragraph 2(c) hereof) at the Contract
Rate (as defined below) then in effect, computed on the basis
of a 360-day year comprised of twelve (12) thirty (30)-day
months and
2
<PAGE> 3
compounded quarterly. As used herein, the term "Contract Rate"
shall mean (i) for the period from the date hereof through
November 30, 1996, at the rates provided in the First
Amendment, (ii) for the period from December 1, 1996 through
and including November 30, 1997, seven and one-half percent
(7.5%) per annum, (iii) for the period from and including
December 1, 1997 through and including the maturity or earlier
repayment of the Loan, eight and eighty-five 100ths percent
(8.85%) per annum."
1.2 Modification of Repayment Terms. Subparagraphs 2(a)(3) and
2(a)(4) and the last paragraph of Paragraph 2(a) of the Note are hereby amended
and restated in their entirety as follows:
"(3) Second, Third, Fourth Quarters of Year 8, Years
9-13 and First Quarter of Year 14: On the first day
immediately following each quarter of each Loan Year in the
period commencing on December 1, 1993 and terminating on
November 30, 1999, there shall be paid an amount equal to the
interest accruing at the Contract Rate then in effect on the
unpaid principal balance of this Note during such quarter.
(4) December 1, 1999 through Maturity Date: On the first
day immediately following each quarter of each Loan Year
during the period commencing on December 1, 1999, and ending
November 30, 2006, there shall be paid such quarterly amount
as is necessary to repay the unpaid principal balance of this
Note outstanding as of December 1, 1999, plus accrued
interest, on the basis of a 25-year amortization schedule
(with equal quarterly payments of interest and principal). As
set forth in Paragraph 3 hereof, on the maturity date of the
Note, the entire unpaid principal balance of this Note, plus
all accrued and unpaid interest thereon, shall be due and
payable in full.
For purposes of illustration (and assuming no incurrence
of late fees, default interest or other charges or amounts to
which the Periodic Payments are applied and assuming no
principal prepayments after the date of the Second Amendment,
a payment schedule is attached to the Second Amendment as
Amended Schedule A, and is incorporated herein by this
reference. As used herein, the term "Loan Year" shall mean and
refer to the twelve (12) month period commencing on the first
day of the next calendar month following the date on which the
Loan is funded by Holder and each twelve (12) month period
thereafter."
3
<PAGE> 4
Schedule A attached to the First Amendment is hereby deleted, and the attached
Amended Schedule A is hereby substituted in lieu thereof.
1.3 Adjustment to Periodic Payments. Paragraph 2(b) of the
Note is hereby amended and restated in its entirety as follows:
"Any partial prepayment of principal made on or after
the Second Amendment Effective Date, pursuant to Paragraph
6(b) below shall not be applied to any Periodic Payment but
shall instead be applied to the portion of the principal
amount of the Note that will become due and payable upon the
maturity of the Loan."
1.4 Term. Paragraph 3 of the Note is hereby amended and
restated as follows:
"Except as otherwise provided herein, the maturity date
of this Note shall be November 30, 2006, on which date the
entire unpaid principal balance of this Note, plus all accrued
and unpaid interest thereon, shall be due and payable in
full."
1.5 Amended Definitions of Deed of Trust and Loan Documents.
Paragraph 4 of the Note is hereby amended by deleting the entire last two
sentences of the paragraph and substituting therefor the following two
sentences:
"As used in this Note, the term "Deed of Trust" shall mean
that certain Deed Of Trust, Financing Statement, Security
Agreement And Fixture Filing (With Assignment Of Rents And
Leases), encumbering real property located in San Francisco
County, California, dated as of August 21, 1986, by the St.
Francis Hotel Corporation (and The Westin St. Francis Limited
Partnership, as its assignee), as Trustor, to Transnation
Title Insurance Company (formerly known as Transamerica Title
Insurance Company), as Trustee, for the benefit of the Holder,
as Beneficiary, as amended by (i) that certain First Amendment
to Deed Of Trust, Financing Statement, Security Agreement And
Fixture Filing (With Assignment Of
4
<PAGE> 5
Rents And Leases) dated as of June 2, 1994 ("First Amendment
to Deed of Trust"), and (ii) that certain Second Amendment to
Deed Of Trust, Financing Statement, Security Agreement And
Fixture Filing (With Assignment Of Rents And Leases) dated as
of May 27, 1997 ("Second Amendment to Deed of Trust") as
further amended, restated, supplemented or otherwise modified
from time to time. As used in this Note, the term "Loan
Documents" shall mean Loan Documents as defined in the Deed of
Trust."
1.6 Prepayment Provisions. Paragraph 6 of the Note is hereby
amended and restated in its entirety to read as follows:
"a. Except as specifically provided herein, Maker shall not be
permitted to prepay the Loan; provided, however, Maker may prepay the Loan, in
full, at any time after the Second Amendment Effective Date, provided that no
default or event of default shall have occurred and be continuing under the Note
or any other Loan Document, upon ninety (90) days prior written notice to
Holder, which notice shall specify the date of any prepayment, and payment to
Holder of the entire outstanding balance of the Loan plus a prepayment premium
equal to the amount obtained by subtracting the amount of the principal balance
of the Loan to be prepaid on the date of such tender of payment from the amount
obtained by calculating the present value of the remaining principal and
interest payments scheduled to have been made in accordance with the terms of
the Note, using a discount rate (compounded quarterly) which is equal to 100
basis points plus the percent per annum of the Treasury Constant Maturities
having a maturity date closest in time to November 30, 2006 ("Treasury Yield")
as such interest rate is reported in The Federal Reserve Statistical Release
G13(415) or its successor publication most recently released prior to the date
of tender of payment. The prepayment premium shall in no event be less than
zero. No partial prepayments shall be allowed except as provided in Paragraph
6(b) hereof.
Maker expressly waives any right to prepay the Loan, except as
specifically provided above. Therefore, if the maturity of this Note is
accelerated by reason of any default hereunder, under the Deed of Trust or under
any other Loan Document, including, but not limited to, a default pursuant to
Section 5.01 of the Deed of Trust, Maker agrees that the applicable prepayment
premium shall automatically become immediately due and payable by Maker, and
further, any tender to cure such default which results in a prepayment of the
indebtedness evidenced hereby resulting from such default, including any
redemption following foreclosure of the Deed of Trust, shall constitute an
evasion of the restrictions on prepayment set forth herein and shall be deemed a
voluntary prepayment. Accordingly, to the maximum extent permitted by law,
Holder may impose as a condition to accepting any such tender, and may also
include in its statement of the amount then due without regard to whether there
has been a tender, the prepayment premium that would otherwise have been due in
connection with a prepayment made on such date. Maker acknowledges that it is a
knowledgeable real estate operator, developer, and investor that fully
understands the effect of the waiver contained above, considers that the
provisions for the extension of the Loan by Holder pursuant to the Second
Amendment at the interest rates set forth above is sufficient consideration for
such waiver, and understands that Holder would not make this Loan without such
waiver.
5
<PAGE> 6
b. In addition to the principal repayments provided for in
Paragraph 2 above, Maker shall be entitled to make up to two principal
prepayments (each a "Partial Prepayment") during any calendar year, without
payment of any prepayment premium, provided that (i) Maker shall have given
Holder at least ninety (90) days prior written notice of Maker's intention to
make such prepayment, which notice shall specify the date and amount of such
prepayment, (ii) each such prepayment amount shall be accompanied by a
prepayment on the Chicago Loan (a "Chicago Loan Prepayment"), made in accordance
with the terms of the Chicago Loan, and the amount of the Partial Prepayment
plus the amount of the Chicago Loan Prepayment shall equal Five Million Dollars
($5,000,000), (iii) the aggregate amount of Partial Prepayments plus Chicago
Loan Prepayments shall not exceed twenty million dollars ($20,000,000) during
the period from the Second Amendment Effective Date through the maturity date
hereof, and (iv) there shall not have occurred any default or event of default
under this Note, the Chicago Loan, the Second Restructuring Agreement, the Deed
of Trust, or the Mortgage between the Second Amendment Effective Date and the
date of any proposed prepayment. Chicago Loan Prepayments and Partial
Prepayments hereunder shall be allocated between the Loan and the Chicago Loan
based upon the ratio of the principal balance of each loan to the aggregate
principal balance of both loans; for example, a $5,000,000 prepayment made at a
time when the principal balance of the Loan was $91,000,000 and the principal
balance of the Chicago Loan was $31,000,000, would be allocated as a
$3,729,508.20 Partial Prepayment ($91,000,000 divided by $122,000,000 times
$5,000,000) and a $1,270,491.80 Chicago Loan Prepayment. Any Partial Prepayments
pursuant to this Paragraph 6(b) shall be made on the dates provided for Periodic
Payments of principal and interest as provided in Paragraph 2.
c. Notwithstanding Paragraphs 6(a) and 6(b), Maker shall be
entitled to prepay the entire balance of this Note upon the closing of an
Arms-Length Sale (as defined below) of the St. Francis Hotel, without the
requirement of any prepayment premium, provided that (i) Maker shall have
provided Holder with at least ninety (90) days prior written notice of such
Arm's-Length Sale, which notice shall identify with reasonable particularity the
prospective purchaser, the terms of such sale, and the date of the proposed sale
closing, (ii) the entire balance of the Note shall be paid in full in cash at
the closing of such sale, and (iii) there shall not have occurred any default or
event of default under this Note, the Chicago Loan, the Second Restructuring
Agreement, the Deed of Trust, or the Mortgage between the Second Amendment
Effective Date and the date of any proposed prepayment. For purposes of this
provision, "Arm's-Length Sale" shall mean a sale of the St. Francis Hotel that
closes on or after August 31, 2001 in connection with which none of Maker, or
any of the other Westin Parties (as defined in the Second Restructuring
Agreement), nor any of their respective affiliates shall retain any direct or
indirect ownership interest in, or lien claim against, the St. Francis Hotel or
the entity that proposes to acquire the St. Francis Hotel pursuant to such sale,
or any affiliate of such entity."
1.7 Notices. The notice addresses for Holder in Paragraph
15(b) of the Note are hereby amended and restated in their entirety to read as
follows:
"(b) If to Holder:
6
<PAGE> 7
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Timothy W. Monter
Telecopy: (512) 370-0583
with a copy to:
LaSalle Advisors Limited
1601 Response Road, Suite 300
Sacramento, California 95815
Attention: Bruce D. Grant
Telecopy: (916) 920-0205
and:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Legal Services Department
Telecopy: (512) 370-0529
and:
Latham & Watkins
5800 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Douglas Bacon
Telecopy: (312) 993-9767"
2. Representations and Warranties of Hotel Corporation and
Hotel Partnership. To induce Holder to enter into this Second Amendment, each
Maker hereby reaffirms, and incorporates by reference herein, each of its
representations and warranties set forth in the Second Restructuring Agreement.
3. Conditions to Effectiveness. The amendments to the Note set
forth in Section 1 hereof shall become effective on the Effective Date (as
defined in the Second Restructuring Agreement).
7
<PAGE> 8
4. Reference to and Effect on the Note.
4.1 Upon the Effective Date, each reference in the Note to
"this Note," "hereunder," "hereof," "herein," "hereby" or words of like import
shall mean and be a reference to the Note as amended hereby, and each reference
to the Note in the Deed of Trust, any other Loan Document, any Restructuring
Document (as defined in the Second Restructuring Agreement) or any other
document, instrument or agreement executed and/or delivered in connection with
this Second Amendment, the Note, the Deed of Trust, any other Loan Documents or
any other Restructuring Documents shall mean and be a reference to the Note as
amended hereby.
4.2 The execution, delivery and effectiveness of this Second
Amendment shall not operate as a waiver of any right, power or remedy of the
Holder under the Note, as amended hereby, the Deed of Trust, the Loan Documents,
the Restructuring Documents or any other document, instrument or agreement
executed in connection herewith or therewith, nor constitutes a waiver of any
provision contained therein, except as specifically set forth herein or
contemplated hereby.
4.3 The terms and conditions of this Second Amendment and the
Holder's rights, powers and remedies pursuant hereto shall apply to the entire
Loan and all other indebtedness and obligations under the Loan Documents. Except
as specifically modified herein, the Note remains in full force and effect, and
Maker hereby ratifies and reaffirms all of the terms and provisions of the Note
and the validity and enforceability thereof (as if The Westin St. Francis
Limited Partnership were a signatory thereto in the same capacity as St. Francis
Hotel Corporation) and remain in full force and effect. This Second Amendment is
an
8
<PAGE> 9
amendment of the Note and does not constitute a novation of the Loan or any of
the other indebtedness or obligations under the Loan Documents.
5. Governing Law and Severability. This Second Amendment shall
be governed by and construed in accordance with the internal laws (as opposed to
the conflicts of law provisions) and decisions of the State of California. Any
provision of this Second Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6. Counterparts. This Second Amendment may be executed
(including, without limitation, by way of facsimile) in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Executed signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
7. Headings. Section headings in this Second Amendment are
included herein for convenience and reference only and shall not constitute a
part of this Second Amendment for any other purpose.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the date first above written.
ST. FRANCIS HOTEL CORPORATION,
a Delaware corporation, as Maker
By: /s/ DOUGLAS C. SUTTEN
----------------------------------------
Its: Vice President
THE WESTIN ST. FRANCIS LIMITED
PARTNERSHIP, a Delaware limited
partnership, as Maker
By: St. Francis Hotel Corporation,
its General Partner
By: /s/ DOUGLAS C. SUTTEN
-----------------------------------------
Its: Vice President
TEACHER RETIREMENT SYSTEM OF TEXAS,
a public pension fund and an agency
of the State of Texas as Holder
By: /s/ TIMOTHY W. MONTER
----------------------------------------
Its: Loan Administration Manager
[Signature Page to Second Amendment to Promissory Note]
10
<PAGE> 11
Westin St. Francis Loan Payment Schedule
<TABLE>
<CAPTION>
Payment Beginning Principal Ending
Date Balance Rate Amort Interest Payment Paid Balance
- ------- --------- ---- ----- -------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
3/1/97 91,454,411 1.8750% N 1,714,770 1,714,770 -- 91,454,411
6/1/97 91,454,411 1.8750% N 1,714,770 1,714,770 -- 91,454,411
9/1/97 91,454,411 1.8750% N 1,714,770 1,714,770 -- 91,454,411
12/1/97 91,454,411 1.8750% N 1,714,770 1,714,770 -- 91,454,411
3/1/98 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
6/1/98 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
9/1/98 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
12/1/98 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
3/1/99 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
6/1/99 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
9/1/99 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
12/1/99 91,454,411 2.2125% N 2,023,429 2,023,429 -- 91,454,411
3/1/00 91,454,411 2.2125% Y 2,023,429 2,278,888 255,459 91,198,951
6/1/00 91,198,951 2.2125% Y 2,017,777 2,278,888 261,111 90,937,840
9/1/00 90,937,840 2.2125% Y 2,012,000 2,278,888 266,889 90,670,951
12/1/00 90,670,951 2.2125% Y 2,006,095 2,278,888 272,793 90,398,158
3/1/01 90,398,158 2.2125% Y 2,000,059 2,278,888 278,829 90,119,329
6/1/01 90,119,329 2.2125% Y 1,993,890 2,278,888 284,998 89,834,331
9/1/01 89,834,331 2.2125% Y 1,987,585 2,278,888 291,304 89,543,027
12/1/01 89,543,027 2.2125% Y 1,981,139 2,278,888 297,749 89,245,278
3/1/02 89,245,278 2.2125% Y 1,974,552 2,278,888 304,337 88,940,942
6/1/02 88,940,942 2.2125% Y 1,967,818 2,278,888 311,070 88,629,872
9/1/02 88,629,872 2.2125% Y 1,960,936 2,278,888 317,952 88,311,919
12/1/02 88,311,919 2.2125% Y 1,953,901 2,278,888 324,987 87,986,932
3/1/03 87,986,932 2.2125% Y 1,946,711 2,278,888 332,177 87,654,755
6/1/03 87,654,755 2.2125% Y 1,939,361 2,278,888 339,527 87,315,228
9/1/03 87,315,228 2.2125% Y 1,931,849 2,278,888 347,039 86,968,189
12/1/03 86,968,189 2.2125% Y 1,924,171 2,278,888 354,717 86,613,472
3/1/04 86,613,472 2.2125% Y 1,916,323 2,278,888 362,565 86,250,907
6/1/04 86,250,907 2.2125% Y 1,908,301 2,278,888 370,587 85,880,320
9/1/04 85,880,320 2.2125% Y 1,900,102 2,278,888 378,786 85,501,534
12/1/04 85,501,534 2.2125% Y 1,891,721 2,278,888 387,167 85,114,367
3/1/05 85,114,367 2.2125% Y 1,883,155 2,278,888 395,733 84,718,634
6/1/05 84,718,634 2.2125% Y 1,874,400 2,278,888 404,489 84,314,145
9/1/05 84,314,145 2.2125% Y 1,865,450 2,278,888 413,438 83,900,708
12/1/05 83,900,708 2.2125% Y 1,856,303 2,278,888 422,585 83,478,123
3/1/06 83,478,123 2.2125% Y 1,846,953 2,278,888 431,935 83,046,188
6/1/06 83,046,188 2.2125% Y 1,837,397 2,278,888 441,491 82,604,696
9/1/06 82,604,696 2.2125% Y 1,827,629 2,278,888 451,259 82,153,437
11/30/06 82,153,437 2.2125% Y 1,817,645 83,971,082 82,153,437 90,670,951
</TABLE>
Maturity Date 11/30/06
Accrued Interest + Principal Due
Amended Schedule "A"
<PAGE> 1
EXHIBIT 10.11
SECOND AMENDMENT TO DEED OF TRUST,
FINANCING STATEMENT, SECURITY AGREEMENT AND
FIXTURE FILING (WITH ASSIGNMENT OF RENTS AND LEASES)
This Second Amendment To Deed Of Trust, Financing Statement,
Security Agreement And Fixture Filing (With Assignment Of Rents And Leases) (the
"Second Amendment") is entered into as of May 27, 1997, by and among St. Francis
Hotel Corporation ("Hotel Corporation"), The Westin St. Francis Limited
Partnership (the "Hotel Partnership," and together with Hotel Corporation,
individually and collectively, the "Trustor"), Teacher Retirement System of
Texas ("Beneficiary") and Transnation Title Insurance Company (formerly known as
Transamerica Title Insurance Corporation) ("Trustee"), as trustee for the
benefit of Beneficiary, in connection with that certain Deed Of Trust, Financing
Statement, Security Agreement And Fixture Filing (With Assignment Of Rents And
Leases), dated as of August 21, 1986, as amended by that certain First Amendment
To Deed Of Trust, Financing Statement, Security Agreement And Fixture Filing
(With Assignment Of Rents And Leases) dated as of June 2, 1994 (the "First
Amendment") by Hotel Corporation (and Hotel Partnership, as its assignee) to
Trustee for the benefit of Beneficiary (the "Existing Deed of Trust," and as
amended by this Second Amendment, the "Deed of Trust").
R E C I T A L S
A. Trustor, Trustee and Beneficiary are parties to the
Existing Deed of Trust, encumbering certain real property (including
improvements thereon) located in the
11
<PAGE> 2
County of San Francisco, State of California (a legal description of which is
attached hereto as Exhibit A) and recorded in the Recorder's Office in County of
San Francisco, California at Reel E160 and Image 1655 as Document No. D855356.
Pursuant to the Existing Deed of Trust, Trustor granted a first-priority lien on
The Westin St. Francis (the "St. Francis Hotel") and the other Mortgaged
Property (as defined therein) as security for a loan ("Loan") in the original
principal amount of $83,325,000 made by Beneficiary to Hotel Corporation, and
for all other Obligations (as defined in the Deed of Trust). Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings given such terms in the Deed of Trust.
B. Contemporaneously with the making of the Loan, pursuant to
that certain Agreement for the Contribution of Assets and the Transfer of
Limited Partnership Interests dated as of August 28, 1986, between Hotel
Corporation and Hotel Partnership, Hotel Corporation transferred all of its
right, title and interest in the St. Francis Hotel and the Property (as defined
therein) to Hotel Partnership. As the assignee of Hotel Corporation, Hotel
Partnership became subject to all of the provisions of the Note, the Deed of
Trust and the other Loan Documents in the same capacity as Hotel Corporation,
and consequently became jointly and severally liable with Hotel Corporation for
all of Hotel Corporation's obligations and liabilities under the Note, the Deed
of Trust and the other Loan Documents.
C. Hotel Corporation, Hotel Partnership, Beneficiary, Westin
Hotels Limited Partnership ("WHLP"), Westin Hotel Company ("Westin") and certain
other parties have entered into that certain Second Restructuring Agreement of
even date herewith (the "Second Restructuring Agreement"), which, among other
things, requires the execution and delivery of this Second Amendment.
12
<PAGE> 3
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound hereby, agree as follows:
1. Amendments.
1.1 Amended Definitions.
a. Definition of Note. The first Recital in the Existing
Deed of Trust is hereby amended by inserting the following phrase immediately
before the word "together" the first time it appears in the Recital:
"and as further amended by that certain Second Amendment to
Promissory Note dated as of May 27, 1997,"
b. Definition of Indebtedness and Loan Documents. The
second Recital paragraph of the Existing Deed of Trust is hereby further amended
by deleting the entirety of that portion of the Second Recital that was added by
Section 1.1(b) of the First Amendment and replacing that portion of the second
Recital with the following:
"((i) the Note, (ii) the Deed of Trust, as amended by that
certain First Amendment To Deed Of Trust, Financing Statement,
Security Agreement And Fixture Filing (With Assignment Of
Rents And Leases) dated as of June 2, 1994 (the "First
Amendment to Deed of Trust"), and by that certain Second
Amendment to Deed of Trust, Financing Statement, Security
Agreement and Fixture Filing (with Assignment of Rents and
Leases) dated as of May 27, 1997 (the "Second Amendment to
Deed of Trust") and as further amended, restated, supplemented
or otherwise modified from time to time, (iii) that certain
Absolute Assignment of Lessor's Interest in Leases dated as of
August 21, 1986, by St. Francis Hotel Corporation (and The
Westin St. Francis Limited Partnership, as its assignee) in
favor of Beneficiary, as amended by those certain Amendments
to Assignment of Leases, Assignment of Management Agreement
13
<PAGE> 4
and Subordination of Management Agreement dated as of June 2,
1994 and May 27, 1997, respectively, (the "Amendments to Other
Loan Documents") and as further amended, restated,
supplemented or otherwise modified from time to time (the
"Assignment of Leases"), (iv) that certain Assignment of
Management Agreement dated as of August 21, 1986, by St.
Francis Hotel Corporation (and The Westin St. Francis Limited
Partnership, as its assignee) as Owner, The Westin St. Francis
Limited Partnership and Westin Hotels Limited Partnership for
the benefit of Beneficiary, as amended by the Amendments to
Other Loan Documents, and, as further amended, restated,
supplemented or otherwise modified from time to time (the
"Assignment of Management Agreement"), (v) the Subordination
of Management Agreement dated August 21, 1986, among the
Beneficiary, The Westin St. Francis Limited Partnership, St.
Francis Hotel Corporation, Westin Hotels Limited Partnership
and Westin Hotel Company, as amended by the Amendments to
Other Loan Documents, and as further amended, restated,
supplemented or otherwise modified from time to time (the
"Subordination of Management Agreement"), (vi) the
Restructuring Agreement dated as of June 2, 1994, among St.
Francis Hotel Corporation, The Westin St. Francis Limited
Partnership, Beneficiary, Westin (as hereinafter defined),
WHLP (as hereinafter defined) and certain other parties (as
amended, restated, supplemented or otherwise modified from
time to time, the "First Restructuring Agreement"), (vii) the
Second Restructuring Agreement dated as of May 27, 1997, among
St. Francis Hotel Corporation, The Westin St. Francis Limited
Partnership, Beneficiary, Westin (as hereinafter defined),
WHLP (as hereinafter defined) and certain other parties (as
amended, restated, supplemented or otherwise modified from
time to time, the "Second Restructuring Agreement"), to the
extent the First Restructuring Agreement or the Second
Restructuring Agreement relate to the Obligations, the
Mortgaged Property or Trustor, (viii) the St. Francis FF&E
Escrow Agreement (as hereinafter defined), (ix) all other
security agreements, financing statements, lease assignments,
guarantees and other agreements, instruments, documents and
written indicia of contractual obligations between or among
the Beneficiary and/or Trustee, on the one hand, and any or
all of The Westin St. Francis Limited Partnership, St. Francis
Hotel Corporation, WHLP or Westin and/or any other person or
entity having any right or interest in any security for the
Loan, on the other hand, executed in connection with any of
the transactions contemplated by any of the documents above,
all of the foregoing being hereinafter referred to as the
"Loan Documents," as each such
14
<PAGE> 5
agreement, instrument or other document referenced in any of
the foregoing clauses may be amended, restated, supplemented
or otherwise modified from time to time),"
c. Definition of 909 Note and Mortgage. Subsection (m) of
Section 6.01 of the Existing Deed of Trust is hereby amended and restated in its
entirety to read as follows:
"(m) The occurrence of any default under that certain Mortgage
and Security Agreement executed by 909 North Michigan Avenue
Corporation, a Delaware corporation ("909") on August 21,
1986, and assumed by The Westin Chicago Limited Partnership, a
Delaware partnership, as 909's assignee, in favor of
Beneficiary, as amended by that certain First Amendment to
Mortgage and Security Agreement dated as of June 2, 1994, and
by that certain Second Amendment to Mortgage and Security
Agreement dated as of May 27, 1997 as the same may be further
amended, restated, supplemented or otherwise modified from
time to time (the "Mortgage"), or any default under that
certain Promissory Note executed by 909 as Maker, on August
21, 1986, in favor of Beneficiary, as Holder, as amended by
that certain Amendment to Promissory Note dated June 2, 1994,
and by that certain Second Amendment to Promissory Note dated
as of May 27, 1997 and as the same may be further amended,
restated, supplemented or otherwise modified from time to time
(the "909 Note"), or any default under any other Loan Document
(as defined in the Mortgage); or"
1.2 Notices. The addresses for notice to Beneficiary in
Section 8.04(b) of the Existing Deed of Trust are hereby amended and restated in
their entirety to read as follows:
"(b) If to Beneficiary:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Timothy W. Monter
Telecopy: (512) 370-0583
with a copy to:
15
<PAGE> 6
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Legal Services Department
Telecopy: (512) 370-0529
LaSalle Advisors Limited
1601 Response Road, Suite 300
Sacramento, California 95815
Attention: Bruce D. Grant
Telecopy: (916) 920-0205
Latham & Watkins
5800 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: J. Douglas Bacon
Telecopy: (312) 993-9767"
1.3 Prepayment Premium in Event of Foreclosure or Trustee's
Sale. Section 6.06 of the Existing Deed of Trust is hereby amended by adding the
following subsection (i) as the last subsection thereof:
"(i) Upon any default by Trustor and following the
acceleration of maturity as herein provided, a tender of
payment by the Trustor or by anyone on behalf of the Trustor
of the amount necessary to satisfy the entire indebtedness
secured hereby made at any time prior to foreclosure sale or
Trustee's sale shall constitute an evasion of the prepayment
terms of the Note and be deemed to be a voluntary prepayment
thereunder and any such payment shall, therefore, include the
additional payment required under the prepayment provisions
contained in the Note."
2. Representations and Warranties of Hotel Corporation and
Hotel Partnership. To induce Beneficiary to enter into this Second Amendment,
each Trustor hereby jointly and severally reaffirms, and incorporates by
reference herein, each of its representations and warranties set forth in the
Second Restructuring Agreement.
16
<PAGE> 7
3. Conditions to Effectiveness. The amendments to the Existing
Deed of Trust set forth herein shall become effective on the Effective Date (as
defined in the Second Restructuring Agreement).
4. Miscellaneous.
4.1 Reference to and Effect on the Deed of Trust. Upon the
Effective Date, each reference in the Existing Deed of Trust to "this Deed of
Trust," "hereunder," "hereof," "herein," "hereby" or words of like import shall
mean and be a reference to the Existing Deed of Trust as amended hereby, and
each reference to the Existing Deed of Trust in the Note, any other Loan
Document, any Restructuring Document (as defined in the Second Restructuring
Agreement), or any other document, instrument or agreement executed and/or
delivered in connection with this Second Amendment, the Existing Deed of Trust,
the Note, any other Loan Documents, or any Restructuring Documents shall mean
and be a reference to the Existing Deed of Trust as amended hereby.
4.2 No Waiver. The execution, delivery and effectiveness of
this Second Amendment shall not operate as a waiver of any right, power or
remedy of the Beneficiary or Trustee under the Existing Deed of Trust, as
amended by this Second Amendment, the Note, the Loan Documents, the
Restructuring Documents or any other document, instrument or agreement executed
in connection herewith or therewith, nor constitutes a waiver of any provision
contained therein, except as specifically set forth herein or contemplated
hereby.
4.3 Reaffirmation. The terms and conditions of this Second
Amendment and the Trustee's and Beneficiary's rights, powers and remedies
pursuant hereto shall apply to all of the indebtedness secured hereby. Except as
specifically modified herein, the Existing Deed of Trust remains in full force
and effect, and Trustor hereby ratifies and reaffirms the terms
17
<PAGE> 8
and provisions of the Deed of Trust and the validity and enforceability thereof
(as if The Westin St. Francis Limited Partnership were a party thereto in the
same capacity as The St. Francis Hotel Corporation). This Second Amendment is an
amendment to the Existing Deed of Trust and does not constitute a novation of
any of the indebtedness secured hereby.
4.4 Governing Law and Severability. This Second Amendment
shall be governed by and construed in accordance with the internal laws (as
opposed to the conflicts of law provisions) and decisions of the State of
California. Any provision of this Second Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
4.5 Counterparts. This Second Amendment may be executed
(including, without limitation, by way of facsimile) in any number of
counterparts and by different parties hereto and separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Executed signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
4.6 Headings. Section headings in this Second Amendment are
included herein for convenience and reference only and shall not constitute a
part of this Second Amendment for any purpose.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
18
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the date first above written.
ST. FRANCIS HOTEL CORPORATION,
a Delaware corporation, as Trustor
By: /s/ DOUGLAS C. SUTTEN
------------------------------------------
Its: Vice President
THE WESTIN ST. FRANCIS LIMITED
PARTNERSHIP, a Delaware limited
partnership, as Trustor
By: St. Francis Hotel Corporation,
its General Partner
By: /s/ DOUGLAS C. SUTTEN
------------------------------------------
Its: Vice President
TEACHER RETIREMENT SYSTEM OF TEXAS,
a public pension fund and an agency
of the State of Texas, as Beneficiary
By: /s/ TIMOTHY W. MONTER
------------------------------------------
Its: Loan Administration Manager
[Signature Page 1 of 2 to Second Amendment to Deed of Trust, Financing
Statement, Security Agreement and Fixture Filing (With Assignment of Rents and
Leases)]
19
<PAGE> 10
TRANSNATION TITLE INSURANCE
COMPANY, as Trustee
By: /s/ Martin J. Strelecky
------------------------------------------
Its: Vice President
[Signature Page 2 of 2 to Second Amendment to Deed of Trust, Financing
Statement, Security Agreement and Fixture Filing (With Assignment of Rents and
Leases)]
20
<PAGE> 11
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 22nd day of May, 1997, before me personally appeared Douglas C.
Sutten to me known to be the Vice President of St. Francis Hotel Corporation,
the corporation that executed the within and foregoing instrument, and
acknowledged said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes therein mentioned, and on oath stated
that he was authorized to execute the said instrument, and that the seal
affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ George T. Cowan
---------------------------------------------
(Signature)
George T. Cowan
NOTARY PUBLIC in and for the
State of Washington, residing at Seattle.
My commission expires: 4/1/99
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 22nd day of May, 1997, before me personally appeared Douglas C.
Sutten to me known to be the Vice President of St. Francis Hotel Corporation,
the corporation that executed the within and foregoing instrument in its
capacity as the sole general partner of The Westin St. Francis Limited
Partnership, and acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes therein mentioned, and
on oath stated that he was authorized to execute the said instrument, and that
the seal affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ George T. Cowan
---------------------------------------------
(Signature)
George T. Cowan
NOTARY PUBLIC in and for the
State of Washington, residing at Seattle.
My commission expires: 4/1/99
21
<PAGE> 12
STATE OF TEXAS )
) ss.
COUNTY OF TRAVIS )
On May 23, 1997, before me personally appeared Timothy W. Monter,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her authorized capacity and
that by her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Janet S. Carpenter
- ----------------------------------------
Janet S. Carpenter
Notary Public
State of Texas
Comm. Exp. 10-02-99
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On May 29th, 1997, before me personally appeared Martin J. Strelecky,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that
by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Kathleen C. McCusker
-----------------------------------------
Residing at Bellevue, WA
Commission expires 12/9/97
22
<PAGE> 13
EXHIBIT A
The land referred to in this Report is situated in the City and County of San
Francisco, State of California, and is described as follows:
PARCEL 1:
BEGINNING at a point formed by the intersection of the Northerly line of Geary
Street with the Westerly line of Powell Street; running thence Northerly along
the Westerly line of Powell Street 275 feet to the corner formed by the
intersection of the Westerly line of Powell Street with Southerly line of Post
Street; running thence Westerly along the Southerly line of Post Street 192 feet
and 6 inches; thence at a right angle Southerly 137 feet and 6 inches; thence at
a right angle Westerly 22 feet and 8-1/4 inches; thence at a right angle
Southerly 137 feet and 6 inches to the Northerly line of Geary Street; thence
running Easterly along the Northerly line of Geary Street 215 feet and 2-1/4
inches to the point of beginning.
BEING a portion of 50 Vara Block No. 169.
PARCEL 2:
BEGINNING at a point on the Northerly line of Geary Street, distant thereon 215
feet and 2-1/4 inches Westerly from the Westerly line of Powell Street, as said
Street lines and all other Street lines hereinafter mentioned are positioned
according to the "Monument Map of the Fifty Vara District of the City and County
of San Francisco", filed January 7, 1910, in Map Book "G" at Page 151, in the
Office of the Recorder of the City and County of San Francisco, State of
California; running thence Westerly along said line of Geary Street 60 feet and
2-1/4 inches to a point thereon, said point being 137 feet 10-1/2 inches
Easterly from the Easterly line of Mason Street; thence at a right angle
Northerly 137 feet 6 inches; thence at a right angle Westerly 27 feet and 10-1/2
inches; thence at a right angle Northerly 137 feet and 6 inches to the Southerly
line of Post Street; thence at a right angle Easterly along said line of Post
Street 110 feet and 9 inches; thence at a right angle Southerly 137 feet and 6
inches; thence at a right angle Westerly 22 feet and 8-1/4 inches; thence at a
right angle Southerly 137 feet and 6 inches to the point of beginning.
EXCEPTING THEREFROM that portion thereof described as follows:
BEGINNING at a point on the Northerly line of Geary Street, distant thereon 275
Westerly from the Westerly line of Powell Street; running thence Westerly along
said line of Geary Street 4-1/2 inches; thence at a right angle Northerly 137
feet 6 inches; thence at a right angle Easterly 4-1/2 inches; thence at a right
angle Southerly 137 feet 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 168.
Assessor's Lot 1 and 13, Block 307.
23
<PAGE> 14
Commonly known address: Union Square
335 Powell Street
San Francisco, California 94102
24
<PAGE> 1
Exhibit 10.14
SECOND AMENDMENT TO PROMISSORY NOTE
This Second Amendment To Promissory Note ("Second Amendment")
is entered into as of May 27, 1997 (the "Second Amendment Effective Date"), by
Teacher Retirement System of Texas (the "Holder"), the 909 North Michigan Avenue
Corporation (the "Hotel Corporation") and The Westin Chicago Limited Partnership
(the "Hotel Partnership"), as assignee of the Hotel Corporation (the Hotel
Corporation and Hotel Partnership, individually and collectively, the "Maker")
in connection with that certain Promissory Note dated as of August 21, 1986, by
Hotel Corporation (and Hotel Partnership as assignee) in favor of Holder in the
original principal amount of $32,825,000 as amended pursuant to that certain
First Amendment To Promissory Note dated as of June 2, 1994 (the "First
Amendment") (as amended, the "Note").
R E C I T A L S
A. On or about August 21, 1986, Holder made a loan (the
"Loan") to Hotel Corporation in the principal amount of $32,825,000. The Loan is
evidenced by the Note and is secured by a first-priority, properly recorded lien
on The Westin Hotel, Chicago (the "Chicago Hotel") and other Premises (as
defined in the Mortgage and Security Agreement, as hereinafter defined) pursuant
to the Mortgage and Security Agreement. Unless otherwise defined herein, all
capitalized terms used herein shall have the respective meanings given such
terms in the Note, as amended hereby.
B. Contemporaneously with the making of the Loan, pursuant to
that certain Agreement for the Contribution of Assets and the Transfer of
Limited Partnership Interests dated as of August 28, 1986, between Hotel
Corporation and Hotel Partnership,
25
<PAGE> 2
Hotel Corporation transferred all of its right, title and interest in and to the
Chicago Hotel and the Property (as defined therein) to Hotel Partnership. As the
assignee of Hotel Corporation, Hotel Partnership became subject to all of the
provisions of the Note, the Mortgage and Security Agreement and the other Loan
Documents (as hereinafter defined) in the same capacity as Hotel Corporation,
and consequently became jointly and severally liable with Hotel Corporation for
all of Hotel Corporation's obligations and liabilities under the Note, the
Mortgage and Security Agreement and the other Loan Documents.
C. Holder, Hotel Corporation, Hotel Partnership, the Westin
St. Francis Limited Partnership ("WSFLP"), Westin Hotel Company ("Westin") have
entered into that certain Second Restructuring Agreement of even date herewith
(the "Second Restructuring Agreement"), which, among other things, requires the
execution and delivery of this Second Amendment.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
1. Amendments.
1.1 Modification of Interest Rate. Paragraph 1 of the Note is
hereby amended and restated in its entirety to read as follows:
"For the period commencing on the date hereof and terminating
upon the maturity or earlier repayment of the loan evidenced
hereby (the "Loan"), interest shall be due on the unpaid
principal amount from time to time outstanding (including,
without limitation, all accrued interest added to principal
pursuant to Paragraph 2(c) hereof) at the Contract Rate
26
<PAGE> 3
(as defined below) then in effect, computed on the basis of a
360-day year comprised of twelve (12) thirty (30)-day months
and compounded quarterly. As used herein, the term "Contract
Rate" shall mean (i) for the period from the date hereof
through November 30, 1996, at the rates provided in the First
Amendment, (ii) for the period from December 1, 1996 through
and including November 30, 1997, seven and one-half percent
(7.5%) per annum, (iii) for the period from and including
December 1, 1997 through and including the maturity or earlier
repayment of the Loan, eight and eighty-five 100ths percent
(8.85%) per annum."
1.2 Modification of Repayment Terms. Subparagraphs 2(a)(3) and
2(a)(4) and the last paragraph of Paragraph 2(a) of the Note are hereby amended
and restated in their entirety as follows:
"(3) Second, Third, Fourth Quarters of Year 8, Years
9-13 and First Quarter of Year 14: On the first day
immediately following each quarter of each Loan Year in the
period commencing on December 1, 1993 and terminating on
November 30, 1999, there shall be paid an amount equal to the
interest accruing at the Contract Rate then in effect on the
unpaid principal balance of this Note during such quarter.
(4) December 1, 1999 through Maturity Date: On the first
day immediately following each quarter of each Loan Year
during the period commencing on December 1, 1999, and ending
November 30, 2006, there shall be paid such quarterly amount
as is necessary to repay the unpaid principal balance of this
Note outstanding as of December 1, 1999, plus accrued
interest, on the basis of a 25-year amortization schedule
(with equal quarterly payments of interest and principal). As
set forth in Paragraph 3 hereof, on the maturity date of the
Note, the entire unpaid principal balance of this Note, plus
all accrued and unpaid interest thereon, shall be due and
payable in full.
For purposes of illustration (and assuming no incurrence
of late fees, default interest or other charges or amounts to
which the Periodic Payments are applied and assuming no
principal prepayments after the date of the Second Amendment,
a payment schedule is attached to the Second Amendment as
Amended Schedule A, and is incorporated herein by this
reference. As used herein, the term "Loan Year" shall mean and
refer to the twelve (12) month period commencing on the first
day of the next
27
<PAGE> 4
calendar month following the date on which the Loan is funded
by Holder and each twelve (12) month period thereafter."
Schedule A attached to the First Amendment is hereby deleted, and the attached
Amended Schedule A is hereby substituted in lieu thereof.
1.3 Adjustment to Periodic Payments. Paragraph 2(b) of the
Note is hereby amended and restated in its entirety as follows:
"Any partial prepayment of principal made on or after
the Second Amendment Effective Date, pursuant to Paragraph
6(b) below shall not be applied to any Periodic Payment but
shall instead be applied to the portion of the principal
amount of the Note that will become due and payable upon the
maturity of the Loan."
1.4 Term. Paragraph 3 of the Note is hereby amended and
restated as follows:
"Except as otherwise provided herein, the maturity date
of this Note shall be November 30, 2006, on which date the
entire unpaid principal balance of this Note, plus all accrued
and unpaid interest thereon, shall be due and payable in
full."
1.5 Amended Definitions of Deed of Trust and Loan Documents.
Paragraph 4 of the Note is hereby amended by deleting the entire last two
sentences of the paragraph and substituting therefor the following two
sentences:
"As used in this Note, the term "Mortgage" shall mean that
certain Mortgage and Security Agreement, encumbering real
property located in Cook County, Illinois, dated as of August
21, 1986, by the 909 North Michigan Avenue Corporation (and
The Westin Chicago Limited Partnership, as its assignee), as
Mortgagor, to Holder, as Mortgagee, as amended by (i) that
certain First Amendment to Mortgage and Security Agreement
dated as of June 2, 1994 ("First Amendment to Mortgage"), and
(ii) that certain Second Amendment to Mortgage and Security
Agreement dated as of even date herewith, as further amended,
restated, supplemented or otherwise modified from time to
time. As used in this Note, the term "Loan Documents" shall
mean Loan Documents as defined in the Mortgage."
28
<PAGE> 5
1.6 Prepayment Provisions. Paragraph 6 of the Note is hereby
amended and restated in its entirety to read as follows:
"a. Except as specifically provided herein, Maker shall not be
permitted to prepay the Loan; provided, however, Maker may prepay the Loan, in
full, at any time after the Second Amendment Effective Date, provided that no
default or event of default shall have occurred and be continuing under the Note
or any other Loan Document, upon ninety (90) days prior written notice to
Holder, which notice shall specify the date of any prepayment, and payment to
Holder of the entire outstanding balance of the Loan plus a prepayment premium
equal to the amount obtained by subtracting the amount of the principal balance
of the Loan to be prepaid on the date of such tender of payment from the amount
obtained by calculating the present value of the remaining principal and
interest payments scheduled to have been made in accordance with the terms of
the Note, using a discount rate (compounded quarterly) which is equal to 100
basis points plus the percent per annum of the Treasury Constant Maturities
having a maturity date closest in time to November 30, 2006 ("Treasury Yield")
as such interest rate is reported in The Federal Reserve Statistical Release
G13(415) or its successor publication most recently released prior to the date
of tender of payment. The prepayment premium shall in no event be less than
zero. No partial prepayments shall be allowed except as provided in Paragraph
6(b) hereof.
Maker expressly waives any right to prepay the Loan,
except as specifically provided above. Therefore, if the maturity of this Note
is accelerated by reason of any default hereunder, under the Mortgage or under
any other Loan Document, including, but not limited to, a default pursuant to
Paragraph 29 of the Mortgage, Maker agrees that the applicable prepayment
premium shall automatically become immediately due and payable by Maker, and
further, any tender to cure such default which results in a prepayment of the
indebtedness evidenced hereby resulting from such default, including any
redemption following foreclosure of the Mortgage, shall constitute an evasion of
the restrictions on prepayment set forth herein and shall be deemed a voluntary
prepayment. Accordingly, to the maximum extent permitted by law, Holder may
impose as a condition to accepting any such tender, and may also include in its
statement of the amount then due without regard to whether there has been a
tender, the prepayment premium that would otherwise have been due in connection
with a prepayment made on such date. Maker acknowledges that it is a
knowledgeable real estate operator, developer, and investor that fully
understands the effect of the waiver contained above, considers that the
provisions for the extension of the Loan by Holder pursuant to the Second
Amendment at the interest rates set forth above is sufficient consideration for
such waiver, and understands that Holder would not make this Loan without such
waiver.
b. In addition to the principal repayments provided for in
Paragraph 2 above, Maker shall be entitled to make up to two principal
prepayments (each a "Partial Prepayment") during any calendar year, without
payment of any prepayment premium, provided that (i) Maker shall have given
Holder at least ninety (90) days prior written notice of Maker's intention to
make such prepayment, which notice shall specify the date and amount of
29
<PAGE> 6
such prepayment, (ii) each such prepayment amount shall be accompanied by a
prepayment on the St. Francis Loan (a "St. Francis Loan Prepayment") made in
accordance with the terms of the St. Francis Loan and the Second Amendment, and
the amount of the Partial Prepayment plus the amount of the St. Francis Loan
Prepayment shall equal Five Million Dollars ($5,000,000), (iii) the aggregate
amount of Partial Prepayments plus St. Francis Loan Prepayments shall not exceed
twenty million dollars ($20,000,000) during the period from the Second Amendment
Effective Date through the maturity date hereof, and (iv) there shall not have
occurred any default or event of default under this Note, the St. Francis Loan,
the Second Restructuring Agreement, the Mortgage, or the St. Francis Deed of
Trust between the Second Amendment Effective Date and the date of any proposed
prepayment. St. Francis Loan Prepayments and Partial Prepayments hereunder shall
be allocated between the Loan and the St. Francis Loan based upon the ratio of
the principal balance of each loan to the aggregate principal balance of both
loans; for example, a $5,000,000 prepayment made at a time when the principal
balance of the Loan was $31,000,000 and the principal balance of the St. Francis
Loan was $91,000,000, would be allocated as a $1,270,491.80 Partial Prepayment
($31,000,000 divided by $122,000,000 times $5,000,000) and a $3,729,508.20 St.
Francis Loan Prepayment. Any Partial Prepayments pursuant to this Paragraph 6(b)
shall be made on the dates provided for Periodic Payments of principal and
interest as provided in Paragraph 2.
c. Notwithstanding Paragraphs 6(a) and 6(b), Maker shall be
entitled to prepay the entire balance of this Note upon the closing of an
Arms-Length Sale (as defined below) of the Chicago Hotel, without the
requirement of any prepayment premium, provided that (i) Maker shall have
provided Holder with at least ninety (90) days prior written notice of such
Arm's-Length Sale, which notice shall identify with reasonable particularity the
prospective purchaser, the terms of such sale, and the date of the proposed sale
closing, (ii) the entire balance of the Note shall be paid in full in cash at
the closing of such sale, and (iii) there shall not have occurred any default or
event of default under this Note, the St. Francis Loan, the Second Restructuring
Agreement, the Mortgage, or the St. Francis Deed of Trust between the Second
Amendment Effective Date and the date of any proposed prepayment. For purposes
of this provision, "Arm's-Length Sale" shall mean a sale of the Chicago Hotel in
connection with which none of Maker, or any of the other Westin Parties (as
defined in the Second Restructuring Agreement), nor any of their respective
affiliates shall retain any direct or indirect ownership interest in, or lien
claim against, the Chicago Hotel or the entity that proposes to acquire the
Chicago Hotel pursuant to such sale, or any affiliate of such entity."
1.7 Notices. The notice addresses for Holder in Paragraph
15(b) of the Note are hereby amended and restated in their entirety to read as
follows:
"(a) If to Holder:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Timothy W. Monter
Telecopy: (512) 370-0583
30
<PAGE> 7
with a copy to:
LaSalle Advisors Limited
1601 Response Road, Suite 300
Sacramento, California 95815
Attention: Bruce D. Grant
Telecopy: (916) 920-0205
and:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Legal Services Department
Telecopy: (512) 370-0529
and
Latham & Watkins
5800 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Douglas Bacon
Telecopy: (312) 993-9767"
2. Representations and Warranties of Hotel Corporation and
Hotel Partnership. To induce Holder to enter into this Second Amendment, each
Maker hereby reaffirms, and incorporates by reference herein, each of its
representations and warranties set forth in the Second Restructuring Agreement.
3. Conditions to Effectiveness. The amendments to the Note set
forth in Section 1 hereof shall become effective on the Effective Date (as
defined in the Second Restructuring Agreement).
4. Reference to and Effect on the Note.
4.1 Upon the Effective Date, each reference in the Note to
"this Note," "hereunder," "hereof," "herein," "hereby" or words of like import
shall mean and be a
31
<PAGE> 8
reference to the Note as amended hereby, and each reference to the Note in the
Mortgage, any other Loan Document, any Restructuring Document (as defined in the
Second Restructuring Agreement) or any other document, instrument or agreement
executed and/or delivered in connection with this Second Amendment, the Note,
the Mortgage, any other Loan Documents or any other Restructuring Documents
shall mean and be a reference to the Note as amended hereby.
4.2 The execution, delivery and effectiveness of this Second
Amendment shall not operate as a waiver of any right, power or remedy of the
Holder under the Note, as amended hereby, the Mortgage, the Loan Documents, the
Restructuring Documents or any other document, instrument or agreement executed
in connection herewith or therewith, nor constitutes a waiver of any provision
contained therein, except as specifically set forth herein or contemplated
hereby.
4.3 The terms and conditions of this Second Amendment and the
Holder's rights, powers and remedies pursuant hereto shall apply to the entire
Loan and all other indebtedness and obligations under the Loan Documents. Except
as specifically modified herein, the Note remains in full force and effect, and
Maker hereby ratifies and reaffirms all of the terms and provisions of the Note
and the validity and enforceability thereof (as if The Westin Chicago Limited
Partnership were a signatory thereto in the same capacity as 909 North Michigan
Avenue Corporation) and remain in full force and effect. This Second Amendment
is an amendment of the Note and does not constitute a novation of the Loan or
any of the other indebtedness or obligations under the Loan Documents.
5. Governing Law and Severability. This Second Amendment shall
be governed by and construed in accordance with the internal laws (as opposed to
the conflicts of
32
<PAGE> 9
law provisions) and decisions of the State of Illinois. Any provision of this
Second Amendment which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6. Counterparts. This Second Amendment may be executed
(including, without limitation, by way of facsimile) in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Executed signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
7. Headings. Section headings in this Second Amendment are
included herein for convenience and reference only and shall not constitute a
part of this Second Amendment for any other purpose.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
33
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the date first above written.
909 NORTH MICHIGAN AVENUE CORPORATION,
a Delaware corporation, as Maker
By: /s/ Douglas C. Sutten
------------------------------------------
Its: Vice President
THE WESTIN CHICAGO LIMITED PARTNERSHIP,
a Delaware limited partnership, as Maker
By: 909 North Michigan Avenue Corporation,
its General Partner
By: /s/ Douglas C. Sutten
------------------------------------------
Its: Vice President
TEACHER RETIREMENT SYSTEM OF TEXAS,
a public pension fund and an agency
of the State of Texas, as Holder
By: /s/ Timothy W. Monter
------------------------------------------
Its: Loan Administration Manager
[Signature Page to Second Amendment of Promissory Note.)
34
<PAGE> 11
Chicago Westin Loan Payment Schedule
<TABLE>
<CAPTION>
Payment Beginning Principal Ending
Date Balance Rate Amort Interest Payment Paid Balance
- ------- --------- ---- ----- -------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
3/1/97 31,027,500 1.8750% N 581,766 581,766 -- 31,027,500
6/1/97 31,027,500 1.8750% N 581,766 581,766 -- 31,027,500
9/1/97 31,027,500 1.8750% N 581,766 581,766 -- 31,027,500
12/1/97 31,027,500 1.8750% N 581,766 581,766 -- 31,027,500
3/1/98 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
6/1/98 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
9/1/98 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
12/1/98 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
3/1/99 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
6/1/99 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
9/1/99 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
12/1/99 31,027,500 2.2125% N 686,483 686,483 -- 31,027,500
3/1/00 31,027,500 2.2125% Y 686,483 773,152 86,669 30,940,831
6/1/00 30,940,831 2.2125% Y 684,566 773,152 88,587 30,852,244
9/1/00 30,852,244 2.2125% Y 682,606 773,152 90,547 30,761,698
12/1/00 30,761,698 2.2125% Y 680,603 773,152 92,550 30,669,148
3/1/01 30,669,148 2.2125% Y 678,555 773,152 94,598 30,574,550
6/1/01 30,574,550 2.2125% Y 676,462 773,152 96,691 30,477,860
9/1/01 30,477,860 2.2125% Y 674,323 773,152 98,830 30,379,030
12/1/01 30,379,030 2.2125% Y 672,136 773,152 101,016 30,278,013
3/1/02 30,278,013 2.2125% Y 669,901 773,152 103,251 30,174,762
6/1/02 30,174,762 2.2125% Y 667,617 773,152 105,536 30,069,226
9/1/02 30,069,226 2.2125% Y 665,282 773,152 107,871 29,961,355
12/1/02 29,961,355 2.2125% Y 662,895 773,152 110,258 29,851,098
3/1/03 29,851,098 2.2125% Y 660,456 773,152 112,697 29,738,401
6/1/03 29,738,401 2.2125% Y 657,962 773,152 115,190 29,623,210
9/1/03 29,623,210 2.2125% Y 655,414 773,152 117,739 29,505,471
12/1/03 29,505,471 2.2125% Y 652,809 773,152 120,344 29,385,127
3/1/04 29,385,127 2.2125% Y 650,146 773,152 123,007 29,262,121
6/1/04 29,262,121 2.2125% Y 647,424 773,152 125,728 29,136,393
9/1/04 29,136,393 2.2125% Y 644,643 773,152 128,510 29,007,883
12/1/04 29,007,883 2.2125% Y 641,799 773,152 131,353 28,876,530
3/1/05 28,876,530 2.2125% Y 638,893 773,152 134,259 28,742,271
6/1/05 28,742,271 2.2125% Y 635,923 773,152 137,230 28,605,041
9/1/05 28,605,041 2.2125% Y 632,887 773,152 140,266 28,464,775
12/1/05 28,464,775 2.2125% Y 629,783 773,152 143,369 28,321,405
3/1/06 28,321,405 2.2125% Y 626,611 773,152 146,541 28,174,864
6/1/06 28,174,864 2.2125% Y 623,369 773,152 149,784 28,025,080
9/1/06 28,025,080 2.2125% Y 620,055 773,152 153,098 27,871,983
11/30/06 27,871,983 2.2125% Y 616,668 28,488,650 27,871,983 --
</TABLE>
Maturity Date 11/30/06
Accrued Interest + Principal Due
Amended Schedule "A"
<PAGE> 1
EXHIBIT 10.17
SECOND AMENDMENT TO MORTGAGE AND SECURITY AGREEMENT
This Second Amendment To Mortgage and Security Agreement (the
"Second Amendment") is being executed as of May 27, 1997, by and among 909 North
Michigan Avenue Corporation ("Hotel Corporation"), The Westin Chicago Limited
Partnership (the "Hotel Partnership," and together with Hotel Corporation,
individually and collectively, the "Mortgagor") and Teacher Retirement System of
Texas ("Mortgagee") in connection with that certain Mortgage and Security
Agreement dated as of August 21, 1986, by Hotel Corporation (and Hotel
Partnership, as its assignee) to Mortgagee as amended by that certain First
Amendment to Mortgage and Security Agreement dated as of June 2, 1994 (the
"First Amendment") (the "Existing Mortgage," and as amended by this Second
Amendment, the "Mortgage").
R E C I T A L S
A. Mortgagor and Mortgagee are parties to the Existing
Mortgage, encumbering certain real property (including improvements thereon)
located in the County of Cook, State of Illinois (a legal description of which
is attached hereto as Exhibit A) and recorded in the Recorder's Office in County
of Cook, Illinois as Document No. 86378850. Pursuant to the Existing Mortgage,
Mortgagor granted a first-priority lien on The Westin Chicago (the "Chicago
Hotel") and the other Premises (as defined therein) as security for a loan
("Loan") in the original principal amount of $32,825,000 made by Mortgagee to
Hotel Corporation, and for all other indebtedness (as defined in the Mortgage).
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings given such terms in the Mortgage (as amended hereby).
35
<PAGE> 2
B. Hotel Corporation, Hotel Partnership, Mortgagee, Westin
Hotels Limited Partnership ("WHLP"), Westin Hotel Company ("Westin") and certain
other parties have entered into that certain Second Restructuring Agreement of
even date herewith (the "Restructuring Agreement"), which, among other things,
requires the execution and delivery of this Second Amendment.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound hereby, agree as follows:
1. Amendments.
1.1. Amended Definitions.
a. Definition of Note. The first Recital in the Existing
Mortgage is hereby amended by deleting the phrase "("the "Note")" in line 5
thereof and substituting therefore the following:
"as amended by that certain First Amendment to Promissory Note
dated as of June 2, 1994 and by that certain Second Amendment
to Promissory Note dated as of May 27, 1997 (as so amended,
together with any and all extensions, substitutions,
amendments, modifications, replacements, rearrangements and/or
renewals thereof from time to time, the "Note")."
b. Definition of Indebtedness and Loan Documents. The
Existing Mortgage is hereby amended by deleting the entirety of that portion of
the second Recital paragraph (which second Recital paragraph was added by
Section 1.1(b) of the First Amendment) that immediately follows clause (iv)
thereof (which portion begins with "All of
36
<PAGE> 3
the covenants" and ends with "... modified from time to time") and replacing it
with the following:
"All of the covenants, obligations and liabilities described
in clauses (i) through (iv) of this Recital shall hereinafter
be collectively referred to as the "indebtedness." As used
herein, the term "Loan Documents" shall mean (i) the Note,
(ii) the Mortgage, as amended by that certain First Amendment
To Mortgage and Security Agreement dated as of June 2, 1994
(the "First Amendment to Mortgage") and by that certain Second
Amendment to Mortgage and Security Agreement dated as of May
27, 1997 (the "Second Amendment to Mortgage"), as further
amended, restated, supplemented or otherwise modified from
time to time, (iii) that certain Absolute Assignment of
Lessor's Interest in Leases dated as of August 21, 1986, by
909 North Michigan Avenue Corporation (and The Westin Chicago
Limited Partnership, as its assignee) in favor of Mortgagee,
as amended by that certain Amendment to Assignment of Rents
and Leases, Assignment of Management Agreement and
Subordination of Management Agreement dated as of June 2, 1994
(the "First Amendment to Other Loan Documents"), and by that
certain Second Amendment to Assignment of Rents and Leases,
Assignment of Management Agreement and Subordination of
Management Agreement dated as of May 27, 1997 (the "Second
Amendment to Other Loan Documents"), and as further amended,
restated, supplemented or otherwise modified from time to time
(the "Assignment of Leases"), (iv) that certain Assignment of
Management Agreement dated as of August 21, 1986, by 909 North
Michigan Avenue Corporation (and The Westin Chicago Limited
Partnership, as its assignee) as Owner, The Westin Chicago
Limited Partnership and Westin Hotels Limited Partnership
("WHLP") for the benefit of Mortgagee, as amended by the First
Amendment to Other Loan Documents and the Second Amendment to
Other Loan Documents, and as further amended, restated,
supplemented or otherwise modified from time to time (the
"Assignment of Management Agreement"), (v) the Subordination
of Management Agreement dated August 21, 1986, among the
Mortgagee, The Westin Chicago Limited Partnership, 909 North
Michigan Avenue Corporation, WHLP and Westin Hotel Company
("Westin"), as amended by the First Amendment to Other Loan
Documents and the Second Amendment to Other Loan Documents,
and as further amended, restated, supplemented or otherwise
modified from time to time, (vi) the Restructuring Agreement
dated as of June 2, 1994, among 909 North Michigan
37
<PAGE> 4
Avenue Corporation, The Westin Chicago Limited Partnership,
Mortgagee, Westin, WHLP and certain other parties (as amended,
restated, supplemented or otherwise modified from time to
time, the "First Restructuring Agreement") to the extent the
First Restructuring Agreement relates to the indebtedness
secured hereby, the Mortgagor or the Premises and the Second
Restructuring Agreement dated as of May 27, 1997, among 909
North Michigan Avenue Corporation, The Westin Chicago Limited
Partnership, Mortgagee, Westin, WHLP and certain other parties
(as amended, restated, supplemented or otherwise modified from
time to time, the "Second Restructuring Agreement") to the
extent the Second Restructuring Agreement relates to the
indebtedness secured hereby, the Mortgagor or the Premises,
(vii) the Tax Escrow Agreement (as hereinafter defined),
(viii) the Chicago FF&E Escrow Agreement (as hereinafter
defined), and (ix) all other security agreements, financing
statements, lease assignments, guarantees and other
agreements, instruments, documents and written indicia of
contractual obligations between the Mortgagee, on the one
hand, and any or all of The Westin Chicago Limited
Partnership, 909 North Michigan Avenue Corporation, WHLP, or
Westin or any other person or entity having any right or
interest in any security for the Loan, on the other hand,
executed in connection with any of the transactions
contemplated by any of the documents referenced in this
definition of Loan Documents, as each such agreement,
instrument or other document referenced in any of the
foregoing clauses may be amended, restated, supplemented or
otherwise modified from time to time."
c. Definition of St. Francis Note. Clause (m) of the
first paragraph of Paragraph 13 of the Existing Mortgage is hereby amended and
restated in its entirety to read as follows:
"(m) default shall be made under (x) that certain Deed of
Trust, Financing Statement, Security Agreement and Fixture
Filing (With Assignment of Rents and Leases) executed by St.
Francis Hotel Corporation, a Delaware corporation, and assumed
by The Westin St. Francis Limited Partnership, a Delaware
partnership, as assignee of St. Francis Hotel Corporation,
each as Trustor (St. Francis Hotel Corporation and The Westin
St. Francis Limited Partnership, collectively, "St. Francis")
on August 21, 1986, to Transnation Title Insurance Company
(formerly known as Transamerica Title Insurance Company), as
Trustee, for the benefit of Mortgagee, as
38
<PAGE> 5
Beneficiary, as amended by that certain First Amendment to
Deed of Trust, Financing Statement, Security Agreement, and
Fixture Filing (with Assignment of Rents and Leases) dated as
of June 2, 1994, and by that certain Second Amendment to Deed
of Trust, Financing Statement, Security Agreement, and Fixture
Filing (with Assignment of Rents and Leases) dated as of May
27, 1997, as the same may be further amended, restated,
supplemented or otherwise modified from time to time (the "St.
Francis Deed of Trust"), or (y) that certain Promissory Note
executed by St. Francis as Maker, on August 21, 1986, in favor
of Mortgagee, as Holder, as amended by that certain First
Amendment to Promissory Note dated June 2, 1994 and by that
certain Second Amendment to Promissory Note dated as of May
27, 1997, and as the same may be further amended, restated,
supplemented or otherwise modified from time to time (the "St.
Francis Note"), or (z) any other Loan Document (as defined in
the St. Francis Note); or"
1.2 Notices. The addresses for notice to Mortgagee in
Paragraph 21(b) of the Existing Mortgage are hereby amended and restated in
their entirety to read as follows:
"(b) If to Mortgagee:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Timothy W. Monter
Telecopy: (512) 370-0583
with a copy to:
Teacher Retirement System of Texas
1000 Red River Street
Austin, Texas 78701-2698
Attention: Legal Services Department
Telecopy: (512) 370-0529
LaSalle Advisors Limited
1601 Response Road, Suite 300
Sacramento, California 95815
Attention: Bruce D. Grant
Telecopy: (916) 920-0205
Latham & Watkins
5800 Sears Tower
39
<PAGE> 6
233 South Wacker Drive
Chicago, Illinois 60606
Attention: J. Douglas Bacon
Telecopy: (312) 993-9767"
1.3 Prepayment Premium in Event of Foreclosure. Paragraph 27
of the Existing Mortgage is hereby amended by adding the following paragraph as
the second-to-last paragraph thereof:
"Upon any default by Mortgagor and following the acceleration
of maturity as herein provided, a tender of payment by the
Mortgagor or by anyone on behalf of the Mortgagor of the
amount necessary to satisfy the entire indebtedness secured
hereby made at any time prior to foreclosure sale shall
constitute an evasion of the prepayment terms of the Note and
be deemed to be a voluntary prepayment thereunder and any such
payment shall, therefore, include the additional payment
required under the prepayment provisions contained in the
Note."
2. Representations and Warranties of Hotel Corporation and
Hotel Partnership. To induce Mortgagee to enter into this Second Amendment, each
Mortgagor hereby jointly and severally reaffirms, and incorporates by reference
herein, each of its representations and warranties set forth in the Second
Restructuring Agreement.
3. Conditions to Effectiveness. The amendments to the Existing
Mortgage set forth in Section 1 hereof shall become effective on the Effective
Date (as defined in the Second Restructuring Agreement).
4. Miscellaneous.
4.1 Reference to and Effect on the Mortgage. Upon the
Effective Date, each reference in the Existing Mortgage to "this Mortgage,"
"hereunder," "hereof," "herein," "hereby" or words of like import shall mean and
be a reference to the Existing Mortgage as
40
<PAGE> 7
amended hereby, and each reference to the Existing Mortgage in the Note, any
other Loan Document, any Restructuring Document (as defined in the Second
Restructuring Agreement), or any other document, instrument or agreement
executed and/or delivered in connection with this Second Amendment, the Existing
Mortgage, the Note, any other Loan Documents, or any Restructuring Documents
shall mean and be a reference to the Existing Mortgage as amended hereby.
4.2 No Waiver. The execution, delivery and effectiveness of
this Second Amendment shall not operate as a waiver of any right, power or
remedy of the Mortgagee under the Existing Mortgage, as amended by the First
Amendment and the Second Amendment, the Note, the Loan Documents, the
Restructuring Documents or any other document, instrument or agreement executed
in connection herewith or therewith, nor constitutes a waiver of any provision
contained therein, except as specifically set forth herein or contemplated
hereby.
4.3 Reaffirmation. The terms and conditions of this Second
Amendment and the Mortgagee's rights, powers and remedies pursuant hereto shall
apply to all of the indebtedness secured hereby. Except as specifically modified
herein, the Existing Mortgage remains in full force and effect, and Mortgagor
hereby ratifies and reaffirms the terms and provisions of the Mortgage and the
validity and enforceability thereof (as if The Westin Chicago Hotel Partnership
were a party thereto in the same capacity as 909 North Michigan Avenue
Corporation). This Second Amendment is an amendment of the Existing Mortgage and
does not constitute a novation of any of the indebtedness secured hereby.
4.4 Governing Law and Severability. This Second Amendment
shall be governed by and construed in accordance with the internal laws (as
opposed to the conflicts of
41
<PAGE> 8
law provisions) and decisions of the State of Illinois. Any provision of this
Second Amendment which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
4.5 Counterparts. This Second Amendment may be executed
(including, without limitation, by way of facsimile) in any number of
counterparts and by different parties hereto and separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Executed signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
4.6 Headings. Section headings in this Second Amendment are
included herein for convenience and reference only and shall not constitute a
part of this Second Amendment for any purpose.
This Document was prepared by:
Douglas Bacon
Latham & Watkins
5800 Sears Tower
Chicago, Illinois 60606
(312) 876-7700
42
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the date first above written.
909 NORTH MICHIGAN AVENUE CORPORATION,
a Delaware corporation, as Mortgagor
By: /s/ Douglas C. Sutten
------------------------------------------
Its: Vice President
THE WESTIN CHICAGO LIMITED PARTNERSHIP,
a Delaware limited partnership, as
Mortgagor
By: 909 North Michigan Avenue Corporation,
its General Partner
By: /s/ Douglas C. Sutten
------------------------------------------
Its: Vice President
TEACHER RETIREMENT SYSTEM OF TEXAS,
a public pension fund and an agency
of the State of Texas, as Mortgagee
By: /s/ Timothy W. Monter
------------------------------------------
Its: Loan Administration Manager
[Signature Page to Second Amendment to Mortgage and Security Agreement.]
43
<PAGE> 10
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 22nd day of May, 1997, before me personally appeared Douglas C.
Sutten, to me known to be the Vice President of 909 North Michigan Avenue
Corporation, the corporation that executed the within and foregoing instrument,
and acknowledged said instrument to be the free and voluntary act and deed of
said corporation, for the uses and purposes therein mentioned, and on oath
stated that he is authorized to execute the said instrument, and that the seal
affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the
day and year first above written.
/s/ George T. Cowan
---------------------------------------------
(Signature)
George T. Cowan
NOTARY PUBLIC in and for the
State of Washington, residing at Seattle.
My commission expires: 4/1/99
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 22nd day of May, 1997, before me personally appeared Douglas C.
Sutten, to me known to be the Vice President of 909 North Michigan Avenue
Corporation, the corporation that executed the within and foregoing instrument
in its capacity as the sole general partner of The Westin Chicago Limited
Partnership, and acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes therein mentioned, and
on oath stated that he is authorized to execute the said instrument, and that
the seal affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the
day and year first above written.
/s/ George T. Cowan
--------------------------------------------
(Signature)
George T. Cowan
NOTARY PUBLIC in and for the
State of Washington, residing at Seattle.
My commission expires: 4/1/99
44
<PAGE> 11
STATE OF TEXAS )
) ss.
COUNTY OF TRAVIS )
On this 23rd day of May, 1997, before me personally appeared Timothy W.
Monter, to me known to be the Loan Portfolio Manager of TEACHER RETIREMENT
SYSTEM OF TEXAS, a public pension fund and an agency of the State of Texas,
which executed the within and foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said public pension
fund, for the uses and purposes therein mentioned, and on oath stated that she
is authorized to execute the said instrument on behalf of said public pension
fund.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the
day and year first above written.
/s/ Janet S. Carpenter
---------------------------------------------
Notary Public
My Commission Expires: 10-2-99
Janet S. Carpenter
Notary Public
State of Texas
Comm. Exp. 10-02-99
45
<PAGE> 12
EXHIBIT A
PARCEL 1: LOTS 20, 21 AND 22 IN ALLMENDINGER'S LAKE SHORE DRIVE ADDITION TO
CHICAGO, BEING A SUBDIVISION OF PART OF BLOCK 13 IN CANAL TRUSTEES' SUBDIVISION
OF SOUTH FRACTIONAL 1/4 OF SECTION 3, TOWNSHIP 39 NORTH, RANGE 14, EAST OF THE
THIRD PRINCIPAL MERIDIAN.
- -ALSO-
PARCEL 2: THAT CERTAIN TRACT OF LAND (EXCEPT THE NORTH 1/2 THEREOF), DESCRIBED
AS FOLLOWS: LOTS 23 TO 31, BOTH INCLUSIVE, IN ALLMENDINGER'S LAKE SHORE DRIVE
ADDITION TO CHICAGO, A SUBDIVISION OF PART OF BLOCK 13 IN THE CANAL TRUSTEES'
SUBDIVISION OF THE SOUTH FRACTIONAL 1/4 OF SECTION 3, TOWNSHIP 39 NORTH, RANGE
14, EAST OF THE THIRD PRINCIPAL MERIDIAN.
- -ALSO-
PARCEL 3: THE EASEMENT OF LIGHT, AIR AND VIEW FOR THE BENEFIT OF PARCEL 2, OVER
AND UPON THE PREMISES DESCRIBED AS FOLLOWS: COMMENCING AT A HORIZONTAL PLANE
PARALLEL TO AND 63 FEET ABOVE CHICAGO CITY DATUM AND EXTENDING VERTICALLY
UPWARDS TO THE ZENITH, BEGINNING AT A POINT ON THE NORTH LINE OF PARCEL 2
AFORESAID, 62 FEET EAST OF THE WESTERLY LINE OF SAID PARCEL 2; THENCE NORTH
ALONG A LINE PARALLEL TO AND 62 FEET EAST OF THE WESTERLY LINE OF LOTS 23 TO 31
INCLUSIVE (AS A TRACT) IN ALMENDINGER'S LAKE SHORE DRIVE ADDITION TO CHICAGO
AFORESAID, A DISTANCE OF 30 FEET TO A POINT; THENCE EAST AND PARALLEL WITH THE
CENTER LINE OF LOTS 23 TO 31 INCLUSIVE (AS A TRACT), A DISTANCE OF 88 FEET TO A
POINT; THENCE SOUTH AND PARALLEL TO THE WESTERLY LINE OF SAID TRACT, A DISTANCE
OF 30 FEET TO THE CENTER LINE OF SAID TRACT; THENCE WEST ALONG THE CENTER LINE
OF SAID TRACT, A DISTANCE OF 88 FEET TO THE PLACE OF BEGINNING, AS CREATED BY
AGREEMENT BETWEEN THE PALMOLIVE-PEET COMPANY, A CORPORATION OF DELAWARE, AND
CHICAGO TITLE AND TRUST COMPANY, A CORPORATION OF ILLINOIS, AS TRUSTEE UNDER
TRUST AGREEMENT DATED JULY 25, 1927 AND KNOWN AS TRUST NUMBER 19104, DATED MARCH
31, 1928, AND RECORDED APRIL 30, 1928, AS DOCUMENT NUMBER 10 005 790 AND ALSO
RECORDED ON JUNE 21, 1932, AS DOCUMENT NUMBER 11 106 014 AND AS CONTINUED AND
RESERVED BY INSTRUMENT, DATED DECEMBER 26, 1958 AND RECORDED ON DECEMBER 26,
1958, AS DOCUMENT NUMBER 17 413 316, ALL IN THE RECORDER'S OFFICE OF COOK
COUNTY, ILLINOIS, WHICH EASEMENTS ARE DEPICTED ON THE SURVEY, DATED MAY 30, 1986
AND PREPARED BY CHICAGO GUARANTEE SURVEY COMPANY, HEREINAFTER REFERRED TO AS
"THE SURVEY".
- -ALSO-
PARCEL 4: AN EASEMENT FOR THE MAINTENANCE OF A REFRIGERATION OF CHILLED WATER
PLANT LOCATED IN THE SOUTHWEST CORNER OF THE SUB-BASEMENT OF THE PLAYBOY
BUILDING, AS CREATED BY AN AGREEMENT BETWEEN THE AMERICAN NATIONAL BANK OF
CHICAGO, AS TRUSTEE, UNDER TRUST AGREEMENT DATED OCTOBER 8, 1959, AND KNOWN AS
TRUST NUMBER
46
<PAGE> 13
14758, AND LESSEE OF THE PLAYBOY BUILDING, AND 909 NORTH MICHIGAN AVENUE
CORPORATION, RECORDED FEBRUARY 2, 1976, AS DOCUMENT NUMBER 23 378 328.
Commonly known address: 909 North Michigan Avenue, Chicago, Illinois 60611
PIN: 17 03 213 006
17 03 213 005
47
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
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0
0
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