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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5, 1998
HOST MARRIOTT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 001-05664 52-2995412
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION OF FILE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
10400 FERNWOOD ROAD, BETHESDA, MARYLAND 20817
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP)CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (301) 380-9000
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ITEM 5. OTHER EVENTS
------------
NEW CREDIT FACILITY
-------------------
The Company announced on August 6, 1998 that it expanded its borrowing
capacity by replacing its existing $500 million bank facility with a new $1.25
billion credit facility. The $1.25 billion credit facility is comprised of a
$350 million term loan and a $900 million revolver and will bear interest at a
floating rate. The credit facility is led by Bankers Trust Company with Wells
Fargo Bank, The Bank of Nova Scotia and Credit Lyonnais acting as co-agents.
Commitments have been received from approximately 20 additional institutions.
The term loan may be increased by up to $250 million. The credit line will
initially have a three-year term with two one-year extention options.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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7(c). EXHIBITS
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* 4.1 Amended and Restated Credit Agreement dated as of June 19, 1997 and
Amended and Restated as of August 5, 1998 among Host Marriott Corporation, Host
Marriott Hospitality, Inc., HMH Properties, Inc., Host Marriott, L.P., HMC
Capital Resources Corp., Various Banks, Wells Fargo Bank, National Association,
The Bank of Nova Scotia and Credit Lyonnais New York Branch, as Co-Arrangers,
and Bankers Trust Company, as Arranger and Administrative Agent.
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* Filed herewith
Host Marriott Corporation
/s/ Donald D. Olinger
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September 11, 1998 Donald D. Olinger
Senior Vice President-Corporate Controller
2
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Exhibit 4.1
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AMENDED AND RESTATED CREDIT AGREEMENT
among
HOST MARRIOTT CORPORATION,
HOST MARRIOTT HOSPITALITY, INC.,
HMH PROPERTIES, INC.,
HOST MARRIOTT, L.P.,
HMC CAPITAL RESOURCES CORP.,
VARIOUS BANKS,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
THE BANK OF NOVA SCOTIA
and
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Arrangers,
and
BANKERS TRUST COMPANY,
as Arranger and Administrative Agent
-----------------------------------
Dated as of June 19, 1997
and
Amended and Restated as of August 5, 1998
-----------------------------------
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TABLE OF CONTENTS
-----------------
SECTION 1. AMOUNT AND TERMS OF CREDIT .................................... 1
1.01 The Commitments .................................................. 1
1.02 Minimum Amount of Each Borrowing ................................. 3
1.03 Notice of Borrowing .............................................. 3
1.04 Disbursement of Funds ............................................ 3
1.05 Notes ............................................................ 4
1.06 Conversions ...................................................... 5
1.07 Pro Rata Borrowings .............................................. 6
1.08 Interest ......................................................... 6
1.09 Interest Periods ................................................. 7
1.10 Increased Costs, Illegality, etc ................................. 8
1.11 Compensation ..................................................... 10
1.12 Change of Lending Office ......................................... 10
1.13 Replacement of Banks ............................................. 11
1.14 Additional Term Loans ............................................ 11
1.15 Final Maturity Date Extensions ................................... 13
SECTION 2. FEES; REDUCTIONS OF COMMITMENT. ............................... 13
2.01 Fees ............................................................. 13
2.02 Voluntary Termination of Unutilized Commitments .................. 14
2.03 Mandatory Termination of Commitments ............................. 14
SECTION 3. PREPAYMENTS; PAYMENTS; TAXES .......................... 15
3.01 Voluntary Prepayments ............................................ 15
3.02 Mandatory Repayments ............................................. 16
3.03 Method and Place of Payment ...................................... 20
3.04 Net Payments; Taxes .............................................. 20
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SECTION 4. CONDITIONS PRECEDENT TO LOANS ................................. 22
4.01 Execution of Agreement; Notes .................................... 22
4.02 Fees, etc ........................................................ 22
4.03 Opinions of Counsel .............................................. 22
4.04 Organizational Documents; Proceedings; etc ....................... 23
4.05 Ground Leases; Franchise Agreements; Management
Agreements; Debt Agreements; etc ................................. 23
4.06 Pledge and Security Agreement .................................... 24
4.07 Subsidiaries Guaranty ............................................ 24
4.08 Adverse Change, etc .............................................. 25
4.09 Litigation ....................................................... 25
4.10 Financings; etc .................................................. 25
4.11 Existing HMH Notes Tender Offers/Consent Solicitations ........... 26
4.12 Original Credit Agreement ........................................ 26
4.13 CRHC Merger; etc. ................................................ 26
4.14 Solvency Certificate; Insurance Certificates ..................... 26
4.15 Financial Statements; Pro Forma Balance Sheets; Projections ...... 27
4.16 No Default; Representations and Warranties ....................... 27
SECTION 5. CONDITIONS PRECEDENT TO ALL LOANS ............................. 27
5.01 Effective Date ................................................... 27
5.02 No Default; Representations and Warranties ....................... 27
5.03 Notice of Borrowing .............................................. 27
SECTION 6. CONDITIONS PRECEDENT TO REIT CONVERSION ....................... 28
6.01 Subsidiaries Mergers ............................................. 28
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6.02 HMH Merger; etc .................................................. 28
6.03 Hospitality Merger; etc .......................................... 28
6.04 SLC Spinoff; etc. ................................................ 28
6.05 REIT Merger; REIT Qualification; etc ............................. 30
6.06 Acknowledgment and Joinder Agreement ............................. 30
6.07 Leases ........................................................... 30
6.08 Adverse Change, etc .............................................. 31
6.09 Litigation ....................................................... 31
6.10 No Default; Representations and Warranties ....................... 31
6.11 Officer's Certificate; Corporate Documents; Proceedings; etc ..... 32
6.12 Opinions of Counsel .............................................. 32
SECTION 7. REPRESENTATIONS AND WARRANTIES................................ 32
7.01 Status ........................................................... 33
7.02 Power and Authority .............................................. 33
7.03 No Violation ..................................................... 33
7.04 Governmental Approvals ........................................... 34
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc ........................ 34
7.06 Litigation ....................................................... 35
7.07 True and Complete Disclosure ..................................... 35
7.08 Use of Proceeds; Margin Regulations .............................. 36
7.09 Tax Returns and Payments ......................................... 36
7.10 Compliance with ERISA ............................................ 36
7.11 The Pledge and Security Agreement; Equity Pledges ................ 37
7.12 Properties ....................................................... 38
7.13 Representations and Warranties in Other Documents ................ 38
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7.14 Subsidiaries .................................................... 38
7.15 Compliance with Statutes, etc ................................... 38
7.16 Investment Company Act .......................................... 39
7.17 Public Utility Holding Company Act .............................. 39
7.18 Environmental Matters ........................................... 39
7.19 Labor Relations ................................................. 39
7.20 Intellectual Property ........................................... 40
7.21 Indebtedness .................................................... 40
7.22 Management Agreements, Franchise Agreements,
Operating Leases, Ground Leases ................................. 40
7.23 Initial Transaction ............................................. 41
7.24 REIT Transaction ................................................ 41
7.25 Status as REIT .................................................. 42
7.26 Facility Managers; Approved Lessees ............................. 42
7.27 Healthcare Matters .............................................. 42
7.28 Year 2000 ....................................................... 43
SECTION 8. AFFIRMATIVE COVENANTS ........................................ 43
8.01 Information Covenants ........................................... 43
8.02 Books, Records and Inspections; Annual Meetings ................. 46
8.03 Maintenance of Property and Insurance ........................... 47
8.04 Corporate Franchises ............................................ 51
8.05 Compliance with Statutes, etc. .................................. 51
8.06 Compliance with Environmental Laws .............................. 51
8.07 ERISA ........................................................... 52
8.08 End of Fiscal Years; Fiscal Quarters ............................ 53
8.09 Performance of Obligations ...................................... 54
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8.10 Payment of Taxes ................................................ 54
8.11 Certain Subsidiaries ............................................ 54
8.12 Management Agreements; Operating Leases ......................... 55
8.13 REIT Requirements ............................................... 55
8.14 Interest Rate Protection ........................................ 55
8.15 Acknowledgment and Joinder Agreement ............................ 55
8.16 Contributions ................................................... 55
8.17 Foreign Subsidiaries Security. .................................. 56
8.18 Additional Guarantors ........................................... 56
8.19 Capital Expenditures ............................................ 58
8.20 Additional Senior Living Care Assets. ........................... 58
8.21 Certain Inventory, Fixed Asset Supplies
and Working Capital Receivables.................................. 58
SECTION 9. NEGATIVE COVENANTS ............................................ 58
9.01 Liens ........................................................... 58
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc .......... 61
9.03 Dividends ....................................................... 65
9.04 Indebtedness .................................................... 67
9.05 Advances, Investments and Loans ................................. 69
9.06 Transactions with Affiliates .................................... 71
9.07 Capital Expenditures ............................................ 72
9.08 Minimum Consolidated Interest Coverage Ratio;
Minimum Unsecured Interest Coverage Ratio ....................... 73
9.09 Minimum Fixed Charge Coverage Ratio ............................. 73
9.10 Tangible Net Worth .............................................. 73
9.11 Maximum Total Leverage Ratio .................................... 73
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9.12 Maximum Secured Debt Leverage Ratio;
Unencumbered EBITDA Ratio ....................................... 74
9.13 Limitation on Payments of Certain Indebtedness;
Modifications of Certain Indebtedness; Modifications
of Certificate of Incorporation, By-Laws
and Certain Agreements; etc ..................................... 76
9.14 Limitation on Certain Restrictions on Subsidiaries .............. 77
9.15 Limitation on Issuance of Capital Stock ......................... 77
9.16 Business ........................................................ 78
9.17 Limitation on Creation of Subsidiaries .......................... 78
SECTION 10. EVENTS OF DEFAULT ............................................ 79
10.01 Payments ........................................................ 79
10.02 Representations, etc. ........................................... 79
10.03 Covenants ....................................................... 79
10.04 Default Under Other Agreements .................................. 80
10.05 Bankruptcy, etc. ................................................ 80
10.06 ERISA ........................................................... 80
10.07 Pledge and Security Agreement ................................... 81
10.08 Guaranty ........................................................ 81
10.09 Judgments ....................................................... 81
10.10 Management Agreements ........................................... 82
10.11 Operating Leases ................................................ 82
10.12 Change of Control ............................................... 82
10.13 Trademark Permission ............................................ 82
10.14 REIT Status ..................................................... 82
10.15 General Partner Status .......................................... 82
10.16 Certain FF&E .................................................... 83
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS ............................. 83
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11.01 Defined Terms ................................................... 83
SECTION 12. THE ADMINISTRATIVE AGENT; CO-ARRANGERS ....................... 117
12.01 Appointment ..................................................... 117
12.02 Nature of Duties................................................. 117
12.03 Lack of Reliance on the Administrative Agent .................... 118
12.04 Certain Rights of the Administrative Agent ...................... 118
12.05 Reliance......................................................... 118
12.06 Indemnification ................................................. 119
12.07 The Administrative Agent in its Individual Capacity ............. 119
12.08 Holders ......................................................... 119
12.09 Resignation by the Administrative Agent
and the Co-Arrangers; Removal of the
Administrative Agent ............................................ 119
SECTION 13. MISCELLANEOUS ............................................... 120
13.01 Payment of Expenses, etc ........................................ 120
13.02 Right of Setoff ................................................. 121
13.03 Notices ......................................................... 121
13.04 Benefit of Agreement ............................................ 122
13.05 No Waiver; Remedies Cumulative .................................. 124
13.06 Payments Pro Rata ............................................... 124
13.07 Calculations; Computations ...................................... 125
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL ..................................... 125
13.09 Counterparts .................................................... 126
13.10 Effectiveness ................................................... 126
13.11 Headings Descriptive ............................................ 127
13.12 Amendment or Waiver; etc. ....................................... 127
13.13 Survival ........................................................ 128
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13.14 Domicile of Loans ............................................... 128
13.15 Confidentiality ................................................. 128
13.16 Register ........................................................ 129
13.17 Commercial Loan Transactions .................................... 130
13.18 Limitations on Recourse ......................................... 130
SECTION 14. PARENTS GUARANTY ............................................. 130
14.01 The Guaranty .................................................... 130
14.02 Bankruptcy ...................................................... 131
14.03 Nature of Liability ............................................. 131
14.04 Independent Obligation .......................................... 131
14.05 Authorization ................................................... 131
14.06 Reliance ........................................................ 133
14.07 Subordination ................................................... 133
14.08 Waiver .......................................................... 133
14.09 Nature of Liability ............................................. 134
14.10 Interest Rate Protection Agreements
and Other Hedging Agreements .................................... 134
14.11 Termination. .................................................... 134
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 1997 and
amended and restated as of August 5, 1998, among HOST MARRIOTT CORPORATION, a
Delaware corporation ("Host Marriott"), HOST MARRIOT HOSPITALITY, INC., a
Delaware corporation ("Hospitality"), HMH PROPERTIES, INC. a Delaware
corporation ("HMH"), HOST MARRIOTT, L.P., a Delaware limited partnership (the
"Operating Partnership"), HMC CAPITAL RESOURCES CORP., a Delaware corporation
("CRC"), the Banks party hereto from time to time, WELLS FARGO BANK, NATIONAL
ASSOCIATION, THE BANK OF NOVA SCOTIA and CREDIT LYONNAIS NEW YORK BRANCH, as Co-
Arrangers, and BANKERS TRUST COMPANY, as Arranger and Administrative Agent (all
capitalized terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H:
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WHEREAS, CRHC, HMC Capital, CRC, the lenders party thereto on (and
immediately before giving effect to) the Effective Date (the "Original Banks"),
Credit Lyonnais New York Branch, The Bank of Nova Scotia and Wells Fargo Bank,
National Association, as Co-Agents, The Bank of Nova Scotia, as Documentation
Agent, Wells Fargo Bank, National Association, as Syndication Agent, and Bankers
Trust Company, as Arranger and Administrative Agent, are parties to a Credit
Agreement, dated as of June 19, 1997 (as the same has been amended, modified or
supplemented to, but not including, the Effective Date, the "Original Credit
Agreement");
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement in its entirety in the form of this Agreement; and
WHEREAS, in connection with the amendment and restatement of the
Original Credit Agreement in the form of this Agreement, the parties hereto
acknowledge and agree that, from and after the Effective Date, HMH shall be
substituted for CRC as the initial Borrower hereunder;
NOW, THEREFORE, the parties hereto agree that, from and after the
Effective Date, the Original Credit Agreement shall be and hereby is amended and
restated in its entirety as follows:
SECTION 1. Amount and Terms of Credit.
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1.01 The Commitments. (a) (A) Subject to and upon the terms and
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conditions set forth herein, each Bank with an Initial Term Loan Commitment
severally agrees to make, on the Effective Date, a term loan or term loans (each
such term loan, an "Initial Term Loan" and, collectively, the "Initial Term
Loans") to the Borrower, which Initial Term Loans (i) shall, at the option of
the Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise specifically
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provided in Section 1.10(b), all Initial Term Loans comprising the same
Borrowing shall at all times be of the same Type, and (ii) shall not exceed for
any such Bank, in initial principal amount, that amount which equals the Initial
Term Loan Commitment of such Bank on such date (before giving effect to the
termination thereof on such date pursuant to Section 2.03(b)).
(B) Subject to and upon the terms and conditions set forth herein,
each Bank with an Additional Term Loan Commitment severally agrees to make, on
each Additional Term Loan Borrowing Date, a term loan or term loans (each such
term loan, an "Additional Term Loan" and, collectively, the
<PAGE>
"Additional Term Loans") to the Borrower, which Additional Term Loans (i) shall
be made as provided in Section 1.14 and (ii) shall be made by each such Bank in
that aggregate principal amount which equals the Additional Term Loan Commitment
of such Bank on each such date (before giving effect to the termination thereof
on each such date pursuant to Section 2.03(c)). Once repaid, Term Loans incurred
hereunder (including any Term Loans made pursuant to Section 1.01(c)) may not be
reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees, at any time and
from time to time on and after the Effective Date and prior to the Revolver
Conversion Date, to make a revolving loan or revolving loans (each, a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrower, which Revolving
Loans (i) shall, at the option of the Borrower, be incurred and maintained as,
and/or converted into, Base Rate Loans or Eurodollar Loans, provided that,
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except as otherwise specifically provided in Section 1.10(b), all Revolving
Loans comprising the same Borrowing shall at all times be of the same Type, (ii)
may be repaid and reborrowed at any time in accordance with the provisions
hereof, (iii) shall not exceed for any such Bank at any time outstanding that
aggregate principal amount which equals the Revolving Loan Commitment of such
Bank at such time and (iv) shall not exceed for all such Banks at any time
outstanding that aggregate principal amount which equals the Total Revolving
Loan Commitment at such time.
(c) Subject to and upon the terms and conditions set forth herein, the
Borrower and each Bank with a Revolving Loan Commitment agree that, at 9:00 A.M.
(New York time) on the Revolver Conversion Date and so long as the Final
Maturity Date has been extended pursuant to Section 1.15, the aggregate
principal amount of Revolving Loans owing to such Bank and outstanding at such
time shall (unless such Revolving Loans have been declared (or have become) due
and payable pursuant to this Agreement), without any notice or action by any
party hereto, automatically convert to and thereafter constitute Term Loans
owing to such Bank hereunder. The Term Loans of any such Bank made pursuant to
this Section 1.01(c) shall not exceed in initial principal amount for any such
Bank that amount which equals the aggregate principal amount of Revolving Loans
owed to such Bank and outstanding immediately prior to such conversion. In
connection with the incurrence of Term Loans pursuant to this Section 1.01(c),
the Banks hereby agree that, notwithstanding anything to the contrary contained
in this Agreement, the Borrower and the Administrative Agent shall take all such
actions as may be necessary to ensure that all Banks with outstanding Term Loans
(including Term Loans made pursuant to this Section 1.01(c)) participate in each
Borrowing of outstanding Term Loans on a pro rata basis (including by having the
--- ----
Term Loans incurred pursuant to this Section 1.01(c) spread out over the then
outstanding Borrowings of Term Loans on a pro rata basis even though as a result
--- ----
thereof the new Term Loans incurred pursuant to this Section 1.01(c) may
effectively have a shorter Interest Period than the then existing Term Loans),
and it is hereby agreed that to the extent the Term Loans that are incurred
pursuant to this Section 1.01(c) are spread out over the then outstanding
Borrowings of Term Loans, the Banks that have made such Term Loans pursuant to
this Section 1.01(c) shall be entitled to receive an effective interest rate on
such Term Loans equal to the Eurodollar Rate as in effect two Business Days
prior to the incurrence of such Term Loans plus the then Applicable Margin until
the end of the then respective current Interest Periods.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Loans under a respective Tranche shall not be less
than the Minimum Borrowing Amount applicable to such Tranche. More than one
Borrowing
<PAGE>
may occur on the same date, but at no time shall there be outstanding
more than ten Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur a Borrowing of Loans hereunder (other than Term Loans incurred pursuant to
Section 1.01(c)), the Borrower shall give the Administrative Agent at the Notice
Office at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Base Rate Loan to be made hereunder and
at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each Eurodollar Loan to be made hereunder,
provided that any such notice shall be deemed to have been given on a certain
- --------
day only if given before 11:00 A.M. (New York time) on such day. Each such
written notice or written confirmation of telephonic notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by the Borrower in the form of Exhibit A,
appropriately completed to specify (i) the aggregate principal amount of the
Loans to be incurred pursuant to such Borrowing, (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the specific uses to be made of the
proceeds of the Loans, (iv) whether the Loans being made pursuant to such
Borrowing shall constitute Initial Term Loans, Additional Term Loans or
Revolving Loans and (v) whether the Loans being incurred pursuant to such
Borrowing are to be initially maintained as Base Rate Loans or, to the extent
permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank which is required to make Loans specified in the
respective Notice of Borrowing facsimile or other written notice (i) of such
proposed Borrowing, (ii) of such Bank's proportionate share thereof and (iii) of
the other matters required by the immediately preceding sentence to be specified
in the Notice of Borrowing. Notwithstanding anything to the contrary contained
in this Agreement, unless the Administrative Agent otherwise agrees, no more
than four Notices of Borrowing may be given in any 30 consecutive day period.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing of Loans, the
Administrative Agent may act without liability upon the basis of telephonic
notice of such Borrowing believed by the Administrative Agent in good faith to
be from an Authorized Officer of the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Administrative Agent's record of the terms of such telephonic notice
of such Borrowing.
1.04 Disbursement of Funds. No later than 1:00 P.M. (New York time)
---------------------
on the date specified in each Notice of Borrowing, each Bank with a Commitment
for the respective Tranche of Loans and which has received the notice referred
to in the next to last sentence of Section 1.03(a) will disburse its pro rata
--- ----
portion of each Borrowing requested to be made on such date. All such amounts
shall be disbursed in Dollars and in immediately available funds at the Payment
Office, and the Administrative Agent will promptly disburse to the Borrower at
the Payment Office, in Dollars and in immediately available funds, the aggregate
of the amounts so made available by the Banks. Unless the Administrative Agent
shall have been notified by any Bank prior to the time of Borrowing that such
Bank does not intend to disburse to the Administrative Agent such Bank's portion
of any Borrowing to be made on such date, the Administrative Agent may assume
that such Bank has disbursed such amount to the Administrative Agent on such
date of Borrowing and the Administrative Agent may, in reliance upon such
assumption, disburse to the Borrower a corresponding amount. If such
corresponding amount is not in fact disbursed to the Administrative Agent by
such Bank, the Administrative Agent
<PAGE>
shall be entitled to recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and, to the extent such corresponding amount has previously
been disbursed to the Borrower, the Borrower shall, within one Business Day
after such notice, pay such corresponding amount to the Administrative Agent.
The Administrative Agent shall also be entitled to recover on demand from such
Bank or the Borrower, as the case may be, interest on such corresponding amount
in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower until the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (i) if recovered from such Bank, the overnight Federal Funds Rate
for the first three days and the interest rate applicable to Loans of the
respective Tranche maintained as Base Rate Loans for each day thereafter, and
(ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) Subject to the provisions of clause (e) of this
-----
Section 1.05, the Borrower's obligation to pay the principal of, and interest
on, the Loans made by each Bank to the Borrower shall be evidenced (i) if Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1 with blanks appropriately completed in
conformity herewith (each, a "Term Note" and, collectively, the "Term Notes")
and (ii) if Revolving Loans, by a promissory note duly executed and delivered by
the Borrower substantially in the form of Exhibit B-2, with blanks appropriately
completed in conformity herewith (each, a "Revolving Note" and, collectively,
the "Revolving Notes").
(b) The Term Note issued to each Bank with an Initial Term Loan
Commitment, an Additional Term Loan Commitment or with outstanding Term Loans
shall (i) be executed by the Borrower, (ii) be payable to the order of such Bank
or its registered assigns and be dated the Effective Date (or, in the case of
Term Notes issued after the Effective Date, be dated the date of the issuance
thereof), (iii) be in a stated principal amount equal to the Initial Term Loan
Commitment of such Bank on the Effective Date (or, in the case of Term Notes
issued after the Effective Date, be in a stated principal amount equal to the
outstanding principal amount of the Term Loans of such Bank on the date of the
issuance thereof (including as a result of any Term Loans made pursuant to
Sections 1.01 (a)(B) and 1.01(c))) and be payable in the principal amount of the
Term Loans evidenced thereby, (iv) mature on the Final Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to voluntary prepayment as provided in Section 3.01, and
mandatory repayment as provided in Section 3.02, and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) The Revolving Note issued by the Borrower to each Bank with a
Revolving Loan Commitment or outstanding Revolving Loans shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Effective Date (or, if issued after the Effective Date,
be dated the date of the issuance thereof), (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Bank (or, if issued after
the termination of such Revolving Loan Commitment, be in a stated principal
amount equal to the outstanding Revolving Loans, if any, of such Bank at such
time) and
<PAGE>
be payable in the principal amount of the outstanding Revolving Loans evidenced
thereby, (iv) mature on the Final Maturity Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 3.01, and mandatory repayment as
provided in Section 3.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes properly endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation (or any error in such notation) shall not affect the Borrower's
obligations to the holder from time to time of each Note in respect of such
Loans.
(e) Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, Term Notes and Revolving Notes shall only be
delivered to Banks with Loans or Commitments of the respective Tranches which at
any time specifically request the delivery of such Notes. No failure of any
Bank to request or obtain a Note evidencing its Loans of any Tranche shall
affect or in any manner impair the obligations of the Borrower to pay the Loans
(and all related Obligations) which would otherwise be evidenced thereby in
accordance with the requirements of this Agreement, and shall not in any way
affect the security or guaranties therefor provided pursuant to the various
Credit Documents. Any Bank which does not have a Note evidencing its
outstanding Loans shall in no event be required to make the notations otherwise
described in preceding clause (d). At any time when any Bank requests the
delivery of a Note to evidence its Loans of any Tranche, the Borrower shall
promptly execute and deliver to the respective Bank the requested Note or Notes
in the appropriate amount or amounts to evidence such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on
-----------
any Business Day occurring after the Effective Date, all or a portion equal to
at least the applicable Minimum Borrowing Amount of the outstanding principal
amount of Loans made pursuant to one or more Borrowings of one or more Types of
Loans under a single Tranche into a Borrowing or Borrowings of another Type of
Loan under such Tranche, provided that, (i) except as otherwise provided in
--------
Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable to the Loans being converted and
no partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
unless the Required Banks otherwise agree, Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion, and (iii) no conversion pursuant to this Section 1.06
shall result in a greater number of Borrowings of Eurodollar Loans than is
permitted under Section 1.02. Each such conversion shall be effected by the
Borrower by giving the Administrative Agent at the Notice Office prior to 11:00
A.M. (New York time) at least three Business Days' prior written notice (or one
Business Day's prior written notice in the case of a conversion of Eurodollar
Loans into Base Rate Loans) (each a "Notice of Conversion") specifying the Loans
to be so converted, the Borrowing(s) pursuant to which such Loans were made and,
if to be converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt notice
of any such proposed conversion affecting any of its Loans.
<PAGE>
1.07 Pro Rata Borrowings. Except as otherwise provided in Section
-------------------
1.01(c), all Borrowings of Term Loans shall be incurred from the Banks pro rata
--- ----
on the basis of their Initial Term Loan Commitments or Additional Term Loan
Commitments, as the case may be. All Borrowings of Revolving Loans shall be
incurred from the Banks pro rata on the basis of their Revolving Loan
--- ----
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank of its obligation to make Loans hereunder and that each Bank
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect
--------
of the unpaid principal amount of each Base Rate Loan from the date of Borrowing
thereof until the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate Loan
to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum which shall
be equal to the sum of the Applicable Margin plus the Base Rate each as in
effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of Borrowing thereof
until the earlier of (i) the maturity (whether by acceleration or otherwise) of
such Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base
Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per
annum which shall, during each Interest Period applicable thereto, be equal to
the sum of the Applicable Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate then borne
by such Loans (without giving effect to any increase in the rate borne by such
Loans as a result of the operation of this clause (c)), in each case with such
interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable in
respect of each Loan, (i) monthly in arrears on the last Business Day of each
calendar month and (ii) on any repayment or prepayment thereof (on the amount
repaid or prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand, provided, that in the case of Base Rate Loans,
--------
interest shall not be payable pursuant to the preceding clause (ii) at the time
of any repayment or prepayment thereof unless the respective repayment or
prepayment is made in conjunction with the repayment or prepayment in full of
all Loans of the respective Tranche.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the respective Eurodollar Rate for the respective Interest
Period or Interest Periods to be applicable to Eurodollar Loans and shall
promptly notify the Borrower and the Banks thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.
1.09 Interest Periods. At the time the Borrower gives any Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period
<PAGE>
(each an "Interest Period") applicable to such Eurodollar Loan, which Interest
Period shall, at the option of the Borrower, be a one, two, three or six-month
period, provided that:
--------
(i) except as otherwise expressly permitted in Section 1.01(c) and in
Section 1.14, all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period for
-------- -------
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) unless the Required Banks otherwise agree, no Interest Period may
be selected at any time when a Default or an Event of Default is then in
existence;
(vi) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be selected which extends beyond the Final Maturity Date; and
(vii) no Interest Period in respect of any Borrowing of any Term
Loans shall be selected which extends beyond any date upon which a
mandatory repayment of such Term Loans will be required to be made under
Section 3.02(b), if the aggregate principal amount of such Term Loans which
have Interest Periods which will expire after such date will be in excess
of the aggregate principal amount of such Term Loans then outstanding less
the aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
---------------------------------
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
<PAGE>
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payment to any Bank of the principal of or interest on such
Eurodollar Loan or any other amounts payable hereunder (except for changes
in the rate of tax on, or determined by reference to, the net income or net
profits of such Bank, or any franchise tax based on the net income or net
profits of a Bank, in either case pursuant to the laws of the jurisdiction
in which such Bank is organized or in which such Bank's principal office or
applicable lending office is located or any subdivision thereof or
therein), or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement affecting such Bank or the
interbank Eurodollar market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing, Notice of Conversion or notice given
under Section 1.09 delivered by the Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrower by such Bank in good faith shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto) and (z) in the case of clause (iii) above, the Borrower shall take one
of the actions specified in Section 1.10(b) as promptly as possible and, in any
event, within the time period required by law. Each of the Administrative Agent
and each Bank agrees that if it gives notice to the Borrower of any of the
events described in clause (i) or (iii) above, it shall promptly notify the
<PAGE>
Borrower and, in the case of any such Bank, the Administrative Agent, if such
event ceases to exist. If any such event described in clause (iii) above ceases
to exist as to a Bank, the obligations of such Bank to make Eurodollar Loans and
to convert Base Rate Loans into Eurodollar Loans on the terms and conditions
contained herein shall be reinstated. In addition, if the Administrative Agent
gives notice to the Borrower that the events described in clause (i) above cease
to exist, then the obligations of the Banks to make Eurodollar Loans and to
convert Base Rate Loans into Eurodollar Loans on the terms and conditions
contained herein (but subject to clause (iii) above) also shall be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) the Borrower shall) either (x) if the affected Eurodollar
Loan is then being made initially or pursuant to a conversion, cancel the
respective Borrowing by giving the Administrative Agent telephonic notice
(confirmed in writing) on the same date that the Borrower was notified by the
affected Bank or the Administrative Agent pursuant to Section 1.10(a)(ii) or
(iii) or (y) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days' written notice to the Administrative Agent, require the
affected Bank to convert such Eurodollar Loan into a Base Rate Loan, provided
--------
that, if more than one Bank is affected at any time, then all affected Banks
must be treated the same pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that, after the date of this
Agreement, the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law and including, without limitation, those
announced or published prior to the Effective Date) concerning capital adequacy,
or any change in interpretation or administration thereof by any governmental
authority, central bank or comparable agency, will have the effect of increasing
the amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank based on the existence of such Bank's
Commitments hereunder or its obligations hereunder, then the Borrower shall pay
to such Bank, upon its written demand therefor, such additional amounts as shall
be required to compensate such Bank or such other corporation for the increased
cost to such Bank or such other corporation or the reduction in the rate of
return to such Bank or such other corporation as a result of such increase of
capital. In determining such additional amounts, each Bank will act reasonably
and in good faith and will use averaging and attribution methods which are
reasonable, provided that such Bank's reasonable good faith determination of
--------
compensation owing under this Section 1.10(c) shall, absent manifest error, be
final and conclusive and binding on all the parties hereto. Each Bank, upon
determining that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which notice
shall show the basis for calculation of such additional amounts. In addition,
each such Bank, upon determining that the circumstances giving rise to the
payment of additional amounts pursuant to this Section 1.10(c) cease to exist,
will give prompt written notice thereof to the Borrower.
1.11 Compensation. The Borrower shall compensate each Bank, upon its
------------
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any
<PAGE>
reason (other than a default by such Bank or the Administrative Agent) a
Borrowing or continuation of, or conversion from or into, Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing, in a Notice of
Conversion or in a notice delivered under Section 1.09 (whether or not withdrawn
by the Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any
repayment (including any repayment made pursuant to Section 3.01 or 3.02 or as a
result of an acceleration of the Loans pursuant to Section 10) or conversion of
any Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment of any Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Borrower;
or (iv) as a consequence of (x) any other default by the Borrower to repay the
Loans when required by the terms of this Agreement or any Note held by such Bank
or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c) or Section 3.04 with respect to such Bank, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Loans
affected by such event, provided that such designation is made on such terms
--------
that such Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Bank provided in Sections 1.10 and 3.04.
1.13 Replacement of Banks. (a) (x) If any Bank (i) becomes a
--------------------
Defaulting Bank or (ii) refuses to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks as (and to the extent) provided in Section
13.12(b), or (y) upon the occurrence of any event giving rise to the operation
of Section 1.10(a)(ii) or (iii), Section 1.10(c) or Section 3.04 with respect to
any Bank which results in such Bank charging to the Borrower increased costs in
excess of those being generally charged by the other Banks, the Borrower shall
have the right, in accordance with the requirements of Section 13.04(b), if no
Default or Event of Default will exist immediately after giving effect to such
replacement, to replace such Bank (the "Replaced Bank") with one or more other
Eligible Transferees reasonably acceptable to the Administrative Agent, none of
whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank"), provided that (i) at the time of any
--------
replacement pursuant to this Section 1.13, the Replaced Bank and the Replacement
Bank shall enter into one or more Assignment and Assumption Agreements pursuant
to Section 13.04(b) (and with all fees payable pursuant to said Section 13.04(b)
to be paid by the Replacement Bank) pursuant to which the Replacement Bank shall
acquire all of the Commitments and all of the outstanding Loans of the Replaced
Bank and, in connection therewith, shall pay to the Replaced Bank in respect
thereof an amount equal to the sum of (1) an amount equal to the principal of,
and all accrued interest on, all outstanding Loans of the Replaced Bank at such
time and (2) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 2.01 and (ii) all obligations of the
Borrower owing to the Replaced Bank (other than those specifically described in
clause (i) above of this proviso in respect of which the assignment purchase
price has been, or is concurrently being, paid) shall be paid in full to such
Replaced Bank concurrently with such replacement.
(b) Upon the execution of the respective Assignment and Assumption
Agreements, the recordation thereof in the Register by the Administrative Agent,
the payment of
<PAGE>
amounts referred to in clauses (i) and (ii) of the proviso of Section 1.13(a)
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by the Borrower, the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions under this
Agreement for periods when such Bank was a "Bank" under this Agreement
(including, without limitation, Sections 1.10, 1.11, 3.04, 13.01 and 13.06),
which shall survive as to such Replaced Bank. Upon the Replaced Bank ceasing to
be a Bank hereunder, such Replaced Bank agrees to promptly return to the
Borrower any Note or Notes theretofore delivered to such Replaced Bank pursuant
to this Agreement marked "canceled", or if such Replaced Bank has lost or cannot
find any such Note or Notes, such Replaced Bank will execute and deliver to the
Borrower a customary lost note and indemnity agreement in form and substance
reasonably satisfactory to the Borrower.
1.14 Additional Term Loans. So long as no Default or Event of
---------------------
Default then exists or would result therefrom, the Borrower shall have the right
at any time on or after January 1, 1999 and on or prior to August 5, 2000 to
request on two occasions that one or more Banks provide Additional Term Loan
Commitments to make Additional Term Loans, it being understood and agreed,
however, that (i) all Additional Term Loans made pursuant to Section 1.01(a)(B)
and this Section 1.14 pursuant to each such request shall be made on a single
date within 30 days after any such request is made by the Borrower as provided
above, provided that all such Additional Term Loans shall be required to be
incurred on or prior to August 5, 2000, (ii) no Bank shall be obligated to
provide an Additional Term Loan Commitment or make any Additional Term Loans as
a result of any such request by the Borrower, (iii) any Bank may provide an
Additional Term Loan Commitment (and make an Additional Term Loan pursuant
thereto) without the consent of any other Bank but with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld), (iv)
the aggregate principal amount of all Additional Term Loans permitted to be made
pursuant to Section 1.01(a)(B) and this Section 1.14 shall be $250,000,000, and
to the extent that such amount is less than $250,000,000, such amount shall be
at least $10,000,000 and in integral multiples of $1,000,000 in excess thereof,
(v) if, after the Borrower has requested the then existing Banks to provide
Additional Term Loan Commitments pursuant to this Section 1.14, the Borrower has
not received Additional Term Loan Commitments in an aggregate amount equal to
that amount of Additional Term Loans which the Borrower desires to incur
pursuant to such request (as set forth in the notice provided by the Borrower as
provided below), then the Borrower may, with the consent of the Administrative
Agent (which consent shall not be unreasonably withheld), request Additional
Term Loan Commitments from Persons which would qualify as Eligible Transferees
hereunder in an aggregate amount equal to such deficiency, and (vi) all actions
taken by the Borrower pursuant to this Section 1.14 shall be done in
coordination with the Administrative Agent. Not less than 30 days, but no more
than 60 days, prior to each proposed Additional Term Loan Borrowing Date, the
Borrower shall deliver to the Administrative Agent a notice indicating that the
Borrower desires to incur Additional Term Loans pursuant to Section 1.01(a)(B)
and this Section 1.14, which notice shall specify the proposed Additional Term
Loan Borrowing Date and the aggregate principal amount of Additional Term Loans
that the Borrower desires to incur on such date. The Administrative Agent shall
promptly transmit a copy of such notice to the Banks, together with such other
information as the Administrative Agent considers necessary in connection
therewith (including any fees that the Borrower has agreed to pay to those Banks
which will provide the Additional Term Loans to be made pursuant to such
request). Together with each notice delivered by the Borrower to the
Administrative Agent pursuant to this Section 1.14, the Borrower also shall
deliver evidence satisfactory to the
<PAGE>
Administrative Agent, including an officer's certificate of the Borrower
(accompanied by any required financial calculations in reasonable detail) and an
opinion of counsel for the Borrower, that the incurrence of such Additional Term
Loans does not violate the terms of the Senior Note Documents, which opinion of
counsel also shall cover such other customary matters as the Administrative
Agent may reasonably request. In connection with each incurrence of Additional
Term Loans pursuant to Section 1.01(a)(B) and this Section 1.14, the Banks
hereby agree that, notwithstanding anything to the contrary contained in this
Agreement, the Borrower and the Administrative Agent shall take all such actions
as may be necessary to ensure that all Banks with outstanding Term Loans
(including the Additional Term Loans to be made on the respective Additional
Term Loan Borrowing Date) participate in each Borrowing of outstanding Term
Loans on a pro rata basis (including by having such Additional Term Loans spread
--- ----
out over the then outstanding Borrowings of Term Loans on a pro rata basis even
--- ----
though as a result thereof such Additional Term Loans may effectively have a
shorter Interest Period than the then existing Term Loans), and it is hereby
agreed that to the extent such Additional Term Loans are spread out over the
then outstanding Borrowings of Term Loans, the Banks that have made such
Additional Term Loans shall be entitled to receive an effective interest rate on
such Additional Term Loans equal to the Eurodollar Rate as in effect two
Business Days prior to the incurrence of such Additional Term Loans plus the
then Applicable Margin until the end of the then respective current Interest
Periods. To the extent that any Person that is not already a then existing Bank
is going to make an Additional Term Loan pursuant to Section 1.01(a)(B) and this
Section 1.14, such Person shall enter into such documentation as may reasonably
be requested by the Administrative Agent to join such Person as a "Bank" party
to this Agreement.
1.15 Final Maturity Date Extensions. Not less than 45 days and not
------------------------------
more than 90 days prior to the Final Maturity Date then in effect, the Borrower
may deliver a written notice to the Administrative Agent, who shall promptly
forward a copy of each such notice to each of the Banks, that the Borrower has
elected to extend the Final Maturity Date then in effect to the first
anniversary of such Final Maturity Date, and the change to the Final Maturity
Date then in effect shall be effective on such Final Maturity Date; provided,
--------
however, that notwithstanding anything to the contrary contained in this Section
- -------
1.15, (i) in no event shall the Final Maturity Date be extended beyond August 5,
2003 and (ii) no such request may be made by the Borrower, and no extension of
the Final Maturity Date shall be effective, if any Default or Event of Default
then exists. Each notice delivered pursuant to the first sentence of this
Section 1.15 also shall be accompanied by a certificate of an Authorized Officer
of the Borrower certifying that no Default or Event of Default has occurred and
is continuing.
SECTION 2. Fees; Reductions of Commitment.
------------------------------
2.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank with a Revolving Loan
Commitment a commitment commission (the "Commitment Commission") for the period
from the Effective Date to but not including the Revolver Conversion Date (or
until such earlier date as the Total Revolving Loan Commitment shall have been
terminated), computed at a rate per annum equal to the Applicable Commitment
Commission Percentage on the daily average Unutilized Revolving Loan Commitment
of such Non-Defaulting Bank. Accrued Commitment Commission shall be due and
payable quarterly in arrears on the last Business Day of each February, May,
August and November and on the Revolver Conversion Date or such earlier date
upon which the Total Revolving Loan Commitment is terminated.
<PAGE>
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Bank an extension fee (the "Extension Fee") in an amount
equal to 0.125% of the aggregate outstanding principal amount of Term Loans of
each such Bank on each date on which the Final Maturity Date is extended
pursuant to Section 1.15 (after giving effect to (i) any Term Loans made on any
such date pursuant to Section 1.01(a)(B) and/or Section 1.01(c) and (ii) any
repayment of Term Loans made on any such date). Each Extension Fee payable
pursuant to this Section 2.01(b) shall be paid on the effective date of each
extension of the Final Maturity Date pursuant to Section 1.15.
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, such other fees as have been agreed to in writing by the Borrower
with the Administrative Agent.
(d) The Borrower also agrees to pay to those Banks that have provided
Additional Term Loan Commitments such fees as may be agreed upon among the
Administrative Agent, the Borrower and such Banks.
2.02 Voluntary Termination of Unutilized Commitments. (a) Upon at
-----------------------------------------------
least two Business Days' prior written notice to the Administrative Agent at the
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, at any time or from time
to time, without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, in a minimum amount of $5,000,000 in the
case of partial reductions; provided that each such reduction shall apply
--------
proportionately to permanently reduce the Revolving Loan Commitment of each
Bank.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon five Business Days' written
notice to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), terminate
the entire Revolving Loan Commitment of such Bank so long as all Loans, together
with accrued and unpaid interest, Fees and all other amounts owing to such Bank
are repaid concurrently with the effectiveness of such termination pursuant to
Section 4.01(b) (at which time Schedule I shall be deemed modified to reflect
such changed amounts), and at such time, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to indemnifications
under this Agreement for periods when such Bank was a "Bank" under this
Agreement (including, without limitation, Sections 1.10, 1.11, 3.04, 13.01 and
13.06), which shall survive as to such repaid Bank.
2.03 Mandatory Termination of Commitments. (a) The Total Commitment
------------------------------------
(and the Initial Term Loan Commitment and the Revolving Loan Commitment of each
Bank) shall terminate in its entirety on August 17, 1998, unless the Effective
Date shall have occurred on or prior to such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 2.03, the Total Initial Term Loan Commitment (and the Initial
Term Loan Commitment of each Bank) shall terminate in its entirety on the
Effective Date (after giving effect to the incurrence of the Initial Term Loans
on such date).
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 2.03, the Total
<PAGE>
Additional Term Loan Commitment (and the Additional Term Loan Commitment of each
Bank) provided pursuant to each request made under Section 1.14 shall terminate
in its entirety on the respective Additional Term Loan Borrowing Date (after
giving effect to the incurrence of the Additional Term Loans on such date).
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 2.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the earlier of
(i) the Final Maturity Date and (ii) 9:00 A.M. (New York time) on the Revolver
Conversion Date.
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 2.03, the Total Commitment (and each of the Commitments of each
Bank) shall terminate in its entirety on the date on which a Change of Control
shall occur.
(f) In addition to any other mandatory commitment reductions pursuant
to this Section 2.03, on each date on or after the Effective Date and prior to
the Revolver Conversion Date upon which a mandatory repayment of Term Loans
pursuant to Sections 3.02(c) through (g), inclusive, is required (and exceeds in
amount the aggregate principal amount of Term Loans then outstanding) or would
be required if Term Loans were then outstanding, the Total Revolving Loan
Commitment shall be permanently reduced by the amount, if any, by which the
amount required to be applied pursuant to said Section (determined as if an
unlimited amount of Term Loans were actually outstanding) exceeds the aggregate
principal amount of Term Loans then outstanding.
(g) Each reduction to the Total Initial Term Loan Commitment, the
Total Additional Term Loan Commitment and the Total Revolving Loan Commitment
pursuant to this Section 2.03 shall be applied proportionately to reduce the
Initial Term Loan Commitment, the Additional Term Loan Commitment or the
Revolving Loan Commitment, as the case may be, of each Bank with such a
Commitment.
SECTION 3. Prepayments; Payments; Taxes.
----------------------------
3.01 Voluntary Prepayments. (a) The Borrower shall have the right to
---------------------
prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Administrative Agent prior to 12:00 Noon (New York time) at the
Notice Office (x) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrower's intent to
prepay Base Rate Loans and (y) at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of the Borrower's
intent to prepay Eurodollar Loans, whether Term Loans or Revolving Loans shall
be prepaid, the amount of such prepayment and the Types of Loans to be prepaid
and, in the case of Eurodollar Loans, the specific Borrowing or Borrowings
pursuant to which made, which notice the Administrative Agent shall promptly
transmit to each of the Banks; (ii) each prepayment of Loans made pursuant to
this Section 3.01(a) shall be in an aggregate principal amount of at least
$5,000,000, provided that if any partial prepayment of Eurodollar Loans made
--------
pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans and any election of an Interest Period with respect thereto
given by the Borrower shall have no force or effect,
<PAGE>
but instead such Borrowing shall be converted automatically to a Borrowing of
Base Rate Loans; (iii) each prepayment made pursuant to this Section 3.01(a) in
respect of any Loans made pursuant to a Borrowing shall be applied pro rata
--- ----
among such Loans, provided that at the Borrower's election in connection with
--------
any prepayment of Revolving Loans pursuant to this Section 3.01(a), such
prepayment shall not be applied to any Revolving Loans of a Defaulting Bank;
(iv) at the time of any prepayment of Eurodollar Loans pursuant to this Section
3.01(a) on any date other than the last day of the Interest Period applicable
thereto, the Borrower shall pay the amounts required pursuant to Section 1.11;
and (v) each prepayment of Term Loans made pursuant to this Section 3.01(a) on
or after the Revolver Conversion Date shall be applied to reduce the then
remaining Scheduled Repayments pro rata (based upon the then remaining principal
--- ----
amounts of the remaining Scheduled Repayments after giving effect to all prior
reductions thereto).
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon five Business Days' prior
written notice to the Administrative Agent at the Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks), repay
all Loans, together with accrued and unpaid interest, Fees and all other amounts
owing to such Bank under this Agreement (including under Section 1.11) in
accordance with said Section 13.12(b) so long as (A) in the case of the
repayment of any Revolving Loans of any Bank pursuant to this Section 3.01(b),
the Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 2.02(b) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments) and (B) the consents
required by Section 13.12(b) in connection with the repayment pursuant to this
Section 3.01(b) have been obtained.
3.02 Mandatory Repayments. (a) On any day on which the aggregate
--------------------
outstanding principal amount of Revolving Loans exceeds the Total Revolving Loan
Commitment then in effect, the Borrower shall prepay on such day principal of
Revolving Loans in an amount equal to such excess.
(b) If the Final Maturity Date is extended pursuant to Section 1.15,
then on each date set forth below, the Borrower shall be required to repay that
principal amount of Term Loans, to the extent then outstanding, as is equal to
the product of (i) the aggregate principal amount of all Term Loans outstanding
on the Revolver Conversion Date (after giving effect to any Term Loans made on
such date pursuant to Sections 1.01(a)(B) and/or 1.01(c)) multiplied (ii) by the
percentage set forth opposite each such date below (each such repayment, as the
same may be reduced as provided in Sections 3.01(a) and 3.02(h), a "Scheduled
Repayment"):
Scheduled Repayment Date Percentage
------------------------ -----------
the last Business Day in September, 2001 5.625%
the last Business Day in December, 2001 5.625%
the last Business Day in March, 2002 5.625%
the last Business Day in June, 2002 5.625%
the last Business Day in September, 2002 5.625%
the last Business Day in December, 2002 5.625%
the last Business Day in March, 2003 5.625%
Final Maturity Date 60.625%
; provided, that if the Final Maturity Date is extended to the first anniversary
--------
of the Revolver Conversion Date pursuant to Section
<PAGE>
1.15, but is not extended to the second anniversary of the Revolver Conversion
Date pursuant to Section 1.15, then the definition of Scheduled Repayment shall
exclude the payments set forth in this Section 3.02(b) for the last Business
Days of June 2002, September 2002, December 2002 and March 2003, and the
percentage applicable to the Final Maturity Date shall be 83.125%, and not
60.625% as described above.
(c) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon which Holdings or
any of its Subsidiaries receives any cash proceeds from any capital contribution
or any sale or issuance of its equity (other than proceeds received from capital
contributions by, or sales or issuances of equity to, the Borrower, a Subsidiary
of the Borrower or a Non-Borrower Subsidiary), an amount equal to 50% of the Net
Equity Proceeds of the respective capital contribution or sale or issuance of
equity shall be applied as a mandatory repayment of principal of outstanding
Term Loans in accordance with the requirements of Sections 3.02(h) and (i);
provided, however, so long as no Specified Default or Event of Default then
- -------- -------
exists, the Borrower shall have the option either (i) to retain all or any
portion of such Net Equity Proceeds (up to the full amount thereof) to the
extent that the Total Leverage Ratio at such time is less than (and the
Borrower shall have delivered to the Administrative Agent a certificate of an
Authorized Financial Officer of the Borrower demonstrating in reasonable detail
that the Total Leverage Ratio at such time is less than) 5.25:1.00 (with such
Total Leverage Ratio to be calculated on a Pro Forma Basis to take into account
--- -----
(x) any Hotel Properties, Senior Living Care Facilities and/or other assets
permitted to be acquired hereunder (or the equity interests of any Person or
Persons owing such Hotel Properties, Senior Living Care Facilities and/or such
other assets) concurrently being acquired with such Net Equity Proceeds or
expected to be acquired within 30 days following the receipt of such Net Equity
Proceeds so long as (I) the Borrower has identified to the Administrative Agent
in writing the Hotel Properties, Senior Living Care Facilities and/or such other
assets expected to be so acquired, (II) such Net Equity Proceeds are being
raised specifically for such acquisition and (III) such acquisition is
consummated within 30 days following receipt of such Net Equity Proceeds and (y)
any prepayment or repayment of Term Loans made on such date (including, without
limitation, pursuant to this Section 3.02)) or (ii) to concurrently apply all or
any portion of such Net Equity Proceeds to permanently prepay or repay any
Indebtedness of Holdings or any of its Subsidiaries not otherwise prohibited
from being repaid or prepaid pursuant to this Agreement so long as immediately
after giving effect to any such prepayment or repayment made pursuant to this
clause (ii) the Total Leverage Ratio would be less than 5.25:1.00. In the event
that the Borrower has not, or cannot, satisfy the provisions of the proviso to
the immediately preceding sentence, such Net Equity Proceeds shall be applied as
provided in the immediately preceding sentence without regard to such proviso.
(d) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon which Holdings or
any of its Subsidiaries receives any cash proceeds from any incurrence by
Holdings or any of its Subsidiaries of Specified Indebtedness for Borrowed
Money, an amount equal to 100% of the Net Debt Proceeds of the respective
incurrence of Indebtedness shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Sections 3.02(h) and (i); provided, however, so long as no Specified Default or
-------- -------
Event of Default then exists, the Borrower shall have the option either (i) to
retain all or any portion of such Net Debt Proceeds (up to the full amount
thereof) to the extent that the Total Leverage Ratio at such time is less than
(and the Borrower shall have delivered to the Administrative Agent a certificate
of an Authorized Financial Officer of the Borrower demonstrating in reasonable
detail that the
<PAGE>
Total Leverage Ratio at such time is less than) 5.00:1.00 (with such Total
Leverage Ratio to be calculated on a Pro Forma Basis to take into
--- -----
account (x) the incurrence of such Indebtedness, (y) any Hotel Properties,
Senior Living Care Facilities and/or other assets permitted to be acquired
hereunder (or the equity interests of any Person or Persons owning such Hotel
Properties, Senior Living Care Facilities and/or such other assets) concurrently
being acquired with such Net Debt Proceeds or expected to be acquired within 30
days following the receipt of such Net Debt Proceeds so long as (I) the Borrower
has identified to the Administrative Agent in writing the Hotel Properties,
Senior Living Care Facilities and/or such other assets expected to be so
acquired, (II) such Net Debt Proceeds are being raised specifically for such
acquisition and (III) such acquisition is consummated within 30 days following
receipt of such Net Debt Proceeds and (z) any prepayment or repayment of Term
Loans made on such date (including, without limitation, pursuant to this Section
3.02)) or (ii) to concurrently apply all or any portion of such Net Debt
Proceeds to permanently prepay or repay any Indebtedness of Holdings or any of
its Subsidiaries not otherwise prohibited from being repaid or prepaid pursuant
to this Agreement so long as immediately after giving effect to such prepayment
or repayment made pursuant to this clause (ii) the Total Leverage Ratio would be
less than 5.00:1.00. In the event that the Borrower has not, or cannot, satisfy
the provisions of the proviso to the immediately preceding sentence, such Net
Debt Proceeds shall be applied as provided in the immediately preceding sentence
without regard to such proviso.
(e) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon which Holdings or
any of its Subsidiaries receives cash proceeds from any Asset Sale, an amount
equal to 100% of the Net Sale Proceeds from such Asset Sale shall be applied as
a mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Sections 3.02(h) and (i); provided that the Net Sale
Proceeds from any Asset Sale shall not be required to be so applied on such date
so long as no Specified Default or Event of Default then exists and the Borrower
has delivered a certificate to the Administrative Agent on or prior to such date
stating that it is the Borrower's intention that such Net Sale Proceeds shall be
used to purchase assets used or to be used in the businesses permitted pursuant
to Section 9.16 within 365 days (or earlier to the extent required to be so
applied pursuant to the terms of any other outstanding Indebtedness) following
the date of such Asset Sale (which certificate shall set forth the estimates of
the Net Sale Proceeds to be so expended), provided further, that if all or any
----------------
portion of such Net Sale Proceeds not so applied as a mandatory repayment are
not used within such 365 day period (or earlier to the extent required to be so
applied pursuant to the terms of any other outstanding Indebtedness) such
remaining portion shall be applied on the last day of such period as provided
above in this Section 3.02(e) (without regard to the first proviso herein).
(f) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each Excess Cash Payment Date, an amount equal to 50% of the
Excess Cash Flow for the relevant Excess Cash Payment Period shall be applied as
a mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Sections 3.02(h) and (i); provided, however, so long as no
-------- -------
Specified Default or Event of Default exists on the relevant Excess Cash Payment
Date and the Total Leverage Ratio as of the last day of the relevant Excess Cash
Payment Period is less than 5.00:1.00 (after giving effect to any permanent
repayment of any Indebtedness on such date, including outstanding Term Loans),
then no such repayment of outstanding Term Loans pursuant to this Section
3.02(f) shall be required on the respective Excess Cash Payment Date.
<PAGE>
(g) In addition to any other mandatory repayments pursuant to this
Section 3.02, within 30 days following each date on or after the Effective Date
upon which Holdings or any of its Subsidiaries receives any cash proceeds from
any Casualty Event or Taking, an amount equal to 100% of the Net
Insurance/Condemnation Proceeds of such Casualty Event or Taking shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 3.02(h) and (i); provided that so
--------
long as no Specified Default or Event of Default then exists, such Net
Insurance/Condemnation Proceeds shall not be required to be so applied on such
date to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such Net
Insurance/Condemnation Proceeds shall be used (or be contractually committed to
be used) to replace or restore any properties or assets in respect of which such
Net Insurance/Condemnation Proceeds were paid within 365 days (or earlier to the
extent required to be so applied pursuant to terms of any other outstanding
Indebtedness) following the date of such Casualty Event or Taking (which
certificate shall set forth the estimates of the proceeds to be so expended)
and, provided further, that (1) if all or any portion of such Net
----------------
Insurance/Condemnation Proceeds not required to be applied as a mandatory
repayment pursuant to the preceding proviso are not so used (or contractually
committed to be used) within 365 days (or earlier to the extent required to be
so applied pursuant to terms of any other outstanding Indebtedness) after the
date of receipt of the Net Insurance/ Condemnation Proceeds from the respective
Casualty Event or Taking, then, such remaining portion not used shall be applied
on the date which is 365 days (or earlier to the extent required to be so
applied pursuant to terms of any other outstanding Indebtedness) following the
date of receipt of such Net Insurance/Condemnation Proceeds from the respective
Casualty Event or Taking in accordance with the requirements of Section 3.02(h)
and (i) and (2) if all or any portion of such Net Insurance/Condemnation
Proceeds not required to be applied as a mandatory repayment pursuant to the
preceding proviso because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination or expiration in accordance with the requirements of Section
3.02 (h) and (i).
(h) If, on the date of any principal repayment of outstanding Term
Loans required by Sections 3.02(c), (d), (e), (f) and (g), the Revolver
Conversion Date has occurred, then the amount of such principal repayment of
Term Loans shall be applied to reduce the then remaining Scheduled Repayments
pro rata (based upon the then remaining principal amounts of the remaining
- --- ----
Scheduled Repayments after giving effect to all prior reductions thereto).
(i) With respect to each repayment of Loans required by this Section
3.02, the Borrower may designate the Types of Loans of the respective Tranche
which are required to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made, provided that: (i)
--------
repayments of Eurodollar Loans pursuant to this Section 3.02 may only be made on
the last day of an Interest Period applicable thereto unless all Eurodollar
Loans with Interest Periods ending on such date of required repayment and all
Base Rate Loans have been paid in full; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto, such Borrowing shall be converted
at the end of the then current Interest Period into a Borrowing of Base Rate
Loans; and (iii) each repayment of Loans made pursuant to the same Borrowing
shall be applied pro rata among such Loans. In the absence of a designation by
--- ----
the Borrower as described in the preceding
<PAGE>
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion.
(j) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower shall repay in full all outstanding Loans on the earlier
of (i) the date on which a Change of Control occurs and (ii) the Final Maturity
Date then in effect.
3.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 12:00 Noon (New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
3.04 Net Payments; Taxes. (a) All payments made by the Borrower
-------------------
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 3.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Bank, or any
franchise tax based on the net income or net profits of a Bank, in either case
pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect to such non-excluded taxes,
levies, imposts, duties, fees or other charges (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, the
Borrower agrees to reimburse each Bank, upon the written request of such Bank,
for taxes imposed on or measured by the net income or net profits of such Bank,
or any franchise tax based on the net income or net profits of a Bank, in either
case pursuant to the laws of the jurisdiction in which such Bank is organized or
in which the principal office or applicable lending office of such Bank is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which such Bank is organized or in which the principal
office or applicable lending office of such Bank is located and for any
withholding of income or similar taxes imposed by the United States of America
as such Bank shall reasonably determine are payable by, or withheld from, such
Bank in respect of such amounts so paid to or on behalf of such Bank pursuant to
the preceding sentence and in respect of any amounts paid to or on behalf of
such Bank pursuant to this sentence. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts or other
documentation reasonably acceptable to the Administrative Agent, evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless
each Bank, and reimburse such Bank upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Bank.
<PAGE>
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective Date, or in the case
of a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 13.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement as of such date to a complete exemption
from United States withholding tax with respect to payments to be made under
this Agreement and under any Note, or (ii) if such Bank is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C (any such certificate, a
"Section 3.04(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Bank's entitlement as of such date to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Bank agrees
that from time to time after the Effective Date, when a lapse in time or change
in circumstances renders the previous certification invalid or inaccurate in any
material respect, such Bank will promptly deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms), or Form W-8 (or
successor form) and a Section 3.04(b)(ii) Certificate, as the case may be, and
such other forms as may be required in order to confirm or establish the
entitlement of such Bank to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall promptly notify the Borrower and the Administrative Agent of
its inability to deliver any such Form or Certificate, in which case such Bank
shall not be required to deliver any such Form or Certificate pursuant to this
Section 3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 13.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, Fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to any provision of Section 3.04(a)
to gross-up payments to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 3.04(b) or (II) in the case of a payment, other than
interest, to a Bank described in clause (ii) above, to the extent that such
Forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 3.04 and except as set forth in Section 13.04(b), the
Borrower agrees to pay additional amounts and to indemnify each Bank in the
manner set forth in Section 3.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes that are effective after the Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or in
the interpretation thereof, relating to the deducting or withholding of such
Taxes.
<PAGE>
SECTION 4. Conditions Precedent to Loans. The occurrence of the
-----------------------------
Effective Date pursuant to Section 13.10, and the obligation of each Bank to
make Loans hereunder on the Effective Date is subject at the time of the
occurrence of the Effective Date to the satisfaction of the following
conditions:
4.01 Execution of Agreement; Notes. On or prior to the Effective
-----------------------------
Date, (i) this Agreement shall have been executed and delivered as provided in
Section 13.10 and (ii) there shall have been delivered to the Administrative
Agent for the account of each of the Banks (subject to Section 1.05(e)) the
appropriate Term Note and/or Revolving Note executed by the Borrower, in each
case in the amount and maturity and with other terms as otherwise provided
herein.
4.02 Fees, etc. On the Effective Date, the Borrower shall have paid
----------
to the Administrative Agent, the Co-Arrangers and the Banks all costs, fees and
expenses (including, without limitation, reasonable legal fees and expenses of
the Administrative Agent) payable to the Administrative Agent, the respective
Co-Arrangers and the Banks to the extent then due.
4.03 Opinions of Counsel. On the Effective Date, the Administrative
-------------------
Agent shall have received (i) from Christopher Townsend, Esq., General Counsel
to Holdings, and counsel to HMH, Hospitality, the Operating Partnership and the
Subsidiary Guarantors, an opinion addressed to the Administrative Agent and each
of the Banks and dated the Effective Date covering the matters set forth in
Exhibit D-1 and such other matters incident to the transactions contemplated
herein as the Administrative Agent may reasonably request, (ii) from Hogan &
Hartson L.L.P., special counsel to the Credit Parties, an opinion addressed to
the Administrative Agent and each of the Banks and dated the Effective Date
covering the matters set forth in Exhibit D-2 and such other matters incident to
the transactions contemplated herein as the Administrative Agent may reasonably
request and (iii) from (x) Latham & Watkins, special counsel to HMH, and (y) the
General Counsel to Holdings, reliance letters addressed to the Administrative
Agent and each of the Banks and dated the Effective Date, entitling the
Administrative Agent and each of the Banks to rely on their opinions delivered
as part of the issuance of the Senior Notes.
4.04 Organizational Documents; Proceedings; etc. (a) On the
-------------------------------------------
Effective Date, the Administrative Agent shall have received a certificate,
dated the Effective Date, signed by the Secretary or an Assistant Secretary of
each Credit Party (or from the Secretary or an Assistant Secretary of the
general partner of each Credit Party that is a limited partnership), in the form
of Exhibit E with appropriate insertions, together with copies of the
declaration of trust, certificate of incorporation and by-laws or other
organizational documents (including partnership agreements and certificates of
partnership and limited liability company agreements and certificates of limited
liability company) of each such Credit Party and the resolutions of each Credit
Party referred to in such certificate, and the foregoing shall be reasonably
acceptable to the Administrative Agent.
(b) All trust, corporate, partnership, limited liability company and
legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents in effect on
the Effective Date shall be reasonably satisfactory in form and substance to the
Administrative Agent and the Required Banks, and the Administrative Agent shall
have received all information and copies of all documents and papers, including
records of corporate and partnership proceedings, governmental approvals, good
standing certificates and bring-down telegrams, if any, which the Administrative
Agent may have reasonably requested in connection therewith, such documents and
papers where
<PAGE>
appropriate to be certified by proper corporate, partnership or governmental
authorities.
(c) On the Effective Date, the Administrative Agent shall have
received a certificate, dated the Effective Date and signed by an Authorized
Officer of Holdings and the Borrower, certifying that all of the applicable
conditions set forth in Sections 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.16
have been satisfied as of the Effective Date (except to the extent that any such
conditions require a determination to be made by the Administrative Agent and/or
the Required Banks).
4.05 Ground Leases; Franchise Agreements; Management Agreements; Debt
----------------------------------------------------------------
Agreements; etc. On or prior to the Effective Date, there shall have been
- ----------------
delivered to (or made available for review by) the Administrative Agent true and
correct copies of (i) the ground lease or other applicable lease, if any, for
each Hotel Property and Senior Living Care Facility, (ii) any franchise
agreements entered into in respect of each Hotel Property and Senior Living Care
Facility (collectively, the "Franchise Agreements"), (iii) all agreements with
respect to the management of each Hotel Property and Senior Living Care Facility
(collectively, the "Management Agreements") and (iv) all agreements evidencing
or relating to all Existing Indebtedness of Holdings or of any of its
Subsidiaries which is to remain outstanding after the Effective Date (other than
Existing Indebtedness of the type described in Section 9.04(iii)), if the
aggregate principal amount of the individual Indebtedness exceeds (or upon
utilization of any unused commitments may exceed) $50,000,000 (collectively, the
"Debt Agreements"); all of which ground or other leases, Franchise Agreements,
Management Agreements and Debt Agreements shall be in form and substance
reasonably satisfactory to the Administrative Agent.
4.06 Pledge and Security Agreement. On the Effective Date, each
-----------------------------
Credit Party shall have duly authorized, executed and delivered a Pledge and
Security Agreement in the form of Exhibit F (as modified, supplemented or
amended from time to time, the "Pledge and Security Agreement") covering all of
such Credit Party's present and future Pledge and Security Agreement Collateral,
together with:
(a) all of the certificated Pledged Securities, if any, referred to
therein and then owned by such Credit Party, together with executed and
undated stock powers in blank or such other instruments of transfer as may
be reasonably requested by the Administrative Agent;
(b) proper financing statements (Form UCC-1) fully executed for
filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Pledge and Security Agreement;
(c) certified copies of requests for information or copies (Form
UCC-11), or equivalent reports, listing all effective financing statements
that name such Credit Party as debtor and that are filed in the
jurisdictions referred to in clause (b) above, together with copies of such
other financing statements that name any such Credit Party as debtor (none
of which shall cover the Pledge and Security Agreement Collateral except to
the extent evidencing Permitted Liens or in respect of which the Collateral
Agent shall have received termination statements (Form UCC-3 or such other
termination statements as shall be required by local law) fully executed
for filing);
<PAGE>
(d) evidence of the completion of (or the Administrative Agent shall
be reasonably satisfied that arrangements are in place to complete) all
other recordings and filings of, or with respect to, the Pledge and
Security Agreement as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests intended to
be created by the Pledge and Security Agreement; and
(e) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Pledge and Security
Agreement have been taken (or the Administrative Agent shall be reasonably
satisfied that arrangements are in place to perfect and protect such
security interests).
4.07 Subsidiaries Guaranty. On the Effective Date, each Subsidiary
---------------------
Guarantor shall have duly authorized, executed and delivered a Subsidiaries
Guaranty in the form of Exhibit G (as modified, amended or supplemented from
time to time, the "Subsidiaries Guaranty").
4.08 Adverse Change, etc. (a) On or prior to the Effective Date,
--------------------
nothing shall have occurred (and neither the Administrative Agent nor the Banks
shall have become aware of any facts, conditions or other information not
previously known) which the Administrative Agent or the Required Banks shall
determine has had, or believe could reasonably be expected to have, a material
adverse effect (i) on the Initial Transaction, (ii) on the rights or remedies of
the Administrative Agent or the Banks, or on the ability of any Credit Party to
perform its respective obligations to the Administrative Agent and the Banks or
(iii) on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Holdings, the Borrower, Holdings and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
(b) On or prior to the Effective Date, all necessary governmental
(domestic and foreign) and third party approvals and consents in connection with
the Initial Transaction and the transactions contemplated by the Documents to
occur on or prior to the Effective Date and otherwise referred to herein or
therein shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes materially adverse
conditions upon the Initial Transaction and the transactions contemplated by
such Documents (other than any immaterial approvals and/or consents relating to
the Initial Transaction). Additionally, there shall not exist any judgment,
order, injunction or other restraint issued or filed or a hearing seeking
injunctive relief or other restraint pending or notified prohibiting or imposing
materially adverse conditions upon the Initial Transaction or the transactions
contemplated by the Documents to occur on or prior to the Effective Date.
4.09 Litigation. On the Effective Date, no litigation by any entity
----------
(private or governmental) shall be pending or threatened (i) with respect to the
Initial Transaction or any Document or any documentation executed in connection
therewith or the transactions contemplated thereby which the Administrative
Agent or the Required Banks shall determine could reasonably be expected to have
a material adverse effect on the Initial Transaction or (ii) which the
Administrative Agent or the Required Banks shall determine could reasonably be
expected to have a materially adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, the Borrower, Holdings and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole.
<PAGE>
4.10 Financings; etc. (a) On or prior to the Effective Date, the
----------------
Borrower shall have received gross cash proceeds of $1,700,000,000 from the
issuance by it of a like principal amount of the Senior Notes and/or from
another financing transaction on terms and conditions reasonably satisfactory to
the Administrative Agent and the Required Banks and (ii) the Borrower shall have
utilized the full amount of the net cash proceeds received from the issuance of
the Senior Notes and/or from such other financing transaction to make payments
owing in connection with the Refinancing Transactions before utilizing any
proceeds of the Loans for such purpose.
(b) On or prior to the Effective Date, there shall have been
delivered to the Administrative Agent true and correct copies of the Senior Note
Documents and/or the documents for such other financing transaction, and all of
the terms and conditions thereof shall be reasonably satisfactory in form and
substance to the Administrative Agent and the Required Banks. The issuance of
the Senior Notes and/or the other financing transaction shall have been
consummated, in each case in all material respects, in accordance with the terms
and conditions of the applicable Documents therefor and all applicable laws.
(c) To the extent that any Exchange Bonds remain outstanding on the
Effective Date (and after giving effect to the Initial Transaction), there shall
have been delivered to the Administrative Agent true and correct copies of the
Exchange Bond Documents, and all of the terms and conditions of the Exchange
Bond Documents shall (i) permit, or otherwise not prohibit, the Initial
Transaction and (ii) be reasonably satisfactory in form and substance to the
Administrative Agent.
4.11 Existing HMH Notes Tender Offers/Consent Solicitations. On or
------------------------------------------------------
prior to the Effective Date, HMH shall have consummated the Existing HMH Notes
Tender Offers/Consent Solicitations and shall have successfully purchased
pursuant thereto at least that amount of outstanding Existing HMH Notes as shall
be required to obtain sufficient exit consents to permit the Initial Transaction
and to eliminate substantially all of the covenants and defaults contained in
the Existing HMH Note Indentures as set forth in the Existing HMH Note Indenture
Supplements, and the Administrative Agent shall have received true and correct
copies of all Existing HMH Notes Tender Offers/Consent Solicitations Documents
and all of the terms and conditions of such Documents shall be in form and
substance reasonably satisfactory to the Administrative Agent. The Existing HMH
Notes Tender Offers/Consent Solicitations shall have been consummated, in all
material respects, in accordance with the terms and conditions of the Existing
HMH Notes Tender Offers/Consent Solicitation Documents and all applicable laws.
4.12 Original Credit Agreement. On the Effective Date, all
-------------------------
outstanding loans under the Original Credit Agreement shall be prepaid in full,
together with interest thereon and all other amounts owing pursuant to the
Original Credit Agreement (whether or not any such amounts are due on the
Effective Date pursuant to the terms thereof).
4.13 CRHC Merger; etc. On or prior to the Effective Date, the CRHC
-----------------
Merger shall have been consummated in accordance with the CRHC Merger Documents
and all applicable laws, and the Administrative Agent shall have received true
and correct copies of the CRHC Merger Agreement and the other CRHC Merger
Documents, all of which shall be in form and substance reasonably satisfactory
to the Administrative Agent and shall be in full force and effect.
4.14 Solvency Certificate; Insurance Certificates. On or prior to
--------------------------------------------
the Effective Date, there shall have been delivered to the Administrative Agent:
<PAGE>
(a) a solvency certificate in the form of Exhibit H, addressed to
the Administrative Agent and each of the Banks and dated the Effective Date
from an Authorized Financial Officer of Holdings providing the opinion of
such Authorized Financial Officer as to the solvency of Holdings and its
Subsidiaries taken as a whole and the Borrower on a stand-alone basis; and
(b) certificates of insurance complying with the requirements of
Section 8.03 for the business and properties of Holdings and its
Subsidiaries, in scope, form and substance reasonably satisfactory to the
Administrative Agent.
4.15 Financial Statements; Pro Forma Balance Sheets; Projections. On
-----------------------------------------------------------
or prior to the Effective Date, the Administrative Agent shall have received the
financial statements, the pro forma balance sheets and the Projections referred
to in Section 7.05(a), all of which shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Required Banks.
4.16 No Default; Representations and Warranties. On the Effective
------------------------------------------
Date, (i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the
Effective Date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
The occurrence of the Effective Date shall constitute a representation
and warranty by each Principal Credit Party to the Administrative Agent and each
of the Banks that all the conditions specified in this Section 4 exist as of the
Effective Date (except to the extent that any of the conditions specified in
this Section 4 are required to be satisfactory to or determined by any Bank, the
Required Banks, the Collateral Agent and/or the Administrative Agent or
otherwise expressly calls for a subjective determination to be made by any Bank,
the Required Banks, the Collateral Agent and/or the Administrative Agent). All
of the Notes, certificates, legal opinions and other documents and papers
referred to in this Section 4, unless otherwise specified, shall be delivered to
the Administrative Agent at the Notice Office for the benefit of each of the
Banks and shall be in form and substance reasonably satisfactory to the Banks.
SECTION 5. Conditions Precedent to All Loans. The obligation of each
---------------------------------
Bank to make Loans (including any Loans made on the Effective Date) is subject,
at the time of each such Loan (except as hereinafter indicated), to the
satisfaction of the following conditions:
5.01 Effective Date. The Effective Date shall have occurred.
--------------
5.02 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Loan and also after giving effect thereto (i) there shall exist no Default
or Event of Default and (ii) all representations and warranties contained herein
and in the other Credit Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on the date of the making of such Loan (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date).
<PAGE>
5.03 Notice of Borrowing. Prior to the making of each Loan, the
-------------------
Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a).
The acceptance of the proceeds of each Loan shall constitute a
representation and warranty by each Principal Credit Party to the Administrative
Agent and each of the Banks that all the conditions specified in this Section 5
and applicable to such Loan exist as of that time.
SECTION 6. Conditions Precedent to REIT Conversion. Notwithstanding
---------------------------------------
anything to the contrary contained in this Agreement, the REIT Conversion shall
not occur unless the following conditions shall have been satisfied as of the
end of the REIT Conversion Date:
6.01 Subsidiaries Mergers. On or prior to the REIT Conversion Date,
--------------------
each of the Subsidiary Mergers shall have been consummated, in all material
respects, in accordance with Schedule IV, with such exceptions thereto, if any,
as may be reasonably satisfactory to the Administrative Agent.
6.02 HMH Merger; etc. (a) On or prior to the REIT Conversion Date,
----------------
there shall have been delivered to the Administrative Agent true and correct
copies of the HMH Merger Agreement and the other HMH Merger Documents, all of
which HMH Merger Documents shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall be in full force and effect.
All material conditions precedent to the consummation of the HMH Merger as
contained in the HMH Merger Agreement shall have been satisfied (or waived with
the consent of the Administrative Agent).
(b) On or prior to the REIT Conversion Date, the HMH Merger shall
have been consummated, in all material respects, in accordance with the HMH
Merger Documents and all applicable laws. Immediately after giving effect to the
consummation of the HMH Merger and prior to the consummation of the other
components of the REIT Transaction, the Operating Partnership shall continue to
be a Wholly-Owned Subsidiary of Holdings.
6.03 Hospitality Merger; etc. (a) On or prior to the REIT
------------------------
Conversion Date, there shall have been delivered to the Administrative Agent
true and correct copies of the Hospitality Merger Agreement and the other
Hospitality Merger Documents, all of which Hospitality Merger Documents shall be
in form and substance reasonably satisfactory to the Administrative Agent and
shall be in full force and effect. All material conditions precedent to the
consummation of the Hospitality Merger as contained in the Hospitality Merger
Agreement shall have been satisfied (or waived with the consent of the
Administrative Agent).
(b) On or prior to the REIT Conversion Date, the Hospitality Merger
shall have been consummated, in all material respects, in accordance with the
Hospitality Merger Documents and all applicable laws. Immediately after giving
effect to the consummation of the Hospitality Merger and prior to the
consummation of the other components of the REIT Transaction, the Operating
Partnership shall continue to be a Wholly-Owned Subsidiary of Holdings.
6.04 SLC Spinoff; etc. (a) (i) On or prior to the REIT Conversion
-----------------
Date, Holdings and its Subsidiaries shall have contributed all of their
respective Senior Living Care Facilities owned or leased as of the Effective
Date, and all rights and agreements with respect thereto (including, without
limitation, all leases, management agreements and franchise agreements) to HMC
Senior Communities, Inc. ("SLC"), a Wholly-Owned Subsidiary of Holdings, and
(ii) on the REIT Conversion Date,
<PAGE>
Holdings shall have distributed to its shareholders and contributed to the
Operating Partnership the shares of SLC (all of the transactions described in
this Section 6.04(a) are collectively referred to as the "SLC Spinoff").
(b) On or prior to the REIT Conversion Date, Holdings and certain
Non-Borrower Subsidiaries shall have contributed to the Operating Partnership,
in exchange for common and/or preferred OP Units and the assumption of
liabilities, all of their respective assets, other than (i) their ownership
interests in SLC, SLC's Subsidiaries, Hospitality and the Operating Partnership,
(ii) the Senior Living Care Facilities and related assets contributed (or to be
contributed) to SLC in connection with the SLC Spinoff (including a 25%
ownership interest in the U.S. Swissotel Management Company), (iii) their
ownership interest in Permitted REIT Subsidiaries whose sole assets immediately
following the REIT Transaction are comprised of OP Units and certain de minimis
-- -------
equity interests in certain Subsidiaries of the Operating Partnership, (iv) cash
in an amount not to exceed $500,000,000 (which cash will be distributed as part
of the E&P Distribution) and (v) certain de minimis assets.
(c) On or prior to the REIT Conversion Date and following the
contributions set forth in Section 6.04(b), the Operating Partnership and/or one
or more of its Wholly-Owned Subsidiaries shall effect a Partnership Roll-Up with
respect to each partnership described in Schedule VII (each, a "Partnership to
be Rolled-Up"), but only to the extent that the requisite percentage of the
partners of each Partnership to be Rolled-Up shall have given their consent
thereto, and with each Partnership Roll-Up to be effected substantially in the
manner set forth on such Schedule VII, in each case with such exceptions
thereto, if any, as are reasonably satisfactory to the Administrative Agent.
(d) On the REIT Conversion Date, the Operating Partnership and its
Subsidiaries shall be permitted to contribute and/or sell to one or more Non-
Controlled Entities certain Non-Conforming Assets and cash, in each case to the
extent that such contributions and/or sales are reasonably determined by the
Borrower to be necessary in order to assure that Host REIT will qualify as a
real estate investment trust for federal income tax purposes (allowing
reasonable margins with respect to applicable limitations) or to avoid
significant adverse tax consequences; provided, that to the extent the sum of
--------
(i) all of such cash and (ii) the book value of all of such Non-Conforming
Assets exceeds $500,000,000, such excess amounts shall be applied, dollar-for-
dollar, against the $800,000,000 allowance for such Investments provided for in
Section 9.05(xii) (although no such excess amount shall be permitted to the
extent that an Investment could not be made at such time pursuant to such
Section 9.05(xii)).
(e) On or prior to the REIT Conversion Date, the Administrative
Agent shall have received true and correct copies of the SLC Spinoff Documents
and the other REIT Transaction Documents evidencing the transactions described
in clauses (b), (c) and (d) of this Section 6.04, all of which REIT Transaction
Documents shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall be in full force and effect.
6.05 REIT Merger; REIT Qualification; etc. (a) On or prior to the
-------------------------------------
REIT Conversion Date, there shall have been delivered to the Administrative
Agent true and correct copies of the REIT Merger Agreement and the other REIT
Merger Documents, all of which REIT Merger Documents shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall be in
full force and effect. All material conditions precedent to the consummation of
the REIT Merger as contained in
<PAGE>
the REIT Merger Agreement shall have been satisfied or waived with the consent
of the Administrative Agent.
(b) On the REIT Conversion Date, the REIT Merger shall have been
consummated, in all material respects, in accordance with the REIT Merger
Documents and all applicable laws. After giving effect to the consummation of
the REIT Merger, Host REIT shall own not less than a 51% limited partnership
interest in the Operating Partnership, and Host REIT or a Wholly-Owned
Subsidiary thereof shall own the entire general partnership interest in the
Operating Partnership.
(c) From and after the REIT Conversion Date, Host REIT shall be
organized in conformity with the requirements for qualification as a real estate
investment trust under the Code for its first taxable year commencing after the
REIT Conversion Date.
6.06 Acknowledgment and Joinder Agreement. On the REIT Conversion
------------------------------------
Date, Host REIT, as the surviving entity of the REIT Merger, shall have duly
authorized, executed and delivered to the Administrative Agent the
Acknowledgment and Joinder Agreement in the form of Exhibit I (the
"Acknowledgment and Joinder Agreement").
6.07 Leases. (a) Not less than 30 days prior to the REIT Conversion
------
Date, there shall have been delivered to the Administrative Agent and the Banks,
a true and correct copy of the form of Operating Lease, which form of Operating
Lease shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks. In addition, prior to the REIT
Conversion Date, (i) there shall have been delivered to the Administrative Agent
true and correct copies of the Operating Leases to be entered into between the
Borrower and/or one or more of its Subsidiaries, on the one hand, and SLC and/or
one or more other Approved Lessees, on the other, pursuant to which SLC and/or
one or more other Approved Lessees shall lease, as lessee, all of the Hotel
Properties of the Borrower and its Subsidiaries as of the REIT Conversion Date
(except for the Hotels set forth on Schedule X and such other exceptions, if
any, as shall be reasonably acceptable to the Administrative Agent), all of
which Operating Leases shall be consistent with the form of Operating Lease
delivered pursuant to this Section 6.07(a) and shall otherwise be in form and
substance reasonably satisfactory to the Administrative Agent and (ii) there
shall have been delivered to the Banks a summary of the principal economic terms
of each such Operating Lease and any principal deviations from the form of
Operating Lease previously delivered to the Banks.
(b) Except as otherwise provided in clause (a) of this Section 6.07,
on the REIT Conversion Date, the Borrower and/or its Subsidiaries, on the one
hand, and SLC and/or one or more other Approved Lessees, on the other, shall
have entered into the Operating Leases delivered to the Administrative Agent
pursuant to clause (a) above with respect to the Hotel Properties of the
Borrower and its Subsidiaries effective not later than the later of January 1,
1999 and the day following the REIT Conversion Date.
6.08 Adverse Change, etc. (a) On or prior to the REIT Conversion
--------------------
Date, nothing shall have occurred (and neither the Administrative Agent nor the
Banks shall have become aware of any facts or conditions not previously known)
which the Administrative Agent or the Required Banks shall reasonably determine
(a) has had, or could reasonably be expected to have, a material adverse effect
on the rights or remedies of the Banks or the Administrative Agent, or on the
ability of any Credit Party to perform its obligations to them hereunder or
under any other Credit Document or (b) has had, or could reasonably be expected
to have, a material adverse effect on the REIT Transaction or on the business,
operations, property, assets, liabilities, condition (finan-
<PAGE>
cial or otherwise) or prospects of Holdings, the Borrower, Holdings and its
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as a
whole.
(b) On or prior to the REIT Conversion Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents
(including shareholder and board of director consents) in connection with the
REIT Transaction and the other transactions contemplated by the REIT Transaction
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect and all applicable waiting periods with respect thereto
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon, the
consummation of the REIT Transaction or the other transactions contemplated by
the REIT Transaction Documents or otherwise referred to herein or therein (other
than any immaterial approvals and/or consents relating to the REIT Transaction
and the other transactions contemplated by the REIT Transaction Documents).
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
consummation of the REIT Transaction or the other transactions contemplated by
the REIT Transaction Documents or otherwise required to be consummated herein or
therein.
6.09 Litigation. On the REIT Conversion Date, there shall be no
----------
actions, suits or proceedings pending or threatened (i) with respect to the REIT
Transaction or any REIT Transaction Document which could reasonably be expected
to have a material adverse effect on the REIT Transaction or (ii) which the
Administrative Agent or the Required Banks shall reasonably determine could
reasonably be expected to have a material adverse effect on the REIT Transaction
or on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Holdings, the Borrower, Holdings and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
6.10 No Default; Representations and Warranties. At the time of the
------------------------------------------
REIT Conversion and also after giving effect thereto (i) there shall exist no
Specified Default or Event of Default and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the REIT Conversion Date (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date).
6.11 Officer's Certificate; Corporate Documents; Proceedings; etc.
-------------------------------------------------------------
(a) On the REIT Conversion Date, the Administrative Agent shall have received a
certificate, dated the REIT Conversion Date and signed by an Authorized Officer
of Host REIT and the Borrower, stating that all of the conditions in Sections
6.01, 6.02, 6.03, 6.04, 6.05, 6.07(b), 6.08, 6.09 and 6.10 have been satisfied
on such date (except to the extent that any such condition consists of a
determination to be made by the Administrative Agent or the Required Banks).
(b) On the REIT Conversion Date, the Administrative Agent shall have
received a certificate from Host REIT and each newly created or acquired Wholly-
Owned Subsidiary of Host REIT that is required to become a Credit Party under
Sections 8.18 and/or 9.17, dated the REIT Conversion Date, signed by the
Chairman of the Board, the President or any Vice President of such Credit Party,
and attested to by the Secretary or
<PAGE>
any Assistant Secretary of such Credit Party, in the form of Exhibit E with
appropriate insertions, together with copies of the certificate of incorporation
(or equivalent organizational document) and by-laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate, and the
foregoing shall be in form and substance reasonably acceptable to the
Administrative Agent.
(c) All corporate, trust, partnership, limited liability company and
legal proceedings and all instruments and agreements in connection with the REIT
Transaction and all other transactions contemplated by this Agreement and the
other REIT Transaction Documents shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all documents and papers, including
records of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any, which the
Administrative Agent reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate or
governmental authorities.
(d) On the REIT Conversion Date, the Administrative Agent shall have
received an updated list of all of the Subsidiaries of Host REIT, which list
shall identify the direct owner or owners of each such Subsidiary.
6.12 Opinions of Counsel. On the REIT Conversion Date, the
-------------------
Administrative Agent shall have received (i) from Hogan & Hartson L.L.P.,
special counsel to the Credit Parties, an opinion addressed to the
Administrative Agent and each of the Banks and dated the REIT Conversion Date,
in form and substance reasonably satisfactory to the Administrative Agent,
covering such matters incident to the REIT Transaction as the Administrative
Agent may reasonably request, and (ii) from Hogan & Hartson L.L.P., special
counsel to the Credit Parties, a tax opinion addressed to the Administrative
Agent and each of the Banks and dated the REIT Conversion Date, in form and
substance reasonably satisfactory to the Administrative Agent, covering the
qualification of Host REIT as a real estate investment trust under the Code
effective for its first taxable year commencing after the REIT Conversion Date
and such other matters incident to the REIT Transaction as the Administrative
Agent may reasonably request.
SECTION 7. Representations and Warranties. In order to induce the
------------------------------
Banks to enter into this Agreement and to make the Loans as provided herein,
each Principal Credit Party makes (as to itself and each of its Subsidiaries),
the following representations, warranties and agreements, in each case after
giving effect to the Initial Transaction as consummated on the Effective Date,
all of which shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans, with the occurrence of the Effective Date and
the incurrence of each Loan on or after the Effective Date being deemed to
constitute a representation and warranty that the matters specified in this
Section 7 are true and correct on and as of the Effective Date and on the date
of each such Loan (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
7.01 Status. Each of Holdings and each of its Subsidiaries (i) is a
------
duly organized and validly existing real estate investment trust, corporation,
partnership or limited liability company, as the case may be, in good standing
(if applicable) under the laws of the jurisdiction of its organization, (ii) has
the trust, corporate, partnership or limited liability company power and
authority, as the case may be, to own or lease its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is
<PAGE>
authorized to do business and is in good standing in each jurisdiction where the
conduct of its business requires such qualifications except for failures to be
so qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole.
7.02 Power and Authority. Each Credit Party has the trust,
-------------------
corporate, partnership or limited liability company power and authority, as the
case may be, to execute, deliver and perform the terms and provisions of each of
the Documents to which it is a party and has taken all necessary trust,
corporate, partnership or limited liability company action, as the case may be,
to authorize the execution, delivery and performance by it of each of such
Documents. Each Credit Party has duly executed and delivered each of the
Documents to which it is a party, and each of such Documents constitutes the
legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance (but
only with respect to any guaranties or security interests given by a Subsidiary
Guarantor), reorganization or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Pledge and Security Agreement) upon any of the properties or assets of
Holdings or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which Holdings or any of its
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject or (iii) will violate any provision of the
declaration of trust, certificate of incorporation, partnership agreement,
certificate of partnership, limited liability company agreement or by-laws, as
the case may be, of Holdings or any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made and which remain in full force and
effect), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Document or (ii) the
legality, validity, binding effect or enforceability of any Document.
7.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The consolidated balance sheets of each of
- ------------------------------
Host Marriott and its Subsidiaries, HMH and its Subsidiaries and CRHC and its
Subsidiaries for the fiscal year ended on January 2, 1998 and the fiscal quarter
ended on March 27, 1998, and the related consolidated statements of income, cash
flows and shareholders' equity of such Persons for the fiscal year and fiscal
quarter ended on such dates, as the case may be, copies of which have been
furnished to the Banks on or prior to the Effective Date, present fairly in all
material respects the consolidated financial position of each of Host Marriott
and its
<PAGE>
Subsidiaries, HMH and its Subsidiaries and CRHC and its Subsidiaries at the date
of such balance sheets and the consolidated results of the operations of such
Persons for the periods covered thereby. All of the foregoing financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied. The pro forma consolidated financial statements
--- -----
of Host Marriott and its Subsidiaries and HMH and its Subsidiaries as of March
27, 1998 and after giving effect to the Initial Transaction, copies of which
have been furnished to the Banks on or prior to the Effective Date, present
fairly in all material respects the pro forma consolidated financial position of
--- -----
Host Marriott and its Subsidiaries and HMH and its Subsidiaries as of March 27,
1998 and for the 52-week period ended on such date. Since January 2, 1998 (but
for this purpose, assuming that the Initial Transaction had been consummated on
such date), nothing shall have occurred that has had, or could reasonably be
expected to have, a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date and on the date on which each
Loan is made, on a Pro Forma Basis after giving effect to all Indebtedness
--- -----
(including the Loans) being incurred or assumed and Liens created by each Credit
Party in connection therewith, (x) the sum of the assets, at a fair valuation,
of Holdings and its Subsidiaries (taken as a whole) and the Borrower (on a
stand-alone basis) will exceed their respective debts, (y) Holdings and its
Subsidiaries (taken as a whole) and the Borrower (on a stand-alone basis) have
not incurred and do not intend to incur, and do not believe that they will
incur, debts beyond their ability to pay such debts as such debts mature and (z)
Holdings and its Subsidiaries (taken as a whole) and the Borrower (on a stand-
alone basis) have sufficient capital with which to conduct its business. For
purposes of this Section 7.05(b) "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a) or in the Schedules to this Agreement, there were as
of the Effective Date no liabilities or obligations with respect to Holdings or
any of its Subsidiaries (whether absolute, accrued, contingent or otherwise and
whether or not due) of a nature required to be set forth in a balance sheet or
footnote thereto prepared in accordance with generally accepted accounting
principles which, either individually or in the aggregate, would be material to
Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole. As of the Effective Date, no
Principal Credit Party knows of any liability or obligation of itself or any of
its Subsidiaries of any such nature that is not fully disclosed in the financial
statements delivered pursuant to Section 7.05(a) or in the footnotes thereto
which, either individually or in the aggregate, could reasonably be expected to
have a material adverse effect on Holdings, Holdings and its Subsidiaries taken
as a whole, the Borrower or the Borrower and its Subsidiaries taken as a whole.
(d) On and as of the Effective Date, the Projections previously
delivered to the Administrative Agent and the Banks have been prepared on a
basis consistent in all material respects with the financial statements referred
to in Section 7.05(a) (other than as set forth or presented in such
Projections), and there
<PAGE>
are no statements or conclusions in any of the Projections which are based upon
or include information known to any Principal Credit Party to be misleading in
any material respect or which fail to take into account known material
information regarding the matters reported therein. On the Effective Date, each
Principal Credit Party believed that the Projections were reasonable and
attainable.
7.06 Litigation. There are no actions, suits or proceedings pending
----------
or, to the best knowledge of each Principal Credit Party, threatened (i) with
respect to the Initial Transaction, the REIT Transaction or any Document which
could reasonably be expected to have a material adverse effect on the Initial
Transaction or the REIT Transaction, (ii) which purports to affect the legality,
validity or enforceability of any Credit Document or (iii) that could reasonably
be expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) furnished by or on behalf of Holdings or any of its Subsidiaries in
writing to the Administrative Agent or any Bank (including, without limitation,
all information contained in the Documents) for purposes of or in connection
with this Agreement, the other Documents, the Initial Transaction, the REIT
Transaction or any of the other transactions contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Holdings or any of its Subsidiaries in writing to the
Administrative Agent or any Bank will be, true and accurate in all material
respects on the date as of which such information is dated or certified and, to
the best of each Principal Credit Party's knowledge, not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information is or was provided.
7.08 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Loans shall be used by the Borrower and its Subsidiaries, subject to the other
restrictions set forth in this Agreement, (i) to fund, in part, the Refinancing
Transaction and the REIT Transaction, and (ii) for the working capital and
general corporate purposes of Holdings and its Subsidiaries.
(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of Holdings and each of its
------------------------
Subsidiaries has timely filed or caused to be timely filed, on the due dates
thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal, state and other material returns, statements, forms and
reports for taxes (the "Returns") required to be filed by or with respect to the
income, properties or operations of Holdings and/or its Subsidiaries. The
Returns accurately reflect in all material respects all material liability for
taxes of Holdings and its Subsidiaries for the periods covered thereby except
for amounts for which adequate reserves have been established in accordance with
generally accepted accounting principles. Each of Holdings and each of its
Subsidiaries has paid all material taxes payable by them other than taxes which
are not delinquent, and other than those contested in good faith and for which
adequate reserves have been established in accordance with generally accepted
accounting principles. There is no action, suit, proceeding, investigation,
audit, or claim
<PAGE>
now pending or, to the best knowledge of each Principal Credit Party, threatened
by any authority regarding any taxes relating to Holdings or any of its
Subsidiaries which, either individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Holdings, Holdings and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its Subsidiaries
taken as a whole. As of the Effective Date, Holdings and each of its
Subsidiaries have properly accrued adequate reserves in accordance with
generally acceptable accounting principles for any amount of taxes in dispute
for a Return which is the subject of any waiver extending the statute of
limitations relating to the payment or collection of taxes of Holdings or any of
its Subsidiaries.
7.10 Compliance with ERISA. (i) Each Plan that is a single employer
---------------------
plan as defined in Section 4001(a)(15) of ERISA (a "Single Employer Plan") is in
substantial compliance with ERISA and the Code; no Reportable Event has occurred
with respect to a Single Employer Plan; no Single Employer Plan is insolvent or
in reorganization; to the best knowledge of each Principal Credit Party, no
Multiemployer Plan is insolvent or in reorganization; no Single Employer Plan
has an Unfunded Current Liability; no Single Employer Plan which is subject to
Section 412 of the Code or Section 302 of ERISA has an accumulated funding
deficiency, within the meaning of such Sections of the Code or ERISA, or has
applied for or received an extension of any amortization period within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all
contributions required to be made by Holdings or any of its Subsidiaries or any
ERISA Affiliate with respect to a Plan and a Foreign Pension Plan have been
timely made; neither Holdings nor any of its Subsidiaries nor any ERISA
Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or
reasonably expects to incur any material liability (including any indirect,
contingent, or secondary liability) under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted to terminate or appoint
a trustee to administer any Single Employer Plan; to the best knowledge of each
Principal Credit Party, no proceedings have been instituted to terminate or
appoint a trustee to administer any Multiemployer Plan; no condition exists
which presents a substantial risk to Holdings or any of its Subsidiaries or any
ERISA Affiliate of incurring a material liability to or on account of a Single
Employer Plan pursuant to the foregoing provisions of ERISA and the Code; to the
best knowledge of each Principal Credit Party, no condition exists which
presents a substantial risk to Holdings or any of its Subsidiaries or any ERISA
Affiliate of incurring any material liability to or on account of a
Multiemployer Plan pursuant to the foregoing provisions of ERISA and the Code;
each Principal Credit Party believes that the aggregate liabilities of Holdings
and its Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the
event of a withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the date of the incurrence of any Loan, could
not reasonably be expected to have a material adverse effect on the ability of
Holdings or any of its Subsidiaries to perform its obligations under this
Agreement or the other Credit Documents to which it is a party; each group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) which covers or has covered employees or former employees of Holdings or
any of its Subsidiaries or any ERISA Affiliate has at all times been operated in
substantial compliance with the provisions of Part 6 of subtitle B of Title I of
ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on
the assets of Holdings or any of its Subsidiaries or any ERISA Affiliate exists
or, to the best knowledge of each Principal Credit Party is likely to arise on
account of any Plan; and Holdings and its Subsidiaries do not maintain or
contribute to (A) any employee welfare benefit plan (as defined in Section 3(1)
of ERISA) which provides benefits to retired employees or other former employees
(other than as
<PAGE>
required by Section 601 of ERISA) or (B) any Plan, the obligations with respect
to which could reasonably be expected to have a material adverse effect on the
ability of Holdings or any of its Subsidiaries to perform its obligations under
this Agreement or the other Credit Documents to which it is a party.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Holdings nor or any of its Subsidiaries has incurred any obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
under each Foreign Pension Plan, determined as of the end of Holdings' most
recently ended fiscal year on the basis of actuarial assumptions, each of which
is reasonable, does not exceed the current value of the assets of each Foreign
Pension Plan allocable to such benefit liabilities, in the aggregate, by a
material amount.
7.11 The Pledge and Security Agreement; Equity Pledges. (a) The
-------------------------------------------------
Pledge and Security Agreement creates (after all steps required under Articles 8
and 9 of the New York UCC have been taken) in favor of the Collateral Agent for
the benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of each Credit Party in the Pledge and
Security Agreement Collateral described therein and owned by such Credit Party
on any date on which this representation and warranty is made or deemed made to
the extent that a security interest therein can be created pursuant to the UCC,
which security interest shall, (i) upon delivery to the Collateral Agent of any
certificates evidencing any Pledged Securities, (ii) upon the filing of
appropriate financing statements under the UCC in respect of any uncertificated
Pledged Securities that constitute a "general intangible" under the New York UCC
or (iii) upon the completion of such other actions as may be required under the
applicable provisions of the UCC (which delivery, filings and/or other actions
have been done (or will be done within five days after the Effective Date) and
remain in full force and effect as to the Pledge and Security Agreement
Collateral owned by any Credit Party on any date on which this representation
and warranty is made or deemed made), constitute a fully perfected first lien
on, and security interest in, all right, title and interest of such Credit Party
in all of the Pledge and Security Agreement Collateral described therein,
subject to no security interests of any other Person.
(b) Schedule IX sets forth, as of the Effective Date, whether the
capital stock or other equity interests in each Subsidiary listed on Schedule V
is pledged (as of the Effective Date) pursuant to the Pledge and Security
Agreement, and to the extent any such interest is not so pledged, Schedule IX
shall indicate the reason therefor.
7.12 Properties. Each of Holdings and each of its Subsidiaries has
----------
good and marketable title to all material properties owned by them, including
all material property reflected in the balance sheets referred to in Section
7.05(a) (except as sold or otherwise disposed of since the date of such balance
sheets, free and clear of all Liens, other than (i) as referred to in such
balance sheets or in the notes thereto or (ii) Permitted Liens).
7.13 Representations and Warranties in Other Documents. All
-------------------------------------------------
representations and warranties set forth in the Documents to which Holdings or
any of its Subsidiaries is a party (other than the Credit Documents) were true
and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made).
<PAGE>
7.14 Subsidiaries. (a) Holdings has no Subsidiaries other than (i)
------------
Hospitality, the Borrower and those Subsidiaries of the Borrower listed on
Schedule V, (ii) the Non-Borrower Subsidiaries and (iii) new Subsidiaries
created in compliance with Section 9.17. Schedule V correctly sets forth, as of
the Effective Date, the percentage ownership (direct or indirect) of Holdings in
each class of capital stock or other equity of each of its Subsidiaries existing
on the Effective Date and also identifies the direct owner thereof.
(b) Part I of Schedule V sets forth, as of the Effective Date, each
initial Subsidiary Guarantor. Part II of Schedule V sets forth, as of the
Effective Date, each Subsidiary of Holdings (other than the Borrower and
Hospitality) which shall not be a Subsidiary Guarantor on the Effective Date,
which Schedule shall specify the reason the respective Subsidiary is not
required to be a Subsidiary Guarantor.
7.15 Compliance with Statutes, etc. Each of Holdings and each of its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including, without limitation, applicable statutes,
regulations, orders and restrictions relating to zoning compliance and
environmental standards and controls), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, Holdings and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its Subsidiaries
taken as a whole.
7.16 Investment Company Act. Neither Holdings nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.17 Public Utility Holding Company Act. Neither Holdings nor any of
----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7.18 Environmental Matters. (a) To the best knowledge of each
---------------------
Principal Credit Party, each of Holdings and each of its Subsidiaries has
complied with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. To the best knowledge of each
Principal Credit Party, there are no pending or threatened Environmental Claims
against Holdings or any of its Subsidiaries or any Real Property owned, leased
or operated by Holdings or any of its Subsidiaries. To the best knowledge of
each Principal Credit Party, there are no facts, circumstances, conditions or
occurrences on any Real Property owned, leased or operated by Holdings or any of
its Subsidiaries or on any property adjoining or in the vicinity of any such
Real Property that could reasonably be expected (i) to form the basis of an
Environmental Claim against Holdings or any of its Subsidiaries or any such Real
Property or (ii) to cause any such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property by Holdings or any of its Subsidiaries under any applicable
Environmental Law.
(b) To the best knowledge of each Principal Credit Party, Hazardous
Materials have not at any time been generated, used, treated or stored on, or
transported to or from, or Released on or from, any Real Property owned, leased
or operated by Holdings or any of its Subsidiaries except in compliance with
<PAGE>
all applicable Environmental Laws and reasonably required in connection with the
operation, use and maintenance of any such Real Property by Holdings or such
Subsidiary's business.
(c) Notwithstanding anything to the contrary in this Section 7.18,
the representations made in this Section 7.18 shall only be untrue if the
aggregate effect of all failures and noncompliance of the types described above
could reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Holdings, Holdings and its Subsidiaries taken as a whole, the
Borrower or the Borrower and its Subsidiaries taken as a whole.
7.19 Labor Relations. Neither Holdings nor any of its Subsidiaries,
---------------
and to the best knowledge of each Principal Credit Party, no Facility Manager or
Approved Lessee, is engaged in any unfair labor practice with respect to any
Hotel Property or Senior Living Care Facility that could reasonably be expected
to have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings,
Holdings and its Subsidiaries taken as a whole, the Borrower or the Borrower and
its Subsidiaries taken as a whole. To the best knowledge of each Principal
Credit Party, there is (i) no unfair labor practice complaint pending or
reasonably expected to arise against Holdings any of its Subsidiaries, any
Facility Manager or any Approved Lessee before the National Labor Relations
Board and no significant grievance or significant arbitration proceeding arising
out of or under any collective bargaining agreement is so pending or reasonably
expected to arise against Holdings, any of its Subsidiaries, any Facility
Manager or any Approved Lessee, (ii) no strike, labor dispute, slowdown or
stoppage is pending or reasonably expected to arise against Holdings, any of its
Subsidiaries, any Facility Manager or any Approved Lessee and (iii) no union
representation question exists with respect to the employees of Holdings, any of
its Subsidiaries, any Facility Manager or any Approved Lessee, in each case with
respect to the Hotel Properties and/or Senior Living Care Facilities managed by
the Facility Managers and/or leased by the Approved Lessees, except (with
respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings,
Holdings and its Subsidiaries taken as a whole, the Borrower or the Borrower and
its Subsidiaries taken as a whole.
7.20 Intellectual Property. Each of Holdings and each of its
---------------------
Subsidiaries owns or has the right to use all trademarks, permits, service
marks, trade names, licenses and franchises necessary for the conduct of its
respective businesses, except such as could not, either individually or in the
aggregate, reasonably be expected to have a material adverse affect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole.
7.21 Indebtedness. (a) Schedule VI sets forth a true and complete
------------
list of all Indebtedness of Holdings and its Subsidiaries as of the Effective
Date and which is to remain outstanding after giving effect to the Initial
Transaction (excluding the Loans, the Senior Notes and Indebtedness of the type
described in Section 9.04(iii), the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower and any other entity which directly or indirectly guaranteed such debt.
On the Effective Date, Holdings is current on all interest payments due on the
QUIPs Debt.
<PAGE>
7.22 Management Agreements, Franchise Agreements, Operating Leases,
--------------------------------------------------------------
Ground Leases. (a) Each Management Agreement and Franchise Agreement and,
- -------------
after the REIT Conversion Date, each Operating Lease with respect to any Hotel
Property or Senior Living Care Facility is in full force and effect in
accordance with its terms and has not been terminated, modified or amended
without the consent of the Administrative Agent (other than in accordance with
its terms) and no party thereto has denied or disaffirmed any of its material
obligations thereunder or has defaulted in the due performance or observance of
any material term, covenant or agreement on its part to be performed or observed
pursuant thereto, in each case except to the extent that (i) Holdings or its
relevant Subsidiary is diligently attempting to replace any such agreement that
has been terminated and (ii) the result of any such termination, amendment,
denial, disaffirmation or default (as applicable) could not, either individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole.
(b) Each ground lease with respect to any Hotel Property or Senior
Living Care Facility which is a Leasehold is in full force and effect in
accordance with its terms and no party thereto has denied or disaffirmed any of
its material obligations thereunder or has defaulted in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant thereto.
7.23 Initial Transaction. At the time of consummation thereof, each
-------------------
component of the Initial Transaction shall have been consummated in all material
respects in accordance with the terms of the respective Documents therefor and
all applicable laws. At the time of consummation thereof, all consents and
approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate each component of the Initial Transaction have
been obtained, given, filed or taken and are or will be in full force and effect
(or effective judicial relief with respect thereto has been obtained) (other
than immaterial consents). All applicable waiting periods with respect thereto
have or, prior to the time when required, will have, expired without, in all
such cases, any action being taken by any competent authority which restrains,
prevents, or imposes material adverse conditions upon any component of the
Initial Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon any
component of the Initial Transaction, or the making of any Loans or the
performance by a Credit Party of its obligations under the Documents to which it
is party. All actions taken by each Credit Party pursuant to or in furtherance
of each component of the Initial Transaction have been taken in compliance with
the respective Documents and all applicable laws.
7.24 REIT Transaction. At the time of consummation thereof, each
----------------
component of the REIT Transaction shall have been consummated, in all material
respects, in accordance with the terms of the respective REIT Transaction
Documents and all applicable laws. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate each component of the
REIT Transaction have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained) (other than immaterial consents). All applicable waiting periods
with respect thereto have or, prior to the time when required, will have,
expired without, in all such cases, any action being taken by any competent
authority which restrains, prevents,
<PAGE>
or imposes material adverse conditions upon any component of the REIT
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon any
component of the REIT Transaction, or the making of any Loans or the performance
by a Credit Party of its obligations under the REIT Transaction Documents to
which it is party. All actions taken by each Credit Party pursuant to or in
furtherance of each component of the REIT Transaction have been taken in
compliance with the respective REIT Transaction Documents and all applicable
laws.
7.25 Status as REIT. On and after the REIT Conversion Date, Host
--------------
REIT will meet all of the requirements for qualification as a real estate
investment trust under the Code effective for its first taxable year commencing
after the REIT Conversion Date. On and after the REIT Conversion Date, Host
REIT is or will be in a position to qualify for such taxable year and for each
taxable year thereafter as a real estate investment trust under the Code and its
proposed methods of operation will enable it to so qualify.
7.26 Facility Managers; Approved Lessees. To the best knowledge of
-----------------------------------
each Principal Credit Party, each Facility Manager has full power and authority
and the legal right to manage and operate the properties it operates and to
conduct the business in which it is currently engaged with respect to any Real
Property owned or leased by Holdings or any of its Subsidiaries, including,
without limitation, to be a party to a Management Agreement. To the best
knowledge of each Principal Credit Party, each Approved Lessee has full power
and authority and the legal right to lease, manage and operate the properties it
operates and to conduct the business in which it is currently engaged with
respect to any Real Property owned or leased by Holdings or any of its
Subsidiaries, including, without limitation, to be the lessee under an Operating
Lease and a party to a Management Agreement.
7.27 Healthcare Matters. (a) To the best knowledge of each
------------------
Principal Credit Party, each Facility Manager or other operator of a Senior
Living Care Facility (i) has, with respect to each of the Senior Living Care
Facilities it manages, all licenses required under applicable law to operate
each such Senior Living Care Facility and to conduct the business in which it is
currently engaged, (ii) has, with respect to each Senior Living Care Facility it
manages, received any certificate of need, determination of need or similar
approval required under applicable law, and any amendments or supplements with
respect thereto, and such approvals are in full force and effect, and (iii) with
respect to Senior Living Care Facilities that are operated as nursing facilities
(except where participation in Medicare or Medicaid is deemed undesirable in the
reasonable business judgment of the Facility Manager or such other operator) is
a party to provider agreements with respect to the participation of such Senior
Living Care Facilities in Medicare and Medicaid, which provider agreements are
in full force and effect, and are not, and for the past five calendar years have
not been, the subject of any proceedings that have been initiated or notices
issued by any Person to suspend, revoke, limit or otherwise modify any such
provider agreement, except, with respect to foregoing clauses (i), (ii) and
(iii), such licenses, approvals, certifications and provider agreements as to
which any lack thereof could not, and except for such proceedings which could
not, either individually or in the aggregate, reasonably be expected to have a
material adverse effect upon the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings,
Holdings and its Subsidiaries taken as a whole, the Borrower or the Borrower and
its Subsidiaries taken as a whole.
(b) Each Senior Living Care Facility (i) complies with all
applicable federal, state and local laws, regulations, quality and safety
standards, building and fire codes, accreditation standards and health care,
nursing facility or other
<PAGE>
requirements of any state department of health or other federal, state or local
governmental authorities, (ii) complies with all requirements for participation
in, and is in conformity with, all insurance, reimbursement and cost reporting
requirements imposed by law or regulation and has a current provider agreement
which is in full force and effect under, Medicare and Medicaid, and (iii) is
not, and for the past five calendar years has not been, the subject of any
proceedings that have been initiated or notices issued by any Person to suspend,
revoke, limit or otherwise modify any such provider agreement, except, with
respect to foregoing clauses (i), (ii) and (iii), such failures to comply and
failures to conform which could not, and except such proceedings which could
not, either individually or in the aggregate, reasonably be expected to have a
material adverse effect upon the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings,
Holdings and its Subsidiaries taken as a whole, the Borrower or the Borrower and
its Subsidiaries taken as a whole.
7.28 Year 2000. Any reprogramming required to permit the proper
---------
functioning, in and following the year 2000, of (i) the computer systems of
Holdings and its Subsidiaries and (ii) equipment of Holdings and its
Subsidiaries containing embedded microchips (including systems and equipment
supplied by others) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by July 1, 1999 except to the extent that the
failure to complete such reprogramming and testing by such date could not be
reasonably expected to have a material adverse effect upon the business,
operations, property, assets, liability, condition (financial or otherwise) or
prospects of Holdings, Holdings and its Subsidiaries taken as a whole, the
Borrower or the Borrower and its Subsidiaries taken as a whole. The cost to
Holdings and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to Holdings and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) is not reasonably likely to have a
material adverse effect upon the business, operations, property, assets,
liability, condition (financial or otherwise) or prospects of Holdings, Holdings
and its Subsidiaries taken as a whole, the Borrower or the Borrower and its
Subsidiaries taken as a whole.
SECTION 8. Affirmative Covenants. Each Principal Credit Party hereby
---------------------
covenants and agrees (as to itself and each of its Subsidiaries) that from and
after the Effective Date and until the Total Commitment has terminated and the
Loans and Notes, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
8.01 Information Covenants. Holdings and/or the Borrower will
---------------------
furnish to the Administrative Agent and each of the Banks:
(a) Quarterly Financial Statements and Reports. (A) Within 60 days
------------------------------------------
after the close of each of the first three quarterly accounting periods in
each fiscal year of Holdings and the Borrower (commencing with the
quarterly accounting period ending closest to June 30, 1998), (i) a
consolidated balance sheet of each of Holdings and its Subsidiaries and the
Borrower and its Subsidiaries as at the end of such quarterly accounting
period, (ii) the related consolidated statements of income for such
quarterly accounting period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly accounting period and (iii) the
related consolidated statements of cash flows for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period, in each case (commencing with the financial statements to be
delivered in respect of the quarterly accounting period ending closest to
June 30, 1998) setting forth comparative
<PAGE>
figures for the corresponding fiscal periods in the prior fiscal year, all
of which shall be in reasonable detail and certified by an Authorized
Financial Officer of Holdings or the Borrower, as the case may be, that, to
the best of such officer's knowledge after due inquiry, they fairly
present, in all material respects, the financial condition of each of
Holdings and its Subsidiaries and the Borrower and its Subsidiaries as of
the dates indicated and the results of their operations and changes in
their cash flows for the periods indicated, subject to normal year-end
audit adjustments, provided that, in satisfying the requirements of this
--------
Section 8.01(a) at any time after the REIT Conversion Date, if at the time
the financial statements referenced herein are to be delivered, Holdings
owns no capital stock of any Person other than the Borrower and has no
other material assets or liabilities (other than pursuant to the Credit
Documents), then only the consolidated financial statements of Holdings and
its Subsidiaries need to be delivered pursuant to this Section 8.01(a) so
long as any differences in the consolidated financial statements of
Holdings and its Subsidiaries from those of the Borrower and its
Subsidiaries are indicated by footnotes in the respective consolidated
financial statements of Holdings and its Subsidiaries.
(B) Within 60 days after the end of each quarterly accounting
period in each fiscal year of Holdings occurring after the REIT Conversion
Date, an operating statement in form and detail reasonably satisfactory to
the Administrative Agent and the Borrower for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period for
all Hotel Properties then subject to Operating Leases.
(b) Annual Financial Statements. Within 105 days after the close
---------------------------
of each fiscal year of Holdings and the Borrower, the consolidated balance
sheet of each of Holdings and its Subsidiaries and the Borrower and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and shareholders' equity and of cash flows for such
fiscal year setting forth comparative figures for the preceding fiscal year
and certified by Arthur Andersen L.L.P. or such other independent certified
public accountants of recognized national standing reasonably acceptable to
the Administrative Agent, together with a report of such accounting firm
stating that in the course of its regular audit of the financial statements
of each of Holdings and its Subsidiaries and the Borrower and its
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge of
any Default or Event of Default which has occurred and is continuing under
any of Sections 9.07 through 9.12, inclusive, or, if in the opinion of such
accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof, provided that, in
--------
satisfying the requirements of this Section 8.01(b) at any time after the
REIT Conversion Date, if at the time the financial statements referenced
herein are to be delivered, Holdings owns no capital stock of any Person
other than the Borrower and has no other material assets or liabilities
(other than pursuant to the Credit Documents), then only the consolidated
financial statements of Holdings and its Subsidiaries need to be delivered
pursuant to this Section 8.01(b) so long as any differences in the
consolidated financial statements of Holdings and its Subsidiaries from
those of the Borrower and its Subsidiaries are indicated by footnotes in
the respective consolidated financial statements.
<PAGE>
(c) Budgets. No later than 60 days after the first day of each
-------
fiscal year of Holdings, budgets in form reasonably satisfactory to the
Administrative Agent (including, in any event, budgeted statements of cash
flow and Capital Expenditures and budgeted debt and cash balances) for such
fiscal year prepared in detail, with respect to Holdings and its
Subsidiaries, accompanied by a statement of an Authorized Financial Officer
of Holdings to the effect that, to the best of such officer's knowledge,
the budget is a reasonable estimate of the period covered thereby.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 8.01(a) and (b), a
certificate of an Authorized Financial Officer of the Borrower to the
effect that, to the best of such officer's knowledge, no Default or Event
of Default has occurred and is continuing or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and extent
thereof, which certificate shall (x) set forth the calculations required to
establish whether Holdings and its Subsidiaries were in compliance with the
provisions of Sections 9.02(vi), 9.02(vii), 9.02(ix), 9.03, 9.04, 9.05 and
9.07 through 9.12, inclusive, at the end of such fiscal quarter or year, as
the case may be, and (y) commencing with the fiscal quarter ending closest
to June 30, 1998, set forth the amount of (and the calculations required to
establish) Quarterly Excess Cash Flow for the preceding fiscal quarter or
Annual Excess Cash Flow for the preceding fiscal year, as the case may be.
(e) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after the President, the Chief Executive
Officer, any Vice President or any Authorized Financial Officer of any
Credit Party obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending or
threatened (x) against Holdings or any of its Subsidiaries which could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as
a whole, the Borrower or the Borrower and its Subsidiaries taken as a
whole, (y) with respect to any material Indebtedness of Holdings or any of
its Subsidiaries or (z) with respect to any Credit Document.
(f) Management Letters. Promptly after any Credit Party's receipt
------------------
thereof, a copy of any "management letter" received by any such Credit
Party from its certified public accountants and management's responses, if
any, thereto.
(g) Other Reports and Filings. Promptly, and without duplication of
-------------------------
any documents or information delivered pursuant to another clause of this
Section 8.01, copies of all financial information, proxy materials and
other information and reports, if any, which Holdings or any of its
Subsidiaries shall file with the Securities and Exchange Commission or any
successor thereto (the "SEC") (it being understood, however, that with
respect to any preliminary filings made with the SEC, Holdings need only
deliver a certificate describing such filing) and copies of all notices and
reports which Holdings or any of its Subsidiaries shall deliver to holders
of the Senior Notes pursuant to the terms of the documentation governing
such Indebtedness (or any trustee, agent or other representative therefor).
<PAGE>
(h) Environmental Matters. Promptly upon, and in any event within
---------------------
ten Business Days after the President, the Chief Executive Officer, any
Vice President or any Authorized Financial Officer of any Credit Party,
obtaining knowledge thereof, notice of one or more of the following
environmental matters to the extent that any such environmental matters,
individually or in the aggregate, could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings,
Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned, leased
or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned, leased or operated by Holdings or any of its
Subsidiaries that (a) results in non-compliance by Holdings or any of
its Subsidiaries with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned,
leased or operated by Holdings or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to
any restrictions on the ownership, lease, occupancy, use or
transferability by Holdings or any of its Subsidiaries of such Real
Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned, leased or operated by Holdings or any of its
Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and Holdings' or such Subsidiary's response or proposed response thereto.
(i) Other Information. From time to time, such other information
-----------------
or documents (financial or otherwise) with respect to Holdings and/or any
of its Subsidiaries as the Administrative Agent or any Bank (through the
Administrative Agent) may reasonably request.
8.02 Books, Records and Inspections; Annual Meetings. (a) Holdings
-----------------------------------------------
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries in conformity with generally
accepted accounting principles and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. Holdings
will, and will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect,
upon reasonable advance notice, during regular business hours and under guidance
of officers of Holdings or such Subsidiary, any of the properties of Holdings or
any of its Subsidiaries, and to examine
<PAGE>
the books of account of Holdings and any of its Subsidiaries and discuss the
affairs, finances and accounts of Holdings and any of its Subsidiaries with, and
be advised as to the same by, its and their respective Presidents, Chief
Executive Officers, Vice Presidents, Authorized Financial Officers and
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or any Bank may reasonably
request, provided that any Bank's rights under this Section 8.02 may not be
--------
exercised more than once in any fiscal quarter of Holdings.
(b) Annual Meetings with Banks. At the request of the Administrative
--------------------------
Agent or the Required Banks, Holdings and the Borrower shall, at least once
during each fiscal year of Holdings, hold a meeting (at a mutually agreeable
location and time) with all of the Banks at which meeting the financial results
of the previous fiscal year and the financial condition of Holdings and its
Subsidiaries and the budgets presented for the current fiscal year of Holdings
and its Subsidiaries shall be reviewed, with each Bank bearing its own travel,
lodging, food and other costs associated with attending any such meeting.
8.03 Maintenance of Property and Insurance. (a) Holdings will, and
-------------------------------------
will cause each of its Subsidiaries, Approved Lessees and Facility Managers (as
appropriate) to, (i) maintain all of their material property in good working
order and condition (ordinary wear and tear and damage by casualty excepted),
(ii) maintain with financially sound and reputable insurance companies or
qualified self-insurers, insurance on itself and its properties in commercially
reasonable amounts, and (iii) furnish to the Administrative Agent and the Banks
from time to time, upon written request, certificates of insurance reasonably
acceptable to the Administrative Agent and required under this Agreement and the
other Credit Documents and such other information relating to such insurance as
the Administrative Agent or any Bank may reasonably request.
(b) With respect to each Hotel Property and Senior Living Care
Facility, Holdings and its Subsidiaries, as applicable, shall obtain and
maintain, or cause to be maintained, insurance providing at least the following
coverages:
(i) comprehensive all risk insurance on the Improvements on each
Hotel Property and Senior Living Care Facility and the Personal Property,
including contingent liability from Operation of Building Laws, Demolition
Costs and Increased Cost of Construction Endorsements, in each case (A) in
an amount equal to 100% of the "Full Replacement Cost," which for purposes
of this Agreement shall mean actual replacement value (exclusive of costs
of excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements owned or leased by Holdings or such Subsidiary
and Personal Property or a waiver of all co-insurance provisions; (C) with
deductibles in such amounts as may be carried by operators of similar
facilities or as required by the insurance carrier; and (D) containing an
"Ordinance or Law Coverage" or "Enforcement" endorsement if any of the
Improvements or the use of the Hotel Property or Senior Living Care
Facility shall at any time constitute legal non-conforming structures or
uses. The Full Replacement Cost shall be redetermined from time to time
(but not more frequently than once in any twelve (12) calendar months) at
the request of the Administrative Agent by an appraiser or contractor
designated and paid by Holdings or such Subsidiary and approved by the
Administrative Agent, or by an engineer or appraiser in the regular employ
of the insurer. Notwith-
<PAGE>
standing the foregoing, if such redetermination is based on an appraisal,
the cost thereof shall be paid by Holdings or the related Subsidiary. After
the first appraisal, additional appraisals may be based on construction
cost indices customarily employed in the trade or as determined by the
respective insurance carrier and shall be Holdings' or the related
Subsidiary's expense. Such appraisals will not be required so long as the
policy is written on a blanket full replacement cost basis with an agreed
amount endorsement. No omission on the part of the Administrative Agent to
request any such ascertainment shall relieve Holdings or any Subsidiary of
any of its obligations under this Section 8.03(b)(i). In addition, Holdings
and its Subsidiaries shall obtain (x) flood hazard insurance if any portion
of the Improvements is currently or at any time in the future located in a
federally designated "special flood hazard area" and (y) earthquake
insurance in amounts and in form and substance reasonably satisfactory to
the Administrative Agent (but in no event less than the "Probable Maximum
Loss" determined by consultants reasonably satisfactory to the
Administrative Agent) in the event the Hotel Property or Senior Living Care
Facility is located in an area with a high degree of seismic activity, or
otherwise as required by the Administrative Agent, provided that the
insurance pursuant to preceding clauses (x) and (y) shall be on terms
consistent with the comprehensive all risk insurance policy required under
this Section 8.03(b)(i), except that the deductible on wind insurance if
the Hotel Property or Senior Living Care Facility is located in a coast
line area, shall not be in excess of seven and one-half percent (7.5%) of
the appraised value of the Hotel Property or Senior Living Care Facility;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about the Hotel Property or Senior Living Care Facility, including, in
the case of Hotel Properties, "Dram Shop" or other liquor liability
coverage if alcoholic beverages are sold from or may be consumed at any
such Hotel Properties, such insurance (A) to be on the so-called
"occurrence" form with a combined single limit of not less than $1,000,000
or such greater amount as may be generally required by institutional
lenders for hotels or facilities comparable to the Hotel Property or Senior
Living Care Facility; (B) to continue at not less than the aforesaid limit
until required to be changed by the Administrative Agent or the Required
Banks in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations on an
"if any" basis; (3) independent contractors; and (4) blanket contractual
liability for all written and oral contracts;
(iii) business income and rent loss insurance (A) covering all risks
required to be covered by the insurance provided for in Section 8.03(b)(i);
(B) containing an extended period of indemnity endorsement which provides
that from and after the physical loss to the Improvements on each Hotel
Property, Senior Living Care Facility and Personal Property has been
repaired, the continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss, or the
expiration of twelve (12) months from the original date of the loss,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (C) in an amount equal to 100% of the
projected house profits plus fixed expenses, to include interest on fixed
indebtedness from the Hotel Property or Senior Living Care Facility for a
period of twelve (12) months, determined prior to the date
<PAGE>
hereof and at least once each year thereafter based on the greater of: (x)
Holdings' reasonable estimate of the house profits plus fixed expenses, to
include interest on fixed indebtedness from the Hotel Property or Senior
Living Care Facility, which estimate shall be reasonably satisfactory to
the Administrative Agent and (y) the house profits plus fixed expenses, to
include interest on fixed indebtedness set forth in the financial
statements delivered to the Banks in accordance with this Agreement;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements on each Hotel
Property and Senior Living Care Facility (A) contractor's liability
insurance covering claims not covered by or under the terms or provisions
of the above mentioned commercial general liability insurance policy; and
(B) the insurance provided for in Section 8.03(b)(i) written in a so-called
builder's risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant to Section 8.03(b)(i), (3)
including permission to occupy such Hotel Property or Senior Living Care
Facility, and (4) with an agreed amount endorsement or a waiver of
coinsurance provisions;
(v) workers' compensation, subject to the statutory limits of the
jurisdiction (domestic or foreign) in which the respective Hotel Property
or Senior Living Care Facility is located, and employer's liability
insurance (A) with a limit per accident and per disease per employee, and
(B) in an amount for disease aggregate in respect of any work or operations
on or about such Hotel Property or Senior Living Care Facility, or in
connection with such Hotel Property or Senior Living Care Facility or its
operation (if applicable), in each case reasonably required by the
Administrative Agent;
(vi) comprehensive boiler and machinery insurance, if applicable,
in amounts as shall be reasonably required by the Administrative Agent on
terms consistent with the comprehensive all risk insurance policy required
under Section 8.03(b)(i);
(vii) umbrella liability insurance in an amount not less than
$100,000,000 per occurrence or such greater amount as may be generally
required by institutional lenders for hotels or senior living facilities
comparable to the respective Hotel Properties or Senior Living Care
Facilities on terms consistent with the commercial general liability
insurance policy required under Section 8.03(b)(ii);
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits
per occurrence of $1,000,000 and an umbrella liability insurance of not
less than $4,000,000;
(ix) a blanket fidelity bond coverage insuring, among other things,
against losses resulting from dishonest or fraudulent acts including losses
from acts committed by (A) Holdings' or any of its Subsidiaries' personnel
or (B) temporary contract employees or student interns;
(x) such other insurance and in such amounts as are required
pursuant to any franchise agreements or as the Administrative Agent from
time to time may reasonably request against such other insurable hazards
which are generally required by institutional lenders for hotels or senior
living facilities comparable to the respective Hotel Properties or Senior
Living Care Facilities or which are commonly insured against for property
similar to the respective Hotel Properties or Senior Living Care Facilities
<PAGE>
located in or around the region in which the respective Hotel Properties or
Senior Living Care Facilities are located;
(xi) insurance against terrorist acts in amounts reasonably
satisfactory to the Administrative Agent, which may be covered by a
standard all-risk policy to the extent available on commercially reasonable
terms; and
(xii) fiduciary liability insurance and directors and officers
liability insurance in amounts and in form and substance reasonably
satisfactory to the Administrative Agent.
(c) All insurance provided for in Section 8.03(b) hereof shall be
obtained under valid and enforceable policies (the "Policies"), and shall be
subject to the reasonable approval of the Administrative Agent as to insurance
companies, amounts, forms and deductibles. The Policies shall be issued by
financially sound and responsible insurance companies authorized to do business
in the jurisdiction (domestic or foreign) in which each Hotel Property or Senior
Living Care Facility is located and approved by the Administrative Agent. Such
insurance company must have a general policy rating of A- or better and a
financial class of VII or better by A.M. Best Company, Inc., or another
financial size rating reasonably acceptable to the Administrative Agent
considering market conditions (each such insurer shall be referred to below as a
"Qualified Insurer"). Not less than thirty (30) days prior to the expiration
dates of the Policies theretofore furnished to the Administrative Agent pursuant
to Section 8.03(b), accompanied by evidence reasonably satisfactory to the
Administrative Agent of payment of the premiums due thereunder (the "Insurance
Premiums"), shall be delivered by Holdings and its Subsidiaries to the
Administrative Agent; provided, however, that in the case of renewal Policies,
-------- -------
Holdings and its Subsidiaries may furnish the Administrative Agent with
certificates of insurance reasonably acceptable to the Administrative Agent
therefor to be followed by the original Policies when issued.
(d) In the event Holdings or any of its Subsidiaries obtains
separate insurance or an umbrella or a blanket Policy, Holdings or such
Subsidiary shall notify the Administrative Agent of the same and shall cause
certified copies of certificates of insurance reasonably acceptable to the
Administrative Agent to be delivered as required in Section 8.03(b). Any blanket
insurance Policy shall be written on an occurrence basis for the coverages
required hereunder.
(e) All Policies of insurance provided for in Section 8.03(b)
shall contain clauses or endorsements to the effect that:
(i) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least 30
days' written notice to the Administrative Agent and any other party named
therein as an additional insured and 10 days notice for non-payment of
premium; and
(ii) each Policy shall provide that the issuers thereof shall give
written notice to the Administrative Agent if the Policy has not been
renewed thirty (30) days prior to its expiration.
(f) Holdings will furnish to the Administrative Agent and to each
Bank, on or before thirty (30) days after the renewal of any Policy, a
certificate of insurance indicating the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance, and, if requested by
<PAGE>
Administrative Agent or the Required Banks, verification of the adequacy of such
insurance by an independent insurance broker or appraiser acceptable to the
Administrative Agent.
8.04 Corporate Franchises. Holdings will, and will cause each of its
--------------------
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises,
licenses and patents; provided, however, that nothing in this Section 8.04 shall
-------- -------
prevent (i) any of the transactions permitted in accordance with Section 9.02,
(ii) any of the transactions that constitute the Initial Transaction or the REIT
Transaction or (iii) the withdrawal by Holdings or any of its Subsidiaries of
its qualification as a foreign corporation, partnership or limited liability
company, as the case may be, in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Holdings, Holdings and its Subsidiaries taken as a whole, the
Borrower or the Borrower and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. Holdings will, and will cause
------------------------------
each of its Subsidiaries and, to the extent it has the power or right to do so
(whether by contract or otherwise) each Approved Lessee and Facility Manager to,
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, including, without limitation, any requirements of any federal, state
or local department of health, except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, Holdings and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its Subsidiaries
taken as a whole. Holdings will, and will cause each of its Subsidiaries and
each Approved Lessee and Facility Manager to, (x) maintain in good standing all
material licenses, certifications, accreditations and other approvals applicable
to it or to any Hotel Property or Senior Living Care Facility which it owns,
leases, manages or operates and (y) maintain a standard of care for the patients
or residents of each such Senior Living Care Facility at all times at the level
necessary to ensure quality care for such patients or residents.
8.06 Compliance with Environmental Laws. (a) Holdings will comply,
----------------------------------
and will cause each of its Subsidiaries to comply, with all Environmental Laws
applicable to the ownership or use of its Real Property now or hereafter owned,
leased or operated by Holdings or any of its Subsidiaries, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole, and will promptly pay or cause
to be paid all costs and expenses incurred in connection with such compliance,
and will keep or cause to be kept all such Real Property free and clear of any
Liens imposed pursuant to such Environmental Laws.
(b) At the written request of the Administrative Agent or the Required
Banks, which request shall specify in reasonable detail the basis therefor, at
any time and from time to time after (i) the Administrative Agent receives
notice under Section 8.01(h) of any event for which notice is required to be
delivered for any Real Property or (ii) Holdings or any of its Subsidiaries are
not in compliance with Section 8.06(a) with respect to any Real Property,
Holdings and the Borrower will provide, at their sole cost and expense, an
environmental site
<PAGE>
assessment report concerning any such Real Property now or hereafter owned,
leased or operated by Holdings or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably approved by the Administrative Agent,
indicating the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with any Hazardous Materials on
such Real Property. If Holdings or the Borrower fails to provide the same within
90 days after such request was made, the Administrative Agent may order the
same, and Holdings and the Borrower shall grant and hereby grant, to the
Administrative Agent and the Banks and their agents access to such Real Property
and specifically grants the Administrative Agent and the Banks an irrevocable
non-exclusive license, subject to the rights of tenants, to undertake such an
assessment, all at the Borrower's expense.
8.07 ERISA. Within 15 Business Days after Holdings, any Subsidiary
-----
of Holdings or any ERISA Affiliate knows or has reason to know of the occurrence
of any of the following events to the extent that such events, individually or
in the aggregate, could reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole,
Holdings will deliver to the Administrative Agent a certificate of an Authorized
Financial Officer of Holdings setting forth details as to such occurrence and
the action, if any, that Holdings, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by Holdings, such Subsidiary, such ERISA Affiliate,
the PBGC, a Plan participant or the Plan administrator with respect thereto:
that a Reportable Event has occurred; that an accumulated funding deficiency,
within the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application may reasonably be expected to be or has been made to
the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Single Employer Plan; that any contribution required
to be made by Holdings, any Subsidiary of Holdings or any ERISA Affiliate to a
Plan or Foreign Pension Plan has not been timely made; that a Plan has been or
may reasonably be expected to be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien on the assets of Holdings, any Subsidiary of
Holdings or any ERISA Affiliate under ERISA or the Code; that proceedings may
reasonably be expected to be or have been instituted to terminate or appoint a
trustee to administer a Plan; that a proceeding has been instituted against
Holdings, any Subsidiary of Holdings or any ERISA Affiliate pursuant to Section
515 of ERISA to collect a delinquent contribution to a Plan; that Holdings, any
Subsidiary of Holdings or any ERISA Affiliate will or may reasonably be expected
to incur or has incurred any liability (including any indirect, contingent, or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code under
Section 4980B of the Code; or that Holdings or any Subsidiary of Holdings may
incur any liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Holdings
will deliver to the Administrative Agent (with sufficient copies for each Bank)
(i) a complete copy of the annual report (Form 5500) of each
<PAGE>
Single Employer Plan (including, to the extent required, the related financial
and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed by Holdings or
any of its Subsidiaries with the Internal Revenue Service and (ii) copies of any
records, documents or other information that must be furnished to the PBGC with
respect to any Plan pursuant to Section 4010 of ERISA. In addition to any
certificates or notices delivered to the Administrative Agent pursuant to the
first sentence hereof, copies of annual reports and any material notices
received by Holdings, any Subsidiary of Holdings or any ERISA Affiliate with
respect to any Plan or Foreign Pension Plan shall be delivered to the
Administrative Agent (with sufficient copies for each Bank) no later than 15
Business Days after the date such report has been filed with the Internal
Revenue Service or such notice has been received by Holdings, such Subsidiary or
such ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. Holdings and the Borrower
------------------------------------
will cause (i) each of its, and each of its Subsidiaries', fiscal years to end
on the Friday closest to December 31 and (ii) each of its, and each of its
Subsidiaries', first three fiscal quarters to end on the last day of the 12th,
24th and 36th week, respectively, of each fiscal year and the fourth fiscal
quarter to end on the Friday closest to December 31, it being understood that
(x) if any Hotel Property or Senior Living Care Facility owned or leased by a
Subsidiary of Holdings is managed or leased by an Approved Lessee or a Facility
Manager other than SLC, any Wholly-Owned Subsidiary of SLC, Marriott
International or any Wholly-Owned Subsidiary of Marriott International,
Holdings, and the Borrower shall cause such Subsidiary's fiscal years and fiscal
quarters to end on dates as close as reasonably practicable to the dates set
forth above in this Section 8.08 and (y) Holdings and the Borrower may elect to
change each of its and each of its Subsidiaries fiscal quarters to end on March
31, June 30, September 30 and December 31.
8.09 Performance of Obligations. Holdings will, and will cause each
--------------------------
of its Subsidiaries to, perform all of its obligations under the terms of each
ground lease, each Operating Lease and each mortgage, deed of trust, indenture,
loan agreement or credit agreement and each other material agreement, contract
or instrument by which it or any Real Property owned or leased by Holdings or
any of its Subsidiaries is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, Holdings and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its Subsidiaries
taken as a whole. Holdings will, and will cause each of its Subsidiaries to,
enforce the provisions of each Operating Lease so as to cause each Approved
Lessee to abide by the terms of, and enforce the obligations under, each
Management Agreement, each franchise agreement and each other material
agreement, contract or instrument to which such Approved Lessee is a party or by
which such Approved Lessee is bound and which affects the ownership, leasing,
management or operation of any Real Property owned or leased by Holdings or any
of its Subsidiaries, except such non-performances as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, conditions (financial
or otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Holdings will, and will cause each of its
----------------
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which any penalties attach
thereto, and all lawful claims for sums that have become due and payable which,
if unpaid, might become a lien or charge upon any properties of
<PAGE>
Holdings or any such Subsidiary; provided that neither Holdings nor any such
--------
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim which is immaterial or is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with generally accepted accounting principles.
8.11 Certain Subsidiaries. (a) Holdings and the Borrower will
--------------------
ensure that at all times either the Borrower or a Wholly-Owned Subsidiary of
Holdings or the Borrower that is a Subsidiary Guarantor is (i) the sole general
partner of any Subsidiary Guarantor that is a partnership, or (ii) the sole
managing member (or has the sole right to designate members of the board of
managers) of any Subsidiary Guarantor that is a limited liability company.
(b) Holdings and the Borrower will ensure that at all times (i)
either the Borrower or a Wholly-Owned Subsidiary of Holdings or the Borrower
that is a Subsidiary Guarantor owns 100% of the equity interests in each Look-
Through Subsidiary and (ii) the equity interests owned by the Borrower (directly
or indirectly) in each Subsidiary of the Borrower that is not a Look-Through
Subsidiary are owned by a Look-Through Subsidiary of the Borrower that is a
Subsidiary Guarantor. In addition, Holdings and the Borrower will ensure that
all Subsidiary Guarantors existing immediately following the consummation of the
REIT Transaction (other than Subsidiary Guarantors owning Hotel Properties that
are the subject of a Partnership Roll-Up) shall be Look-Through Subsidiaries.
8.12 Management Agreements; Operating Leases. Unless the Required
---------------------------------------
Banks otherwise agree in writing, Holdings will take, and will cause each of its
Subsidiaries to take, all action necessary so that (i) each Hotel Property or
Senior Living Care Facility is at all times managed by a Permitted Facility
Manager pursuant to a Management Agreement, and (ii) from and after the REIT
Conversion Date, each Hotel Property that is leased is at all times leased to an
Approved Lessee pursuant to an Operating Lease; provided, however, that Holdings
-------- -------
and its Subsidiaries shall not be deemed to be in breach of the covenants set
forth in this Section 8.12 by virtue of a failure to so maintain a Management
Agreement or Operating Lease, so long as (x) Holdings or its relevant Subsidiary
is diligently pursuing engaging a replacement Permitted Facility Manager or
Approved Lessee pursuant to a Management Agreement or Operating Lease, as
applicable, and (y) the failure to have maintained such Management Agreement or
Operating Lease could not, either individually or in the aggregate, reasonably
be expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole.
8.13 REIT Requirements. Effective as of the first day of the first
-----------------
taxable year commencing following the REIT Conversion Date, Host REIT shall
thereafter operate its business at all times so as to satisfy all requirements
necessary to qualify as a real estate investment trust under Sections 856
through 860 of the Code. Host REIT will maintain adequate records so as to
comply with all record-keeping requirements relating to the qualification of
Host REIT as a real estate investment trust as required by the Code and
applicable regulations of the Department of the Treasury promulgated thereunder
and will properly prepare and timely file with the IRS all returns and reports
required thereby. Host REIT will request from its shareholders all shareholder
information required by the Code and applicable regulations of the Department of
Treasury promulgated thereunder.
8.14 Interest Rate Protection. If at any time the aggregate
------------------------
outstanding principal of Loans exceeds $750,000,000,
<PAGE>
then within 60 days thereafter, the Borrower will enter into (and thereafter
maintain) Interest Rate Protection Agreements reasonably acceptable to the
Administrative Agent, with a term of at least one year, establishing a fixed or
maximum interest rate not to exceed 11% for an aggregate amount equal to at
least 50% of the aggregate principal amount of all Loans then outstanding.
8.15 Acknowledgment and Joinder Agreement. At the time of the
------------------------------------
consummation of the REIT Merger, Host REIT, as the surviving entity of the REIT
Merger, shall have duly authorized, executed and delivered the Acknowledgment
and Joinder Agreement.
8.16 Contributions. From and after the REIT Conversion Date,
-------------
Holdings will contribute as an equity contribution to the capital of the
Borrower within 15 days following its receipt thereof, any cash proceeds
received by Holdings from any asset sale, any incurrence of Indebtedness, any
Insurance Proceeds or Condemnation Proceeds, any sale or issuance of its equity,
any cash capital contributions received by Holdings or any cash Dividends
received from the Borrower to the extent not promptly used by Holdings to make a
distribution to its shareholders as permitted under Section 9.03 or to pay its
general corporate overhead expenses and other liabilities.
8.17 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for
Holdings reasonably acceptable to the Administrative Agent does not within 30
days after a request from the Administrative Agent or the Required Banks deliver
evidence, in form and substance mutually satisfactory to the Administrative
Agent and Holdings, with respect to any Foreign Subsidiary that is not a Look-
Through Subsidiary which has not already had all of its stock pledged pursuant
to the Pledge and Security Agreement, that (i) a pledge of 66-2/3% or more of
the total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote, and (ii) the entering into by such Foreign
Subsidiary of a guaranty in substantially the form of the Subsidiaries Guaranty,
in any such case could reasonably be expected to cause (I) the undistributed
earnings of such Foreign Subsidiary as determined for Federal income tax
purposes to be treated as a deemed dividend to such Foreign Subsidiary's United
States parent for Federal income tax purposes or (II) other material adverse
Federal income tax consequences to the Credit Parties, then in the case of a
failure to deliver the evidence described in clause (i) above, that portion of
such Foreign Subsidiary's outstanding capital stock not theretofore pledged
pursuant to (and to the extent required by) the Pledge and Security Agreement
shall be pledged to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Pledge and Security Agreement (or another pledge
agreement in substantially similar form, if needed), and in the case of a
failure to deliver the evidence described in clause (ii) above, such Foreign
Subsidiary (to the extent that same is a Wholly-Owned Subsidiary) shall execute
and deliver (x) the Subsidiaries Guaranty (or another guaranty in substantially
similar form, if needed), guaranteeing the Obligations of the Borrower under the
Credit Documents and under any Interest Rate Protection Agreement or Other
Hedging Agreement and (y) the Pledge and Security Agreement (or another pledge
agreement in substantially similar form, if needed) securing such Foreign
Subsidiary's obligations under the Subsidiaries Guaranty, in each case to the
extent that the entering into such Pledge and Security Agreement or Subsidiaries
Guaranty is permitted by the laws of the respective foreign jurisdiction and
with all documents delivered pursuant to this Section 8.17 to be in form and
substance reasonably satisfactory to the Administrative Agent.
<PAGE>
8.18 Additional Guarantors. (a) On or prior to September 30, 1998,
---------------------
each of MHP Acquisition Corp. and MHP II Acquisition Corp. shall, and on or
prior to December 31, 1998, HMC Capital Corporation shall (unless it has already
merged into a Subsidiary Guarantor), execute and deliver to the Administrative
Agent counterparts of the Subsidiaries Guaranty and the Pledge and Security
Agreement, at which time each such Subsidiary shall become a Subsidiary
Guarantor.
(b) If at any time after the Effective Date, (A) Holdings or the
Borrower (directly or indirectly) acquires, establishes or creates any Wholly-
Owned Domestic Subsidiary or any Wholly-Owned Foreign Subsidiary that is a Look-
Through Subsidiary (or in the circumstances contemplated by Section 8.17, any
other Wholly-Owned Foreign Subsidiary), other than a Permitted REIT Subsidiary,
or (B) any Subsidiary of Holdings guaranties the obligations of the Borrower
under the Senior Notes or under any other Indebtedness of the Borrower, such
Subsidiary shall be required at such time to execute and deliver counterparts of
the Subsidiaries Guaranty and the Pledge and Security Agreement, at which time
such Subsidiary shall become a Subsidiary Guarantor (unless, in the case of
preceding clause (A), such Wholly-Owned Subsidiary is prohibited from entering
into the Subsidiaries Guaranty and the Pledge and Security Agreement by reason
of restrictions set forth in the terms of any then existing Indebtedness of such
Wholly-Owned Subsidiary and, in the case of a Wholly-Owned Subsidiary acquired
after the Effective Date, such Wholly-Owned Subsidiary is prohibited from
entering into the Subsidiaries Guaranty and the Pledge and Security Agreement by
reason of restrictions contained in any other material contract existing at the
time of such acquisition). Notwithstanding anything to the contrary contained
in this Section 8.18(b), any Wholly-Owned Subsidiary created solely to effect an
acquisition permitted pursuant to Section 9.02 (viii), (ix) or (x) shall not be
required to execute and deliver a counterpart of the Subsidiaries Guaranty or
the Pledge and Security Agreement until such time as the respective acquisition
is consummated but only so long as such Wholly-Owned Subsidiary does not have
any assets other than up to $5,000 in cash.
(c) If the REIT Transaction has not been consummated by March 31,
1999, then within 30 days thereafter (i) the capital stock of Hospitality shall
be pledged pursuant to the Pledge and Security Agreement and (ii) each Wholly-
Owned Non-Borrower Subsidiary which has not theretofore executed and delivered
counterparts of the Subsidiaries Guaranty and the Pledge and Security Agreement
shall so execute and deliver such Credit Documents and shall become a Subsidiary
Guarantor, unless such Wholly-Owned Non-Borrower Subsidiary is prohibited from
executing and delivering such Credit Documents by the terms of any Indebtedness
(and in the case of a Wholly-Owned Subsidiary acquired after the Effective Date,
prohibitions contained in the terms of any other material contract existing at
the time of such acquisition) to which it is a party or to which it or its
assets are subject.
(d) Each Wholly-Owned Subsidiary of Holdings or the Borrower that
is not a party to the Subsidiaries Guaranty and the Pledge and Security
Agreement because of prohibitions contained in the terms of any Indebtedness
(and in the case of a Wholly-Owned Subsidiary acquired after the Effective Date,
prohibitions contained in the terms of any other material contract existing at
the time of such acquisition) to which such Subsidiary is a party or to which it
or its assets is subject shall promptly (and in any event within 30 days)
following satisfaction and discharge of such Indebtedness (or the termination of
such prohibitions) (unless such Indebtedness is refinanced in accordance with
this Agreement with other Indebtedness that prohibits such Subsidiary from being
a party to the Subsidiaries Guaranty or the Pledge and Security Agreement)
execute and deliver counterparts of the
<PAGE>
Subsidiaries Guaranty and the Pledge and Security Agreement and become a
Subsidiary Guarantor; provided, however, that the provisions of this Section
-------- -------
8.18(d) shall not apply to Wholly-Owned Non-Borrower Subsidiaries until March
31, 1999.
(e) Notwithstanding the foregoing provisions of this Section 8.18,
provided that (i) the REIT Transaction has been consummated and (ii) the IRS
Ruling has been issued, neither the Borrower nor any Subsidiary Guarantor shall
be required to pledge the equity interest of any Person that is not a Look-
Through Subsidiary pursuant to the Pledge and Security Agreement (and all
pledges of equity interests in Persons that are not Look-Through Subsidiaries
shall be released from the pledge created under the Pledge and Security
Agreement at the request and expense of the Borrower, as more particularly
provided therein).
(f) Each Subsidiary required to take actions pursuant to the
preceding Sections 8.18(a), (b), (c) and (d) shall execute and deliver, or cause
to be executed and delivered, all other relevant documentation of the type
described in Section 4 (including without limitation, opinions of counsel) as
such Subsidiary would have had to deliver if such Subsidiary were a Credit Party
on the Effective Date, with all actions to be taken pursuant to this Section
8.18 to be taken to the reasonable satisfaction of the Administrative Agent.
8.19 Capital Expenditures. Holdings and its Subsidiaries shall,
--------------------
during each fiscal year of Holdings and the Borrower, expend in respect of
maintenance Capital Expenditures at the Hotel Properties and Senior Living Care
Facilities (or to the extent not spent, place in a reserve) an amount equal to
at least 4% of the combined total Gross Revenues from the Hotel Properties and
Senior Living Care Facilities for such fiscal year.
8.20 Additional Senior Living Care Assets. Within 90 days following
------------------------------------
the REIT Conversion Date, Holdings and its Subsidiaries shall have sold all of
their remaining Senior Living Care Facilities (and related assets) which were
not disposed of as part of the SLC Spinoff to SLC, one or more of SLC's
Subsidiaries and/or one or more other Persons which are not Subsidiaries of
Holdings at a price, and on terms, no less favorable than those pursuant to
which Holdings and/or its Subsidiaries originally acquired such Senior Living
Care Facilities (and related assets).
8.21 Certain Inventory, Fixed Asset Supplies and Working Capital
-----------------------------------------------------------
Receivables. Holdings will, and will cause each of its Subsidiaries to, ensure
- -----------
that each Operating Lease relating to a Hotel Property pursuant to which all or
any portion of the inventory, fixed asset supplies and/or working capital
receivables have been sold to the related Approved Lessee as provided in Section
9.02(xvi), provides to the Borrower or its Subsidiary owning the related Hotel
Property a right to repurchase all of the inventory, fixed asset supplies and/or
working capital receivables upon any termination or expiration of the related
Operating Lease related to such Hotel Property for a purchase price not greater
than the fair market value thereof. Holdings will, and will cause each of its
Subsidiaries to, exercise each such repurchase option upon the termination or
expiration of each such Operating Lease.
SECTION 9. Negative Covenants. Each Principal Credit Party hereby
------------------
covenants and agrees (as to itself and each of its Subsidiaries) that from and
after the Effective Date and until the Total Commitment has terminated and the
Loans and Notes, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 Liens. Holdings will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or
<PAGE>
personal, tangible or intangible) of Holdings or any of its Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable with recourse to
Holdings or any of its Subsidiaries), or assign any right to receive income
(other than in connection with a sale permitted under Section 9.02) or permit
the filing of any financing statement under the UCC or any other similar notice
of Lien under any similar recording or notice statute, provided that the
--------
provisions of this Section 9.01 shall not prevent the creation, incurrence,
assumption or existence of the following Liens (collectively, "Permitted
Liens"):
(i) inchoate Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not yet due and
payable or Liens for taxes, assessments or governmental charges or levies
being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of Holdings or any of its
Subsidiaries imposed by law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of Holdings' or such
Subsidiary's property or assets or materially impair the use thereof in the
operation of the business of Holdings or such Subsidiary or (y) which are
being contested in good faith by appropriate proceedings and for which
adequate reserves have been established, which proceedings have the effect
of preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Effective Date which are listed, and
the property subject thereto described, in Schedule VIII, but only to the
respective date, if any, set forth in such Schedule VIII for the removal
and termination of any such Liens, plus renewals, replacements,
refinancings and extensions of such Liens to the extent permitted by
Section 9.04(xi), provided that any such renewal, replacement, refinancing
--------
or extension does not encumber any additional assets or properties of
Holdings or any of its Subsidiaries;
(iv) Liens created pursuant to the Pledge and Security Agreement;
(v) leases or subleases granted to merchants, vendors, other
providers of services and other Persons in the ordinary course of business
and not materially interfering with the conduct of the business of Holdings
or any of its Subsidiaries;
(vi) to the extent that the respective Indebtedness is permitted to
be incurred at such time pursuant to Section 9.04(xii), (A) Liens upon
equipment or machinery subject to Capitalized Lease Obligations, provided
--------
that (x) such Liens only serve to secure the payment of Indebtedness
arising under such Capitalized Lease Obligation and (y) the Lien
encumbering the asset giving rise to such Capitalized Lease Obligation does
not encumber any other asset of Holdings or any of its Subsidiaries and (B)
Liens placed upon equipment or machinery used in the ordinary course of
business of Holdings or any of its Subsidiaries at the time of acquisition
thereof by Holdings or any such
<PAGE>
Subsidiary or within 90 days thereafter to secure Indebtedness incurred to
pay all or a portion of the purchase price thereof, provided, that the Lien
--------
encumbering the asset giving rise to the purchase money Indebtedness does
not encumber any other asset of Holdings or any of its Subsidiaries;
(vii) to the extent that the respective Indebtedness is permitted to
be incurred at such time pursuant to Section 9.04(xii), Liens securing
Permitted Non-Recourse Indebtedness of Specified Subsidiaries so long as
such Liens only encumber the Real Property (including the furniture,
fixtures, equipment and other personal property related thereto) and the
revenues and proceeds derived therefrom of the Specified Subsidiary that
has incurred such Permitted Non-Recourse Indebtedness;
(viii) easements, rights-of-way, restrictions (including zoning
restrictions), encroachments and other similar charges or encumbrances, and
minor title deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of Holdings or any
of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement
filings in respect of operating leases;
(x) statutory and common law landlords' liens under leases to
which Holdings or any of its Subsidiaries is a party;
(xi) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety bonds, bids, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money);
(xii) Liens arising out of the existence of judgments, decrees or
awards not constituting an Event of Default under Section 10.09, provided
--------
that the aggregate amount of any cash and the fair market value of all
property pledged or deposited to secure all such judgments, decrees and
awards shall not exceed $50,000,000 at any time outstanding;
(xiii) Liens on property or assets acquired pursuant to an
acquisition permitted under Section 9.02(viii), (ix) or (x), pursuant to a
Partnership Roll-Up or pursuant to an Investment made under Section
9.05(xi) or (xii) (so long as, in the case of such clause (xii), such Liens
do not attach to any FF&E of a Non-Controlled Entity unless such Liens are
part of an existing blanket Lien on all assets so acquired (in which case
the FF&E may be contributed to a Non-Controlled Entity subject to such
Lien)), or on property or assets of a Subsidiary of Holdings acquired
pursuant to such an acquisition, pursuant to such a Partnership Roll-Up or
pursuant to such an Investment, in each case in existence at the time such
acquisition, Partnership Roll-Up or Investment is consummated, provided
that (i) any Indebtedness that is secured by such Liens is permitted to
exist under Section 9.04(x) and (ii) such Liens are not incurred in
connection with or in contemplation or anticipation of such acquisition,
Partnership Roll-Up or Investment and do not attach to any other asset of
Holdings or any of its Subsidiaries;
<PAGE>
(xiv) Liens (or other transfers designed to effect a security
interest, in each case) on the capital stock or other equity interests of,
and/or the assets owned by, those Subsidiaries of Holdings (other than a
Credit Party) which were created or acquired solely in connection with
their acquisition of two Hotel Properties located in Cancun and Puerto
Vallarta, Mexico, which Liens solely secure the Indebtedness incurred to
finance such acquisitions, so long as (i) such Subsidiaries do not have any
material assets other than such Hotel Properties, (ii) such Indebtedness is
permitted to be incurred under Section 9.04(xii) and (iii) the aggregate
principal amount of such Indebtedness shall not exceed $70,000,000; and
(xv) Liens in favor of the Borrower or any of its Subsidiaries
granted by a Non-Controlled Entity.
Notwithstanding anything to the contrary contained above in this Section 9.01,
in no event shall more than $2,200,000,000 in aggregate principal amount of all
outstanding Permitted Refinancing Indebtedness and all Indebtedness incurred
pursuant to Section 9.04(xii) be permitted to be secured pursuant to the Pledge
and Security Agreement and such Indebtedness shall only be entitled to the
benefits of the Pledge and Security Agreement to the extent that it is otherwise
unsecured.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
-------------------------------------------------------
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale- leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures (including payments in respect of
Capitalized Lease Obligations) by the Borrower and its Subsidiaries shall
be permitted to the extent not in violation of Sections 9.01(vi)(B) and
9.07;
(ii) Holdings and its Subsidiaries may in the ordinary course of
business, (x) sell or otherwise dispose of equipment and materials which,
in the reasonable opinion of such Person, are obsolete, uneconomic or no
longer useful in the conduct of such Person's business and (y) sell or
exchange other items of equipment and materials so long as the purpose of
each such sale or exchange is to acquire (and results within 90 days of
such sale or exchange in the acquisition of) replacement items of equipment
or materials which are the functional equivalent of the item of equipment
or material so sold or exchanged and is at least of comparable value and
quality;
(iii) Investments may be made to the extent permitted by Section
9.05;
(iv) Holdings and its Subsidiaries may lease (as lessee) real or
personal property in the ordinary course of business (so long as any such
lease does not create a Capitalized Lease Obligation unless permitted by
Section 9.01(vi));
(v) Holdings and its Subsidiaries may make sales or other
dispositions of inventory in the ordinary course of business and consistent
with past practice;
(vi) Holdings and its Subsidiaries may sell Hotel Properties, Senior
Living Care Facilities and other assets
<PAGE>
(including the capital stock or other equity interests (including by way of
merger) of the Person or Persons owning such Hotel Properties, Senior
Living Care Facilities or other assets, but specifically excluding the
capital stock of Hospitality, the Borrower or any Subsidiary Guarantor
unless all of the capital stock or other equity interests of a Subsidiary
Guarantor is sold) so long as (i) no Default or Event of Default then
exists or would result therefrom, (ii) each such sale is at fair market
value (as determined in good faith by Holdings or such Subsidiary, as the
case may be), (iii) the consideration received by Holdings or such
Subsidiary is either (a) at least 75% cash and is received at the time of
the consummation of such sale, and with the balance of such consideration
to be in the form of promissory notes, real estate assets (including
related FF&E) and/or equity interests of Persons owning real estate assets,
or (b) a combination of cash and Permitted Like-Kind Exchange Property,
(iv) the aggregate amount of all sales made pursuant to preceding clause
(a) of this Section 9.02(vi) shall not exceed $250,000,000 in any fiscal
year of Holdings and (v) and the aggregate fair market value of all assets
sold in exchange for Permitted Like-Kind Exchange Properties shall not
exceed (A) $500,000,000 in any twelve month period beginning after the
Effective Date and ending prior to July 31, 2000 or (B) $250,000,000 for
any twelve month period thereafter;
(vii) on and after the REIT Conversion Date, the Borrower and its
Subsidiaries may sell the FF&E at a Hotel Property to a Non-Controlled
Entity so long as (i) the Borrower shall have reasonably determined that
each such sale is necessary in order to avoid the characterization for tax
purposes of any portion of the rent payable under the related Operating
Lease as rent not attributable to real property (allowing reasonable
margins with respect to applicable limitations), (ii) such FF&E is leased
by such Non-Controlled Entity to the Approved Lessee under the related
Operating Lease pursuant to an FF&E lease containing market terms for
similar FF&E and with provisions protecting the interests of the owner of
the applicable Hotel Property in a form reasonably acceptable to the
Administrative Agent, (iii) the related Approved Lessee shall have assigned
its interest (as lessee) in such FF&E lease to the Borrower or its
Subsidiary owning the related Hotel Property as security for such Approved
Lessee's obligations under the Operating Lease and the Borrower or such
Subsidiary (or any successor Approved Lessee of such Hotel Property) shall
have the right to acquire the interests of the tenant under such FF&E lease
(if it is then in effect) upon a termination of the related Operating
Lease, (iv) the purchase price paid for such FF&E shall be equal to at
least the fair market value of such FF&E (with a purchase price equal to
the book value thereof being deemed to meet this standard) (and the
consideration paid shall be in the form of cash and/or a promissory note),
and (v) no more than (A) $200,000,000 of such FF&E is sold at the time of
the REIT Conversion and (B) without duplication of any FF&E sold pursuant
to preceding clause (A), $100,000,000 of such FF&E is otherwise sold in any
fiscal year of the Borrower less (in the case of this clause (B)) the
aggregate amount of FF&E otherwise purchased by Non-Controlled Entities
during such fiscal year from Persons other than the Borrower or a
Subsidiary thereof for use at a Hotel Property of the Borrower or a
Subsidiary thereof;
(viii) the Borrower and its Wholly-Owned Subsidiaries and, prior to
the REIT Conversion Date, Wholly-Owned Subsidiaries which are Non-Borrower
Subsidiaries, may acquire Hotel Properties (other than
<PAGE>
pursuant to the Blackstone Acquisition) and/or, prior to the REIT
Conversion Date, Senior Living Care Facilities (or all of the capital stock
or other equity interests of the Person or Persons owning such Hotel
Properties and/or Senior Living Care Facilities (including by way of
merger)) so long as (i) no Specified Default or Event of Default then
exists or would result therefrom, (ii) based on calculations made by
Holdings and/or the Borrower on a Pro Forma Basis after giving effect to
--- -----
such acquisition and as if such acquisition had occurred on the first day
of the respective Calculation Period, no Default or Event of Default will
exist under, or would have existed during the Test Period last reported (or
required to be reported pursuant to Section 8.01(a) or (b), as the case may
be) prior to the date of the respective acquisition under, the financial
covenants contained in Sections 9.08 through 9.12, inclusive, (iii) in the
case of an acquisition of a Hotel Property, such Hotel Property is a Full
Service Hotel, provided that limited service Hotel Properties also may be
acquired pursuant to this Section 9.02(viii) so long as on a Pro Forma
Basis the portion of Consolidated EBITDA attributed to such limited service
Hotels, when added to the portion of Consolidated EBITDA attributed to all
other limited service Hotels of Holdings and its Subsidiaries, does not
exceed 7% of the Consolidated EBITDA for the most recently ended Test
Period, and (iv) in the case of any acquisition made pursuant to this
Section 9.02(viii) with an Acquisition Purchase Price of $100,000,000 or
more, Holdings or the Borrower shall have delivered to the Administrative
Agent an officer's certificate executed by an Authorized Financial Officer
of Holdings or the Borrower, certifying to the best of such officer's
knowledge, compliance with the requirements of preceding clauses (i)
through (iii) and containing the calculations required by the preceding
clauses (ii) and (iii);
(ix) the Borrower and its Subsidiaries and, prior to the REIT
Conversion Date, the Non-Borrower Subsidiaries, may acquire high quality
real estate (or the equity interests of a Person owning such real estate
(including by way of merger)) consistent with the quality of the Borrower's
and its Subsidiaries' existing portfolio of Hotel Properties (other than
pursuant to the Blackstone Acquisition) so long as (i) no Specified Default
or Event of Default then exists or would result therefrom, (ii) based on
calculations made by Holdings and/or the Borrower on a Pro Forma Basis
--- -----
after giving effect to such acquisition and as if such acquisition had
occurred on the first day of the respective Calculation Period, no Default
or Event of Default will exist under, or would have existed during the Test
Period last reported (or required to be reported pursuant to Section
8.01(a) or (b), as the case may be) prior to the date of the respective
acquisition under, the financial covenants contained in Sections 9.08
through 9.12, inclusive, (iii) the aggregate amount of all acquisitions
made pursuant to this Section 9.02(ix), when added to the aggregate amount
of all Investments made pursuant to Section 9.05(xi), does not exceed
$1,500,000,000, and (iv) in the case of any such acquisition with an
Acquisition Purchase Price of $100,000,000 or more, Holdings or the
Borrower shall have delivered to the Administrative Agent an officer's
certificate executed by an Authorized Financial Officer of Holdings or the
Borrower, certifying to the best of such officer's knowledge, compliance
with the requirements of preceding clauses (i) through (iii) and containing
the calculations required by the preceding clauses (ii) and (iii);
<PAGE>
(x) the Borrower or one or more Wholly-Owned Subsidiaries thereof
may consummate the Blackstone Acquisition so long as no Default or Event of
Default then exists or would result therefrom;
(xi) any Subsidiary of the Borrower (other than a Specified
Subsidiary that has outstanding Permitted Non-Recourse Indebtedness) may be
merged with and into the Borrower or any Subsidiary Guarantor so long as
(i) in the case of any merger involving the Borrower, the Borrower is the
surviving Person, (ii) in the case of any merger involving a Subsidiary
Guarantor, a Subsidiary Guarantor is the surviving Person, (iii) in the
case of any merger involving a non-Wholly-Owned Subsidiary, the only
consideration paid to third parties in connection therewith is (I) cash,
(II) the assumption of Indebtedness, (III) equity interests in the
surviving Person so long as such Person is not a Subsidiary Guarantor
and/or (IV) after the REIT Conversion Date, equity in Host REIT or OP
Units, provided that, in the case of a merger described in preceding clause
(iii), (x) in the event that the surviving Person is not a Wholly-Owned
Subsidiary of the Borrower, any such cash payment shall be treated as an
Investment made (and shall reduce the aggregate amount of Investments
permitted to be made) under Section 9.05(xi) and such cash payment may only
be made to the extent that an Investment may be made at such time under
such Section 9.05(xi) and (y) in the event that the surviving Person is (or
becomes) a Wholly-Owned Subsidiary of the Borrower, such transaction shall
only be permitted if the Borrower could have consummated such transaction
pursuant to Section 9.02(viii) (and with the Borrower being required to
satisfy the provisions of such Section 9.02(viii) in connection therewith),
and (iv) at least 5 Business Days prior written notice of any such merger
is given by the Borrower to the Administrative Agent;
(xii) any Subsidiary of Holdings (other than the Borrower or a
Specified Subsidiary that has outstanding Permitted Non-Recourse
Indebtedness) that is not a Subsidiary Guarantor may be merged with and
into any other Subsidiary of Holdings (other than the Borrower or a
Specified Subsidiary that has outstanding Permitted Non-Recourse
Indebtedness) that is not a Subsidiary Guarantor so long as in the case of
any merger involving a non-Wholly-Owned Subsidiary of Holdings, the only
consideration paid to third parties in connection therewith is (I) cash,
(II) the assumption of Indebtedness, (III) equity interests in the
surviving Person so long as such Person is not a Subsidiary Guarantor
and/or (IV) after the REIT Conversion Date, equity in Host REIT or OP
Units, provided that, (x) in the event that the surviving Person is not a
Wholly-Owned Subsidiary of the Borrower, any such cash payment shall be
treated as an Investment made (and shall reduce the aggregate amount of
Investments permitted to be made) under Section 9.05(xi) and such cash
payment may only be made to the extent that an Investment may be made at
such time under such Section 9.05(xi) and (y) in the event that the
surviving Person is (or becomes) a Wholly-Owned Subsidiary of the Borrower,
such transaction shall only be permitted if the Borrower could have
consummated such transaction pursuant to Section 9.02(viii) (and with the
Borrower being required to satisfy the provisions of such Section
9.02(viii) in connection therewith);
(xiii) on or after the REIT Conversion Date, the Borrower and its
Subsidiaries may enter into Operating Leases with an Approved Lessee and
the Non-Controlled Entities may enter into FF&E leases with an Approved
Lessee;
<PAGE>
(xiv) the CRHC Merger shall be permitted in accordance with Section
4.13;
(xv) each of the transactions that constitute the REIT Transaction
shall be permitted in accordance with the terms of this Agreement;
(xvi) from and after the REIT Conversion Date, the Borrower and its
Subsidiaries shall have the right to sell inventory, fixed asset supplies
and working capital receivables relating to a Hotel Property to the
Approved Lessee under the Operating Lease relating to such Hotel Property
for a purchase price equal to no less than the fair market value thereof
(with a purchase price equal to the book value thereof being deemed to meet
this standard) (and the consideration therefor shall be in the form of cash
and/or a promissory note), so long as the Borrower or related Subsidiary is
granted a Lien upon such inventory, fixed asset supplies and working
capital receivables pursuant to the related Operating Lease as security for
the obligations of the Approved Lessee thereunder; and
(xvii) sales of Senior Living Care Facilities (and related assets)
pursuant to Section 8.20 shall be permitted.
To the extent the Required Banks or all of the Banks, as the case may be, waive
the provisions of this Section 9.02 with respect to the sale of any Pledge and
Security Agreement Collateral, or any Pledge and Security Agreement Collateral
is sold or otherwise disposed of as permitted by this Section 9.02, such Pledge
and Security Agreement Collateral shall be sold or otherwise disposed of free
and clear of the Liens created by the Pledge and Security Agreement, and the
Administrative Agent and the Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.
9.03 Dividends. (a) Prior to the REIT Conversion Date, Holdings
---------
will not, and will not permit any of its Subsidiaries to, authorize, declare or
pay any Dividends with respect to Holdings or any of its Subsidiaries, except
that, (i) any Subsidiary of the Borrower may pay cash Dividends to the Borrower
or to a Wholly-Owned Subsidiary of the Borrower, (ii) any non-Wholly-Owned
Subsidiary of the Borrower may pay cash Dividends to its shareholders, members
or partners generally so long as the Borrower or its respective Subsidiary which
owns the equity interest or interests in the Subsidiary paying such Dividends
receives at least its proportionate share thereof (based upon its relative
holdings of equity interests in the Subsidiary paying such Dividends and taking
into account the relative preferences, if any, of the various classes of equity
interests in such Subsidiary), (iii) any Non-Borrower Subsidiary may pay cash
Dividends to its shareholders, members or partners generally so long as Holdings
or its respective Subsidiary which owns the equity interest or interests in the
Subsidiary paying such Dividends receives at least its proportionate share
thereof (based upon its relative holdings of equity interests in the Subsidiary
paying such Dividends and taking into account the relative preferences, if any,
of the various classes of equity interests in such Subsidiary), (iv) so long as
no Specified Default or Event of Default then exists or would result therefrom,
Dividends may be paid on the QUIPs, (v) the Borrower may pay cash Dividends to
Hospitality, which in turn may pay cash Dividends to Holdings, so long as the
proceeds therefrom are promptly used by Holdings to pay (x) any Permitted Tax
Payments that are then actually due and payable and (y) any general corporate
and other overhead expenses and liabilities incurred by it to the extent not
otherwise prohibited by this Agreement, and (vi) so long as no Default or Event
of Default then exists or would result therefrom and same are permitted by the
Senior Note
<PAGE>
Indenture, the Borrower may pay cash Dividends to Hospitality, which in turn may
pay cash Dividends to Holdings, provided that (x) the aggregate amount of cash
--------
Dividends paid by the Borrower pursuant to this clause (vi) in any fiscal
quarter of the Borrower shall not exceed (A) prior to the end of the fiscal
quarter ending closest to March 31, 1999, 50%, and (B) after such time, 75% (or
50% to the extent that a payment is required under Section 3.02(f) in respect of
the relevant Excess Cash Payment Period), in each case of Quarterly Excess Cash
Flow of Holdings for the immediately preceding fiscal quarter of Holdings,
although (I) to the extent that Dividends are permitted to be paid in a fiscal
quarter of the Borrower pursuant subclauses (A) or (B) above in this clause (vi)
and are not so paid in such fiscal quarter, such unused amount may be carried
forward and paid as a cash Dividend in any succeeding fiscal quarter of the
Borrower that is part of the same fiscal year (or within 60 days after the end
of such fiscal year), and (II) for the period from the Effective Date through
December 31, 1998, the amount of such Dividends permitted by this clause (vi)
for such period shall not be less than $100,000,000 and (y) no such Dividends
may be paid from such Quarterly Excess Cash Flow for the immediately preceding
fiscal quarter until Holdings and the Borrower have delivered to the
Administrative Agent the financial statements pursuant to Section 8.01(a) or
(b), as the case may be, in respect of such immediately preceding fiscal
quarter.
(b) On and after the REIT Conversion Date, Holdings will not, and will
not permit any of its Subsidiaries to, authorize, declare or pay any Dividends
with respect to Holdings or any of its Subsidiaries, except that (i) any
Subsidiary of the Borrower may pay cash Dividends to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower, (ii) any non-Wholly-Owned Subsidiary of
the Borrower may pay cash Dividends to its shareholders, members or partners
generally so long as the Borrower or its respective Subsidiary which owns the
equity interest or interests in the Subsidiary paying such Dividends receives at
least its proportionate share thereof (based upon its relative holdings of
equity interests in the Subsidiary paying such Dividends and taking into account
the relative preferences, if any, of the various classes of equity interests in
such Subsidiary), (iii) so long as (x) no Specified Default, and no Event of
Default, exists at the time of the respective payment or would exist immediately
after giving effect thereto and (y) Holdings qualifies, or has taken all actions
necessary to qualify, as "real estate investment trust" under the Code, during
any four consecutive fiscal quarters of Holdings, the Borrower may pay cash
Dividends to Holdings and all other holders of OP Units when and to the extent
necessary for Holdings to distribute, and Holdings may so distribute, cash
Dividends to its shareholders in an aggregate amount not to exceed the greater
of (A) 85% of the Adjusted Funds From Operations for such four consecutive
fiscal periods (or, if shorter, the period from the REIT Conversion Date to the
last day of the Borrower's fiscal quarter then last ended) and (B) the minimum
amount necessary for Holdings to maintain its tax status as a real estate
investment trust and to satisfy the distributions required to be made by Notice
88-19 under the Code (or Treasury regulations issued pursuant thereto) by reason
of Holdings making the election provided for therein, in each case so long as
such Dividend is otherwise permitted to be made by the Senior Note Indenture,
(iv) so long as no Default or Event of Default then exists or would result
therefrom, Dividends may be paid on the QUIPs, (v) so long as no Specified
Default, and no Event of Default, exists or would result therefrom, the Borrower
may pay cash Dividends to Holdings so long as the proceeds therefrom are
promptly used by Holdings to pay (x) any Permitted Tax Payments at the time and
to the extent actually due and payable (but without duplication of any tax
payments permitted to be made pursuant to clause (iii) above to satisfy the
distribution required to be made by Notice 88-19 under the Code (or Treasury
regulations issued pursuant thereto)) and (y) any general corporate and other
overhead expenses and liabilities incurred by it to the extent not otherwise
prohibited by this
<PAGE>
Agreement, (vi) at the time of the REIT Conversion, the SLC Spinoff shall be
permitted in accordance with the terms of this Agreement, and (vii) from and
after the REIT Conversion, the Borrower may pay cash Dividends and OP Units to
Holdings and the other holders of OP Units sufficient to enable Holdings to make
(and Holdings may make) the E&P Distribution, provided that the aggregate amount
of the E&P Distribution paid in cash shall not exceed $500,000,000.
9.04 Indebtedness. Holdings will not, and will not permit any of its
------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness to the extent the same is listed on
Schedule VI;
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course of business;
(iv) intercompany Indebtedness among the Borrower and the Subsidiary
Guarantors or any of them to the extent permitted by Section 9.05(iv);
(v) other intercompany Indebtedness between or among Holdings and
Subsidiaries of Holdings or any of them to the extent permitted by Sections
9.05(vi), (vii), (xi) and (xii);
(vi) Indebtedness under Interest Rate Protection Agreements entered
into with respect to other Indebtedness permitted under this Agreement;
(vii) accrued and deferred management fees under any Management
Agreement;
(viii) from and after the REIT Conversion, Indebtedness of the
Borrower evidenced by Limited Partner Notes in an aggregate principal
amount not to exceed $250,000,000 (as reduced by any repayments of
principal thereof);
(ix) Indebtedness of the Borrower and the Guarantors under the
Senior Notes and the other Senior Note Documents in an aggregate
outstanding principal amount not to exceed $1,700,000,000 (as reduced by
any repayments of principal thereof), provided that no Guarantor may
guaranty the Senior Notes unless such Guarantor also has guaranteed the
Obligations pursuant to the Parents Guaranty or the Subsidiaries Guaranty,
as the case may be;
(x) Indebtedness of the Borrower or any of its Subsidiaries or,
prior to the REIT Conversion Date, of Holdings or any Non-Borrower
Subsidiary, in either case acquired pursuant to (A) an acquisition or
merger permitted under Section 9.02(viii), (ix) or (x) (or Indebtedness
assumed at the time of any such acquisition secured by the asset so
acquired), or (B) as part of a Partnership Roll-Up or an Investment
permitted under Section 9.05(xi) or (xii), in each case, so long as (i)
such Indebtedness was not incurred in connection with or in contemplation
or anticipation of any such acquisition or merger, Partnership Roll-Up or
Investment, and (ii) except in the case of the Blackstone Acquisition or
the existing Indebtedness securing the Marriott O'Hare Suites to be
acquired as part of the related Partnership Roll-Up, at the time of any
such acquisition or Investment such Indebtedness does not exceed 65% of the
<PAGE>
Acquisition Purchase Price of the assets or Subsidiaries so acquired as
part of the same transaction, provided that, notwithstanding the foregoing,
--------
such Indebtedness may exceed 65%, but not 80%, of the Acquisition Purchase
Price of the assets or the Subsidiaries so acquired, so long as the
aggregate outstanding principal amount of all such Indebtedness in excess
of the 65% requirement set forth above does not exceed $200,000,000
(excluding Indebtedness relating to the Blackstone Acquisition or Marriott
O'Hare Suites);
(xi) Indebtedness of the Borrower and its Subsidiaries and, prior
to the REIT Conversion Date, Holdings and the Non-Borrower Subsidiaries, in
either case constituting Permitted Refinancing Indebtedness so long as the
proceeds thereof are used (x) to refinance Existing Indebtedness (other
than the QUIPs Debt and any intercompany Indebtedness between or among
Holdings and its Subsidiaries) or (y) to refinance Indebtedness acquired or
assumed pursuant to Section 9.04(x), in each case to the extent that the
proceeds of such Refinancing Indebtedness are not required to repay the
Loans pursuant to Section 3.02(d); and
(xii) additional Indebtedness of the Borrower and its Subsidiaries
and, prior to the REIT Conversion Date, Holdings and the Non-Borrower
Subsidiaries in an aggregate principal amount not to exceed at any time
outstanding $1,200,000,000, in each case so long as (i) no Default or Event
of Default then exists or would result therefrom and such Indebtedness is
otherwise permitted to be incurred under the Senior Note Indenture, (ii)
based on calculations made by Holdings or the Borrower on a Pro Forma Basis
--- -----
as if the incurrence of such Indebtedness had occurred on the first day of
the respective Calculation Period relating to such incurrence, no Default
or Event of Default will exist under, or would have existed during the
period beginning on the first day of the respective Calculation Period and
ended on the Determination Date under, the financial covenants contained in
Sections 9.08 through 9.12, inclusive, (iii) such Indebtedness is unsecured
although such Indebtedness may be secured by a Lien permitted under
Sections 9.01(iv) or 9.01(xiv), provided, however, that up to $400,000,000
-------- -------
in aggregate outstanding principal amount of such Indebtedness at any time
may be secured Indebtedness in the form of Permitted Non-Recourse
Indebtedness, Capitalized Lease Obligations and/or purchase money
Indebtedness in respect of equipment and materials, and (iv) Holdings or
the Borrower shall have delivered to the Administrative Agent an officer's
certificate executed by an Authorized Financial Officer of Holdings or the
Borrower, certifying to the best of such officer's knowledge, compliance
with the requirements of this Section 9.04(xii) and containing the
calculations required by the preceding clauses (ii) and (iii).
Notwithstanding anything to the contrary contained in this Section 9.04 or
elsewhere in this Agreement, in no event shall any Non-Controlled Entity which
owns any FF&E at a Hotel Property owned or leased by Holdings or any of its
Subsidiaries incur any Indebtedness for borrowed money or enter into any
guaranties in respect thereof (other than in the form of an intercompany loan
from the Borrower or a Subsidiary Guarantor).
9.05 Advances, Investments and Loans. Holdings will not, and will
-------------------------------
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become
<PAGE>
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an "Investment" and, collectively, "Investments"), except
that the following shall be permitted:
(i) Holdings and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary terms;
(ii) Holdings and its Subsidiaries may acquire and hold cash and
Cash Equivalents, provided, to the extent that Holdings holds any cash or
Cash Equivalents, Holdings shall comply with the requirements of Section
8.16;
(iii) the Borrower and its Subsidiaries may enter into Interest
Rate Protection Agreements to the extent permitted by Section 9.04(vi);
(iv) the Borrower and the Subsidiary Guarantors may make
intercompany loans and cash equity contributions in and to one another;
(v) (A) prior to the REIT Conversion Date, Holdings may make
equity contributions and intercompany loans to Hospitality and the Non-
Borrower Subsidiaries, and Hospitality may make equity contributions and
intercompany loans to the Borrower, and (B) on and after the REIT
Conversion Date, Holdings may make equity contributions to the Borrower;
(vi) (A) so long as no Specified Default or Event of Default then
exists or would result therefrom, the Borrower and the Subsidiary
Guarantors may make intercompany loans to, and cash equity contributions
in, their respective Subsidiaries which are not Subsidiary Guarantors
(other than a Non-Controlled Entity) in an aggregate amount not to exceed
$250,000,000 at any one time outstanding (determined without regard to any
write-downs or write-offs thereof) and (B) Subsidiaries of Holdings which
are not Credit Parties and, prior to the REIT Conversion Date, Holdings,
may make intercompany loans and cash equity contributions between or among
one another;
(vii) Holdings and its Subsidiaries may hold the Investments held
by them on the Effective Date, without giving effect to any additions
thereto or replacements thereof, except to the extent permitted to be made
pursuant to another clause in this Section 9.05;
(viii) Holdings and its Subsidiaries may make Investments consisting
of non-cash consideration to the extent permitted in connection with
dispositions of assets pursuant to Sections 9.02(vi), (vii) and (xvi);
(ix) acquisitions effected in accordance with the requirements of
Sections 9.02(viii), (ix) and (x);
(x) Holdings and its Subsidiaries may hold the stock or other
equity interests in their respective Subsidiaries;
(xi) the Borrower and its Subsidiaries and, prior to the REIT
Conversion Date, Holdings and the Non-Borrower Subsidiaries may make
Permitted Designated Investments so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii) the aggregate amount of
all Investments made pursuant to this Section 9.05(xi), when added to the
aggregate amount of all acquisitions made pursuant to Section 9.02(ix),
shall not
<PAGE>
exceed $1,500,000,000 in the aggregate at any time outstanding (determined
without regard to any write-downs or write-offs thereof), (iii) based on
calculations made by Holdings or the Borrower on a Pro Forma Basis after
--- -----
giving effect to such Investment and as if such Investment had occurred on
the first day of the respective Calculation Period, no Default or Event of
Default will exist under, or would have existed during the Test Period last
reported (or required to be reported pursuant to Section 8.01(a) or (b), as
the case may be) prior to the date of the respective Investment under, the
financial covenants contained in Sections 9.08 through 9.12, inclusive,
(iv) in the case of any Investment made pursuant to this Section 9.05(xi)
of $100,000,000 or more which is financed in whole or in part with
Indebtedness, Holdings or the Borrower shall have delivered to the
Administrative Agent an officer's certificate executed by an Authorized
Financial Officer of Holdings or the Borrower, certifying to the best of
such officer's knowledge, compliance with the requirements of this Section
9.05(xi) and containing the calculations required by the preceding clauses
(ii) and (iii), and (v) no Permitted Designated Investments are made
pursuant to this Section 9.05(xi) to, in and/or for the benefit of, any
Non-Controlled Entity;
(xii) from and after the REIT Conversion Date, the Borrower and its
Subsidiaries may make Investments in Non-Controlled Entities, the assets of
which principally consist of Non-Conforming Assets, so long as (i) no
Default or Event of Default then exists or would result therefrom, (ii)
except for up to a $200,000,000 cash Investment made on the REIT Conversion
Date to finance the cash portion of the purchase price for the initial
purchase of FF&E pursuant to Section 9.02(vii) and except for contributions
and/or sales of up to $500,000,000 of Non-Conforming Assets and cash to
Non-Controlled Entities as provided in Section 6.04(d), the aggregate
amount of all other Investments made pursuant to this Section 9.05(xii)
(other than cash Investments the proceeds of which are used to purchase
FF&E pursuant to Section 9.02(viii)), when added to the aggregate amount of
all sales of FF&E made after the REIT Conversion Date pursuant to Section
9.02(vii), shall not exceed $800,000,000 at any time outstanding
(determined without regard to any write-downs or write-offs thereof) (it
being understood that the amount of any FF&E invested pursuant to this
Section 9.05(xii) shall be contributed at the fair market value thereof
(with a price equal to the book value thereof being deemed to meet this
standard)), (iii) based on calculations made by Holdings or the Borrower on
a Pro Forma Basis after giving effect to such Investment and as if such
--- -----
Investment had occurred on the first day of the respective Calculation
Period, no Default or Event of Default will exist under, or would have
existed during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the date
of the respective Investment under, the financial covenants contained in
Sections 9.08 through 9.12, inclusive, and (iv) in the case of any
Investment made pursuant to this Section 9.05(xii) of $100,000,000 or more
to the extent financed in whole or in part with Indebtedness, Holdings or
the Borrower shall have delivered to the Administrative Agent an officer's
certificate executed by an Authorized Financial Officer of Holdings or the
Borrower, certifying to the best of such officer's knowledge, compliance
with the requirements of this Section 9.05(xii) and containing the
calculations required by the preceding clauses (ii) and (iii);
<PAGE>
(xiii) each of the transactions that constitute the REIT Transaction
shall be permitted in accordance with the terms of this Agreement; and
(xiv) Holdings and its Subsidiaries may create Subsidiaries
pursuant to Section 9.17 (although any Investments made in such
Subsidiaries shall only be permitted if independently justified under
another provision of this Section 9.05).
9.06 Transactions with Affiliates. Holdings will not, and will
----------------------------
not permit any of its Subsidiaries to, enter into any transaction or series of
related transactions with any Affiliate of Holdings or any of its Subsidiaries,
other than in the ordinary course of business and on terms and conditions
substantially as favorable to Holdings or such Subsidiary as would reasonably be
obtained by Holdings or such Subsidiary at that time in a comparable arm's-
length transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section
9.03;
(ii) loans may be made and other transactions may be entered into
by Holdings and its Subsidiaries to the extent permitted by Sections 9.02,
9.04 or 9.05;
(iii) each of the transactions that constitute the REIT
Transaction shall be permitted in accordance with the terms of this
Agreement;
(iv) Permitted Sharing Arrangements and payments made pursuant
thereto shall be permitted to the extent that such transactions are not
otherwise prohibited or restricted pursuant to this Agreement;
(v) on and after the REIT Conversion Date, the Borrower and its
Subsidiaries, on the one hand, and the Approved Lessees, on the other, may
enter into, and perform the terms of, the Operating Leases; and
(vi) the payment of reasonable and customary fees and expenses to
members of the Board of Directors of the Borrower who are not employees of
the Borrower shall be permitted.
9.07 Capital Expenditures. Holdings will not, and will not permit
--------------------
any of its Subsidiaries to, make any Capital Expenditures, except:
(i) the Borrower and its Subsidiaries and, prior to the REIT
Conversion Date, the Non-Borrower Subsidiaries may make acquisitions of
Hotel Properties, Senior Living Care Facilities and/or other real estate
assets in accordance with the requirements of Sections 9.02(viii), (ix) and
(x) and may make Investments pursuant to Sections 9.05(v), (vi), (vii),
(viii), (xi) and (xii), in each case to the extent that same constitute
Capital Expenditures;
(ii) in addition to Capital Expenditures permitted by the
preceding clause (i) and the following clauses (iii), (iv) and (v), the
Borrower and its Subsidiaries and, prior to the REIT Conversion Date, the
Non-Borrower Subsidiaries may make maintenance Capital Expenditures with
respect to their Hotel Properties, Senior Living Care Facilities and other
high quality real estate so long as (x) the aggregate amount of all such
Capital Expenditures in any fiscal year of the Borrower does not exceed an
amount equal to 8% of the Gross Revenues from all such Hotel Properties,
Senior Living Care Facilities and other high quality real estate for such
fiscal year (or such higher amount as may be required
<PAGE>
pursuant to the respective Management Agreement) plus any amounts then
being so held for Hotel Properties, Senior Living Care Facilities or high
quality real estate, as the case may be, to the extent deposited in a prior
fiscal year and (y) all such Capital Expenditures are made in accordance
with the terms of the respective Management Agreement for such Hotel
Properties, Senior Living Care Facilities or high quality real estate, as
the case may be;
(iii) in addition to Capital Expenditures permitted by the
preceding clauses (i) and (ii) and the following clauses (iv) and (v), the
Borrower and its Subsidiaries and, prior to the REIT Conversion Date, the
Non-Borrower Subsidiaries may make additional Capital Expenditures to the
extent permitted by Section 3.02(g);
(iv) in addition to Capital Expenditures permitted by the
preceding clauses (i), (ii) and (iii) and the following clause (v), the
Borrower and its Subsidiaries and, prior to the REIT Conversion Date, the
Non-Borrower Subsidiaries may make payments in respect of Capitalized Lease
Obligations to the extent such Capitalized Lease Obligations are otherwise
permitted under Section 9.04(xii); and
(v) in addition to the Capital Expenditures permitted to be made
pursuant to clauses (i), (ii), (iii) and (iv), the Borrower and its
Subsidiaries and, prior to the REIT Conversion Date, the Non-Borrower
Subsidiaries may make additional Capital Expenditures for the purpose of
renovating or constructing Improvements with respect to existing Hotel
Properties and/or Senior Living Care Facilities and for the purpose of
constructing new Hotel Properties so long as the aggregate amount of all
such Capital Expenditures does not exceed (x) for the period commencing on
the Effective Date and ending on the last day of the Borrower's fiscal year
ending closest to December 31, 1998, $150,000,000 and (y) for any fiscal
year of the Borrower thereafter, $400,000,000; provided that, to the extent
--------
that the amount of Capital Expenditures made by the Borrower and its
Subsidiaries and, prior to the REIT Conversion Date, the Non-Borrower
Subsidiaries pursuant to preceding clause (y) during the Borrower's fiscal
year ending closest to December 31, 1999 is less than $400,000,000, then
the amount of such difference, but not in excess of $200,000,000, may be
carried forward and used to make such Capital Expenditures in the
immediately succeeding fiscal year of the Borrower.
9.08 Minimum Consolidated Interest Coverage Ratio; Minimum
-----------------------------------------------------
Unsecured Interest Coverage Ratio. (a) Holdings and the Borrower will not permit
- ---------------------------------
the Consolidated Interest Coverage Ratio for any Test Period (i) ending on or
prior to the last day of Holdings' fiscal quarter ending closest to June 30,
1999, to be less than 2.25:1.00, (ii) ending after such date and on or prior to
the last day of Holdings' fiscal quarter ending closest to June 30, 2000, to be
less than 2.375:1.00 and (iii) ending after such date, to be less than
2.50:1.00.
(b) Holdings and the Borrower will not permit the Unsecured
Interest Coverage Ratio for any Test Period to be less than 2.00:1.00.
9.09 Minimum Fixed Charge Coverage Ratio. Holdings and the
-----------------------------------
Borrower will not permit the Consolidated Fixed Charge Coverage Ratio for any
Test Period to be less than 1.50:1.00.
<PAGE>
9.10 Tangible Net Worth. Holdings and the Borrower will not permit
------------------
Tangible Net Worth at any time to be less than Minimum Tangible Net Worth.
9.11 Maximum Total Leverage Ratio. Holdings and the Borrower will
----------------------------
not permit the Total Leverage Ratio at any time during a period set forth below
to be greater than the ratio set forth opposite such period below:
Period Ratio
------ -----
Effective Date through but not
including the last day of Holdings'
fiscal quarter ending closest to
June 30, 1999 5.50:1.00
The last day of Holdings' fiscal
quarter ending closest to June 30,
1999 through but not including the
last day of Holdings' fiscal quarter
ending closest to December 31, 1999 5.25:1.00
The last day of Holdings' fiscal
quarter ending closest to December
31, 1999 through but not including
the last day of Holdings' fiscal quarter
ending closest to June 30, 2000 5.00:1.00
Thereafter 4.50:1.00
9.12 Maximum Secured Debt Leverage Ratio; Unencumbered EBITDA
--------------------------------------------------------
Ratio. (a) Holdings and the Borrower will not permit the Secured Debt Leverage
- -----
Ratio at any time during a period set forth below to be greater than the ratio
set forth opposite such period below:
Period Ratio
------ -----
Effective Date through but not
including the last day of Holdings'
fiscal quarter ending closest to
June 30, 1999 0.57:1.00
The last day of Holdings' fiscal quarter
ending closest to June 30, 1999
through but not including the last
day of Holdings' fiscal quarter ending
closest to September 30, 1999 0.525:1.00
The last day of Holdings' fiscal quarter
ending closest to September 30, 1999
through but not including the last
day of Holdings' fiscal quarter ending
closest to December 31, 1999 0.50:1.00
The last day of Holdings' fiscal quarter
ending closest to December 31, 1999
through but not including the last
day of Holdings' fiscal quarter ending
closest to December 31, 2000 0.45:1.00
The last day of Holdings' fiscal quarter
ending closest to December 31, 2000
through but not including the last day
<PAGE>
of Holdings' fiscal quarter ending closest
to December 31, 2001 0.425:1.00
Thereafter 0.40:1.00
provided, that notwithstanding anything to the contrary contained above in this
- --------
Section 9.12(a), in the event that $2,200,000,000 of Indebtedness, other than
the Obligations hereunder, the Senior Notes and the Existing HMH Notes, are
secured pursuant to the Pledge and Security Agreement, then the ratio set forth
above opposite the period labeled "Thereafter" shall no longer be applicable,
and Holdings and the Borrower in lieu thereof will not permit the Secured Debt
Leverage Ratio at any time during a period set forth below to be greater than
the ratio set forth opposite such period below:
Period Ratio
------ -----
The last day of Holdings' fiscal quarter
ending closest to September 30,
2001 through but not including the
last day of Holdings' fiscal quarter
ending closest to September 30, 2002 0.375:1.00
Thereafter 0.35:1.00
(b) Unencumbered EBITDA Ratio. Holdings and the Borrower will
-------------------------
not permit the Unencumbered EBITDA Ratio for any Test Period ending on the last
day of a fiscal quarter of Holdings set forth below to be less than the ratio
opposite such fiscal quarter below:
Fiscal Quarter Ending Ratio
--------------------- -----
Closest To
----------
September 30, 1998 0.425:1.00
December 31, 1998 0.425:1.00
March 31, 1999 0.425:1.00
June 30, 1999 0.475:1.00
September 30, 1999 0.50:1.00
December 31, 1999 0.55:1.00
March 31, 2000 0.55:1.00
June 30, 2000 0.55:1.00
September 30, 2000 0.55:1.00
December 31, 2000 0.575:1.00
March 31, 2001 0.575:1.00
June 30, 2001 0.575:1.00
September 30, 2001 0.575:1.00
December 31, 2001 0.60:1.00
March 31, 2002 0.60:1.00
June 30, 2002 0.60:1.00
September 30, 2002 0.60:1.00
December 31, 2002 0.60:1.00
March 31, 2003 0.60:1.00
June 30, 2003 0.60:1.00
9.13 Limitation on Payments of Certain Indebtedness; Modifications
-------------------------------------------------------------
of Certain Indebtedness; Modifications of Certificate of Incorporation, By-Laws
- -------------------------------------------------------------------------------
and Certain Agreements; etc. Holdings will not, and will not permit any of its
- ---------------------------
Subsidiaries to, (i) make (or give any notice in respect of) any
<PAGE>
voluntary or optional payment or prepayment on or redemption or acquisition for
value of, or any prepayment or redemption as a result of any asset sale, change
of control or similar event of, including, in each case without limitation, by
way of depositing with the trustee with respect thereto money or securities
before due for the purpose of paying when due, the Senior Notes, the QUIPs Debt,
any Limited Partner Notes or any Permitted Non-Recourse Indebtedness, provided
--------
that (x) so long as no Default or Event of Default then exists or would result
therefrom, from and after the REIT Conversion Date, the Borrower may voluntarily
prepay Limited Partner Notes and may prepay such Limited Partner Notes from the
sale of any asset in respect of which such Limited Partner Note relates to the
extent that such prepayment is required by the terms of such Limited Partner
Note, (y) so long as no Default or Event of Default then exists or would result
therefrom, Holdings may prepay the QUIPs Debt with that portion of any Net
Equity Proceeds from any sale or issuance of its equity that is not required to
be used to prepay Loans pursuant to Section 3.02(c) and (z) any Permitted Non-
Recourse Indebtedness may be prepaid by the Specified Subsidiary that incurred
same with the proceeds from the sale of any property that secures such Permitted
Non-Recourse Indebtedness, (ii) amend or modify, or permit the amendment or
modification of, the QUIPs Debt, the Limited Partner Notes or any Permitted Non-
Recourse Indebtedness or any agreement (including, without limitation, any
purchase agreement, indenture or loan agreement) related thereto (other than any
amendment or modification thereto which would not violate or be inconsistent
with any of the terms or provisions of this Agreement and could not reasonably
be expected to be adverse to the interests of the Banks in any material
respect), (iii) amend or modify, or permit the amendment or modification of, any
provision of any Senior Note Document, (iv) amend or modify, or permit the
amendment or modification of, any provision of any Management Agreement or
Operating Lease (other than any amendment or modification thereto which would
not violate or be inconsistent with any of the terms or provisions of this
Agreement and the other Credit Documents and could not reasonably be expected to
be adverse to the interests of the Banks in any material respect), or (v) other
than in connection with the REIT Transaction, amend, modify or change its
designation of trust, certificate of incorporation (including, without
limitation, by the filing or modification of any certificate of designation),
by-laws, certificate of partnership, partnership agreement or any equivalent
organizational document, or any agreement entered into by it, with respect to
its capital stock or other equity interests, or enter into any new agreement
with respect to its capital stock or other equity interests, other than any
amendments, modifications or changes pursuant to this clause (v) or any such new
agreements in each case which are not adverse in any material respect to the
interests of the Banks. Notwithstanding anything to the contrary contained in
this Agreement, at any time that a Default or an Event of Default exists, no
payment of principal, interest or otherwise may be made on the QUIPs Debt.
9.14 Limitation on Certain Restrictions on Subsidiaries. Holdings
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of the Borrower to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by the Borrower or any of
its Subsidiaries, or pay any Indebtedness owed to the Borrower or any Subsidiary
of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except in each case for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) the Senior Note Documents, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Borrower or any Subsidiary of the Borrower, (v)
customary
<PAGE>
provisions restricting assignment of any licensing agreement entered into by the
Borrower or any Subsidiary of the Borrower in the ordinary course of business,
(vi) customary provisions restricting the transfer of assets subject to Liens
permitted under Section 9.01, (vii) restrictions existing in any document
executed in connection with any Permitted Non-Recourse Indebtedness so long as
such restrictions only apply to the Specified Subsidiary that has incurred such
Permitted Non-Recourse Indebtedness, (viii) restrictions assumed pursuant to the
acquisition by the Borrower or any Subsidiary of the Borrower of any Person or
of any property or assets, so long as such encumbrances or restrictions exist at
the time of such acquisition and are not incurred in contemplation thereof, and
such encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets so acquired, (ix) restrictions under an agreement that has been entered
into for the sale or disposition of all or substantially all of the capital
stock of, or property and assets of, a Subsidiary of the Borrower, so long as
such encumbrances or restrictions apply solely to such Subsidiary, (x)
replacements of restrictions imposed pursuant to clause (viii) of this Section
9.14 in connection with and pursuant to a refinancing of the Indebtedness giving
rise to such restrictions to the extent such refinancing is permitted under this
Agreement and so long as such replacement restrictions are not more restrictive
than those being replaced and do not apply to any other Person or assets other
than those that would have been covered by the restrictions in the Indebtedness
so refinanced, and (xi) customary restrictions on the transfer of assets owned
by, or loans and advances made by, a non-Wholly Owned Subsidiary of the Borrower
to the extent such restrictions are set forth in the joint venture agreement,
partnership agreement or other organizational documents relating thereto.
9.15 Limitation on Issuance of Capital Stock. (a) Holdings will
---------------------------------------
not permit any of its Subsidiaries to issue any capital stock (including by way
of sales of treasury stock) or other equity interests or any options or warrants
to purchase, or securities convertible into, capital stock or other equity
interests, except (i) for OP Units issued by the Operating Partnership to the
extent that no Event of Default will result therefrom, (ii) for transfers and
replacements of then outstanding shares of capital stock or other equity
interests, (iii) for stock splits, stock dividends and similar or additional
issuances which do not decrease the percentage ownership of Holdings or any of
its Subsidiaries in any class of the capital stock or other equity interests of
such Subsidiary, (iv) to qualify directors to the extent required by applicable
law, (v) for issuances by newly created or acquired Subsidiaries in accordance
with the terms of this Agreement and (vi) for additional issuances by existing
non-Wholly-Owned Subsidiaries which are limited partnerships as required
pursuant to the terms of their respective partnership agreements or as part of
any agreement entered into in connection with the REIT Transaction.
(b) Holdings will not, and will not permit any of its
Subsidiaries to, issue any class of redeemable common stock or other redeemable
common equity interests or any class of preferred stock other than (i)
redeemable common OP Units issued by the Operating Partnership which are
redeemable into stock of Host REIT or, at the option of Host REIT, into cash,
(ii) Qualified Preferred Stock of Holdings and OP Units of the Operating
Partnership that constitute preference shares or OP Units to the extent such
shares or OP Units may be issued under Section 9.15(a) and (iii) interests in
non-Wholly-Owned Subsidiaries that are redeemable, at the option of the Borrower
or a Subsidiary thereof, for cash, OP Units or stock of Host REIT.
9.16 Business. (a) Holdings will not, and will not permit any of
--------
its Subsidiaries to, engage (directly or indirectly) in any business other than
the businesses in which the Borrower and its Subsidiaries are engaged on the
Effective Date and those
<PAGE>
otherwise specifically permitted by this Agreement, provided that from and after
the REIT Conversion Date, Holdings will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in the senior living care
business.
(b) Notwithstanding anything to the contrary contained in this
Agreement, from and after the REIT Conversion Date, Holdings will not engage in
any business activities, will not have any significant assets other than the
ownership of the OP Units of the Borrower and de minimis equity interests in
Subsidiaries of the Borrower (other than a Subsidiary Guarantor), and will not
have any significant liabilities other than those under this Agreement, under
the other Documents to which it is a party and pre-existing liabilities of
Holdings at the time of the REIT Conversion (which liabilities have been assumed
by the Operating Partnership but which may still remain liabilities of
Holdings). Notwithstanding anything to the contrary contained in this
Agreement, from and after the REIT Conversion Date, Holdings shall not (i) make
any Capital Expenditures, (ii) enter into any merger, consolidation or similar
transaction except for the REIT Merger, (iii) incur (or permit to remain
outstanding) any Indebtedness (other than (x) in respect of outstanding QUIPs
Debt, (y) as otherwise permitted by the immediately preceding sentence and (z)
liabilities of the Borrower for which Holdings is liable solely by virtue of it
being the general partner of the Borrower (although any such liabilities in
respect of Indebtedness for borrowed money, Capitalized Lease Obligations,
purchase money Indebtedness, letters of credit and guarantees of any of the
foregoing shall provide that such liabilities are non-recourse to Holdings
except under circumstances similar to those contained in Section 13.18)), (iv)
grant any Liens except under the Credit Documents or (v) make any Investment
except as otherwise permitted under the first sentence of this clause (b).
9.17 Limitation on Creation of Subsidiaries. (a) Except as
--------------------------------------
otherwise specifically provided in following clause (b), Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Effective Date any Subsidiary; provided that, (i) the Borrower and its
--------
Wholly-Owned Subsidiaries, and prior to the REIT Conversion Date, Wholly-Owned
Non-Borrower Subsidiaries, shall be permitted to establish or create, and to the
extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries so long as
the capital stock or other equity interests of such new Subsidiary that is owned
by any Credit Party is pledged pursuant to, and to the extent required by, the
Pledge and Security Agreement (and so long as any actions required to be taken
by the Pledge and Security Agreement in connection therewith are in fact taken),
(ii) such new Subsidiary, if required by Section 8.18, executes a counterpart of
the Subsidiaries Guaranty and the Pledge and Security Agreement and (iii) such
new Subsidiary, to the extent requested by the Administrative Agent or the
Required Banks, takes all actions required pursuant to Section 8.18. In
addition, each new Wholly-Owned Subsidiary shall execute and deliver, or cause
to be executed and delivered, all other relevant documentation of the type
described in Section 4 as such new Subsidiary would have had to deliver if such
new Subsidiary were a Credit Party on the Effective Date. Without prejudice to
the preceding provisions of this Section 9.17(a), the Collateral Agent may
require that the capital stock of a new Subsidiary (in the case of a Foreign
Subsidiary, subject to limitations on the percentage of voting stock required to
be pledged which are consistent with the limitations provided in the Pledge and
Security Agreement as originally in effect) be pledged pursuant to an agreement
in a form suitable for enforcement in the jurisdiction in which the new
Subsidiary is incorporated.
(b) In addition to Subsidiaries created pursuant to preceding
clause (a), the Borrower and its Subsidiaries, and prior
<PAGE>
to the REIT Conversion Date, Non-Borrower Subsidiaries may establish or acquire
one or more Subsidiaries after the Effective Date as a result of Investments
expressly permitted to be made pursuant to Section 9.05; provided that (x) all
--------
capital stock or other equity interests of each such Subsidiary shall be pledged
by any Credit Party which owns same to the extent required by the Pledge and
Security Agreement and (y) if any such Subsidiary is, or becomes, a Wholly-Owned
Subsidiary of such Borrower, such Subsidiary shall at such time take all actions
as would otherwise be required pursuant to Section 9.17(a) in connection with
the creation of a new Wholly-Owned Subsidiary.
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
--------
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for two or more Business Days, in the payment
when due of any interest on any Loan or Note, or any Fees or any other amounts
owing hereunder or under any other Credit Document; or
10.02 Representations, etc. Any representation, warranty or
---------------------
statement made or deemed made by any Credit Party herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(e)(i), 8.08, 8.12, 8.16, 8.18 or 8.21 or Section 9 or (ii) default
in the due performance or observance by it of any other term, covenant or
agreement contained in this Agreement (other than as provided in Section 10.01)
and such default shall continue unremedied for a period of 30 days after written
notice to the Borrower by the Administrative Agent or the Required Banks; or
10.04 Default Under Other Agreements. (i) Holdings or any of
------------------------------
its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness (other than
the Obligations) of Holdings or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, provided that it
--------
shall not be a Default or an Event of Default under clauses (i) or (ii) of this
Section 10.04 unless the aggregate outstanding principal amount of all
Indebtedness as described in such clauses (i) and (ii) is at least $15,000,000;
or
10.05 Bankruptcy, etc. Holdings or any of its Subsidiaries
---------------
(other than a Designated Immaterial Subsidiary) shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against Holdings or any
of its Subsidiaries (other than a Designated Immaterial Subsidiary) and
<PAGE>
the petition is not controverted within 10 days, or is not dismissed within 30
days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of Holdings or any of its Subsidiaries (other than a Designated
Immaterial Subsidiary) or Holdings or any of its Subsidiaries (other than a
Designated Immaterial Subsidiary) commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings or any of its Subsidiaries (other than
a Designated Immaterial Subsidiary), or there is commenced against Holdings or
any of its Subsidiaries (other than a Designated Immaterial Subsidiary) any such
proceeding which remains undismissed for a period of 30 days, or Holdings or any
of its Subsidiaries (other than a Designated Immaterial Subsidiary) is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered and is not vacated or stayed
within 30 days; or Holdings or any of its Subsidiaries (other than a Designated
Immaterial Subsidiary) suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 30 days; or Holdings or any of its Subsidiaries (other than a
Designated Immaterial Subsidiary) makes a general assignment for the benefit of
creditors; or any partnership and/or corporate action is taken by Holdings or
any of its Subsidiaries (other than a Designated Immaterial Subsidiary) for the
purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof under Section 412 of
the Code or Section 302 of ERISA or a waiver of such standard or extension of
any amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation 4043.61 (without regard to subparagraph (b)(1)
thereof) and an event described in subsection .62, .63, .64., .65, .66, .67 or
.68 or PBGC Regulation Section 4043 shall be reasonably expected to occur with
respect to such Plan within the following 30 days, any Plan shall have had or is
likely to have a trustee appointed to administer such Plan, any Plan is, shall
have been or is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a
contribution required to be made by Holdings, any Subsidiary of Holdings or any
ERISA Affiliate to a Plan or a Foreign Pension Plan has not been timely made,
Holdings or any of its Subsidiaries or ERISA Affiliates has incurred or is
likely to incur a liability to or on account of a Plan under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or on account of a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) under Section 4980B of the Code, or Holdings or any of its Subsidiaries or
ERISA Affiliates has incurred or is likely to incur liabilities pursuant to one
or more employee welfare benefit plans (as defined in Section 3(1) of ERISA)
that provide benefits to retired employees or other former employees (other than
as required by Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA) or Foreign Pension Plans; (b) there shall
result from any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a liability;
and (c) such lien, security interest or liability, individually and/or in the
aggregate, in the reasonable opinion of the Required Banks, will have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, Holdings and its
Subsidiaries
<PAGE>
taken as a whole, the Borrower or the Borrower and its Subsidiaries taken as a
whole; or
10.07 Pledge and Security Agreement. At any time after the
-----------------------------
execution and delivery thereof, the Pledge and Security Agreement shall cease to
be in full force and effect, or shall cease to give the Collateral Agent for the
benefit of the Secured Creditors the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Pledge and Security Agreement
Collateral), in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons, and subject to no other Liens, or any Credit Party
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to the Pledge and
Security Agreement and such default shall continue beyond any grace period
specifically applicable thereto pursuant to the terms of the Pledge and Security
Agreement; or
10.08 Guaranty. Any Guaranty shall cease to be in full force or
--------
effect (other than in accordance with its terms) as to the relevant Guarantor,
or any Guarantor or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under the relevant Guaranty or
any Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to such
Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
---------
entered against Holdings or any of its Subsidiaries involving in the aggregate
for Holdings and its Subsidiaries a liability (not paid or not fully covered by
a reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments equals or exceeds $15,000,000; or
10.10 Management Agreements. Any Management Agreement or any
---------------------
material provision thereof shall cease to be in full force and effect or any
party thereto shall deny or disaffirm its material obligations thereunder or
shall default in the due performance or observance of any material term,
covenant or agreement on its part to be performed or observed pursuant thereto
after the expiration of any applicable cure period, other than those failures,
defaults or modifications which could not, individually or in the aggregate, be
reasonably expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Holdings, Holdings and its Subsidiaries taken as a whole, the
Borrower or the Borrower and its Subsidiaries taken as a whole; or
10.11 Operating Leases. Any Operating Lease or any material
----------------
provision thereof shall cease to be in full force and effect or otherwise be
amended or modified without the consent of the Administrative Agent or any party
thereto shall deny or disaffirm its material obligations thereunder or shall
default in the due performance or observance of any material term, covenant or
agreement on its part to be performed or observed pursuant thereto after the
expiration of any applicable cure period, other than those failures, defaults or
modifications which could not individually or in the aggregate, be reasonably
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole; or
<PAGE>
10.12 Change of Control. A Change of Control shall occur; or
-----------------
10.13 Trademark Permission. (a) At any time Hotel Properties
--------------------
which account for more than 15% of Consolidated EBITDA for the Test Period then
most recently ended shall be operated without the use of the "Marriott",
"Renaissance", "Hyatt", "Swissotel", "Four Seasons" or "Ritz-Carlton" or other
nationally recognized luxury or upscale chain name or trademark or shall not be
permitted to use any such name or trademark in any advertising incident thereto;
or
(b) At any time on or prior to the REIT Conversion Date, Senior
Living Care Facilities which accounted for more than 15% of Consolidated EBITDA
for the Test Period then most recently ended shall be operated without the use
of the "Forum" or "Brighton Gardens" name or trademark (or another nationally
recognized brand name or trademark acceptable to the Required Banks and which is
used by a Permitted Facility Manager in the operation of a Senior Living Care
Facility) or shall not be permitted to use any such name or trademark in any
advertising incident thereto; or
10.14 REIT Status. At any time from and after the REIT
-----------
Conversion Date, Host REIT shall cease, for any reason, to be a real estate
investment trust under Sections 856 through 860 of the Code; or
10.15 General Partner Status. On or after the REIT Conversion
----------------------
Date, Host REIT shall cease at any time to be the sole general partner of the
Borrower; or
10.16 Certain FF&E. From and after the REIT Conversion Date, any
------------
Person, other than the Borrower or a Subsidiary thereof, shall have any
consensual Lien on the FF&E owned by a Non-Controlled Entity (other than Liens
existing on the Effective Date or as otherwise specifically provided in Section
9.01(xiii));
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (provided, that, if an Event of Default specified in Section 10.05
--------
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment terminated,
whereupon the Commitments of each Bank shall forthwith terminate immediately and
any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all other Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and (iii) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Pledge and
Security Agreement.
<PAGE>
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acknowledgment and Joinder Agreement" shall have the meaning provided
in Section 6.06.
"Acquisition Purchase Price" shall mean, with respect to any
acquisition of assets pursuant to Section 9.02(viii) or (ix), any Partnership
Roll-Up or any Investment made pursuant to Section 9.05(xi) the total amount of
consideration paid by Holdings and its Subsidiaries for such assets or
Investment (including the aggregate principal amount of all Indebtedness,
issued, assumed and/or acquired in connection with such acquisition, Partnership
Roll-Up or Investment).
"Additional Term Loan" shall have the meaning provided in Section
1.01(a)(B).
"Additional Term Loan Borrowing Date" shall mean each of two single
dates to occur on or after January 1, 1999 and on or before August 5, 2000 on
which Additional Term Loans are made pursuant to Sections 1.01(a)(B) and 1.14.
"Additional Term Loan Commitment" shall mean, for each Bank that has
agreed to make an Additional Term Loan on an Additional Term Loan Borrowing Date
pursuant to Sections 1.01(a)(B) and 1.14, the amount allocated to such Bank by
the Administrative Agent and agreed to by such Bank in respect of the Additional
Term Loans to be made on each such date.
"Adjusted Consolidated Net Income" shall mean, for any period,
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash interest expense)
and net non-cash losses which were included in arriving at Consolidated Net
Income for such period less the sum of the amount of all net non-cash income and
gains included in arriving at the Consolidated Net Income for such period.
"Adjusted Funds From Operations" shall mean, for any period,
Consolidated Net Income for such period plus (a) the sum of the following
amounts for such period to the extent deducted in the determination of
Consolidated Net Income for such period: (i) depreciation expense, (ii)
amortization expense and other non-cash charges of Holdings and its Subsidiaries
with respect to their real estate assets for such period, (iii) losses from
Asset Sales, losses resulting from restructuring of Indebtedness and other
extraordinary losses, and (iv) amortization of financing costs; less (b) the sum
of the following amounts to the extent included in the determination of
Consolidated Net Income for such period: (i) gains from Asset Sales, gains
resulting from restructuring of Indebtedness and other extraordinary gains and
(ii) the applicable share of Consolidated Net Income of Holdings' Unconsolidated
Entities; plus (c) Holdings' pro rata share of Adjusted Funds From Operations of
--- ----
Holdings' Unconsolidated Entities based upon Holdings' percentage ownership
interest in such Unconsolidated Entities.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include any
successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling (including, but not limited to, all
directors, officers and general partners of
<PAGE>
such Person) controlled by, or under direct or indirect common control with,
such Person or (ii) that directly or indirectly owns more than 10% of the total
voting power normally entitled to vote in the election of directors, managers or
trustees, as applicable, in such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise, provided that the right to designate a member of the board of
directors or managers of a Person will not, by itself, be deemed to constitute
control. Notwithstanding the foregoing, neither Marriott International nor any
of its Subsidiaries shall be considered to be Affiliates of Holdings or any of
its Subsidiaries.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed, refinanced or replaced from
time to time.
"Annual Excess Cash Flow" shall mean, in respect of any fiscal year of
Holdings, the amount of Excess Cash Flow of Holdings for such fiscal year.
"Applicable Commitment Commission Percentage" see definition of
"Applicable Margin" below.
"Applicable Margin" and "Applicable Commitment Commission Percentage"
shall have the meaning provided in clause (a) or (b) below, as applicable:
(a) At any time during which the Borrower has not achieved or has
failed to maintain an Unsecured Debt Rating of at least BBB- from S&P and Baa3
from Moody's, "Applicable Margin" and "Applicable Commitment Commission
Percentage" shall mean, from and after any Start Date to and including the
corresponding End Date, the respective percentage set forth below under the
respective Type of Loan or Commitment Commission and opposite the respective
Level (i.e., Level I, Level II, Level III, Level IV, Level V or Level VI, as the
case may be) indicated to have been achieved on the applicable Test Date for
such Start Date (as shown in the respective officer's certificate delivered
pursuant to Section 8.01(d)), it being understood that from the Effective Date
through the Start Date in respect of the Test Period ending closest to December
31, 1998, (i) should the Total Leverage Ratio on the Effective Date be less than
5.0:1.0, the Applicable Margin for such period shall be, for Base Rate Loans,
0.75%, and for Eurodollar Rate Loans, 1.75%, and the Applicable Commitment
Commission Percentage shall be 0.35%, and (ii) should the Total Leverage Ratio
on the Effective Date be equal to or greater than 5.0:1.0, the Applicable Margin
and the Applicable Commitment Commission Percentage shall be based on the Level
applicable on the Effective Date:
<PAGE>
<TABLE>
<CAPTION>
Base Eurodollar
Rate Rate Commitment
Total Leverage Ratio Loans Loans Commission
-------------------- ----- ----- ----------
<S> <C> <C> <C> <C>
Level I less than 3.5:1.0 0.275% 1.275% 0.25%
Level II greater than or equal to
3.5:1.0 and less than 4.0:1.0 0.375% 1.375% 0.25%
Level III greater than or equal to
4.0:1.0 and less than 4.5:1.0 0.500% 1.50% 0.25%
Level IV greater than or equal to
4.5:1.0 and less than 5.0:1.0 0.625% 1.625% 0.35%
Level V greater than or equal to
5.0:1.0 and less than 0.80% 1.80% 0.35%
5.25:1.0
Level VI
greater than or equal to 0.95% 1.95% 0.35%
5.25:1.0
</TABLE>
(b) At any time during which the Borrower has achieved and is
currently maintaining an Unsecured Debt Rating of at least BBB- from S&P and
Baa3 from Moody's, "Applicable Margin" and "Applicable Commitment Commission
Percentage" shall mean, from any Start Date to and including the corresponding
End Date, the respective percentage per annum set forth below under the
respective Type of Loan or Commitment Commission and opposite the respective
Level (i.e., Level I, Level II, Level III or Level IV, as the case may be)
indicated to have been achieved on the applicable Test Date for such Start Date
(as shown in the respective officer's certificate delivered pursuant to Section
8.01(d)):
<TABLE>
<CAPTION>
Unsecured Debt
Rating of Base Eurodollar
the Borrower Rate Rate Commitment
(S&P/Moody's) Loans Loans Commission
-------------- ----- ----- ----------
<S> <C> <C> <C> <C>
Level I A-/A3 or 0% 0.875% 0.125%
better
Level II BBB+/Baa1 0% 1.00% 0.15%
Level III BBB/Baa2 0.125% 1.125% 0.175%
Level IV BBB-/Baa3 0.250% 1.25% 0.20%
</TABLE>
provided that (i) if S&P and/or Moody's shall cease to issue ratings of debt
securities of real estate investment trusts generally, then the Administrative
Agent and the Borrower shall negotiate in good faith to agree upon a substitute
rating agency or agencies (and to correlate the system of ratings of each
substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency or agencies are agreed
upon, the applicable Level shall be determined on the basis of the rating
assigned by the other rating agency (or, if both S&P and Moody's shall have so
ceased to issue such ratings, on the basis of the Level in effect immediately
prior thereto) and (b) after such substitute rating agency or agencies are
agreed upon, the applicable Level shall be determined on the basis of the rating
assigned by the other rating agency and such substitute rating agency or the two
substitute rating agencies, as the case may be; (ii) except as set forth in
clause (iii) below, if the long term senior unsecured actual or implied debt
ratings of the Borrower by S&P and Moody's are not equivalent, the higher rating
will apply for the purposes of determining the applicable Level; and (iii) if
the long term senior unsecured actual or implied debt ratings of the Borrower by
S&P and Moody's are two or more Levels apart, the rating one Level
<PAGE>
below the higher rating will apply for the purposes of determining the
applicable Level.
Notwithstanding anything to the contrary contained above in this
definition, at any time that a Specified Default or an Event of Default shall
exist, Level VI pricing set forth in clause (a) of this definition shall apply.
"Approved Bank" shall have the meaning provided in the definition of
"Cash Equivalents."
"Approved Lessee" shall mean (i) SLC or a Subsidiary thereof, as
lessee under an Operating Lease, or (ii) another lessee under an Operating Lease
approved by the Administrative Agent and the Required Banks.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person (including by-way-of
redemption by such Person) other than to Holdings or a Wholly-Owned Subsidiary
of Holdings of any asset (including, without limitation, any capital stock or
other securities of, or equity interest in, another Person) other than sales or
other dispositions of assets pursuant to Sections 9.02(ii), (v), (xiii) and
(xvi).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
"Authorized Financial Officer" of any Credit Party shall mean any of
the Chief Financial Officer, the Treasurer or the Chief Accounting Officer of
such Credit Party or any other officer of such Credit Party designated in
writing to the Administrative Agent by any of the foregoing officers of such
Credit Party as being authorized to act in such capacity so long as the other
officer is a financial person who works in such Credit Party's controller's or
accounting office.
"Authorized Officer" of any Credit Party shall mean any of the
President, any Authorized Financial Officer or any Vice-President of such Credit
Party or any other officer of such Credit Party which is designated in writing
to the Administrative Agent by any of the foregoing officers of such Credit
Party as being authorized to give notices under this Agreement.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Section
13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or failure of a Bank to make available its portion of any Borrowing
in violation of this Agreement or (ii) a Bank having notified in writing the
Borrower and/or the Administrative Agent that it does not intend to comply with
its obligations under Section 1.01, including, without limitation, as a result
of any takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the higher of (i) the rate which
is 1/2 of 1% in excess of the Federal Funds Rate and (ii) the Prime Lending
Rate.
"Base Rate Loan" shall mean each Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.
"Blackstone Acquisition" shall mean the acquisition by the Borrower
and/or one or more Subsidiaries of the Borrower
<PAGE>
of 12 luxury Hotel Properties (or interests therein), three mortgage notes and
certain other assets from Affiliates of The Blackstone Group and Blackstone Real
Estate Partners on substantially the terms and conditions described on Schedule
III (which Schedule III shall also set forth any Indebtedness and/or Liens
securing Indebtedness being acquired or assumed in connection therewith).
"Borrower" shall mean, (x) prior to the consummation of the HMH
Merger, HMH, and (y) from and after the consummation of the HMH Merger, the
Operating Partnership.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from Banks having Commitments of the respective Tranche on a given date
(or resulting from a conversion or conversions on such date) having in the case
of Eurodollar Loans the same Interest Period, provided that Base Rate Loans
--------
incurred pursuant to Section 1.10(b) shall be considered part of the related
Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
"Calculation Period" shall mean the period of four consecutive fiscal
quarters last ended before the date of the respective event or incurrence which
requires calculations to be made on a Pro Forma Basis and for which financial
--- -----
information of the kind referred to in Sections 8.01(a) and (b) is available.
"Capital Expenditures" shall mean, with respect to any Person,
without duplication, (i) all expenditures by such Person which should be
capitalized in accordance with generally accepted accounting principles,
including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted accounting
principles) and, without duplication, the amount of Capitalized Lease
Obligations of such Person (but excluding, solely for purposes of calculating
Excess Cash Flow for any period, any expenditures as described above in this
clause (i) to the extent representing reductions to amounts held in reserve for
FF&E which were included as Capital Expenditures pursuant to clause (ii) below
of this definition in a prior period) and (ii) solely for purposes of
calculating Excess Cash Flow for any period, all amounts actually held in
reserve for FF& E by such Person during such period.
"Capitalized Interest" shall mean interest that is capitalized and is
not counted as interest expense in accordance with GAAP.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
--------
States of America is pledged
<PAGE>
in support thereof) having maturities of not more than one year from the date of
acquisition, (ii) U.S. dollar denominated time deposits, certificates of deposit
and bankers acceptances of (x) any Bank or (y) any bank whose short-term
commercial paper rating from S&P is at least A-2 or the equivalent thereof or
from Moody's is at least P-2 or the equivalent thereof (any such bank or Bank,
an "Approved Bank"), in each case with maturities of not more than one year from
the date of acquisition, (iii) commercial paper issued by any Approved Bank or
by the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-2 or the equivalent thereof by S&P or at least P-2 or
the equivalent thereof by Moody's, or guaranteed by any industrial company with
a long term unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case maturing
within one year after the date of acquisition, (iv) marketable direct
obligations issued by the District of Columbia or any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's and (v) investments in money market funds
substantially all the assets of which are comprised of securities of the types
described in clauses (i) through (iv) above.
"Casualty Event" shall mean any theft, loss, physical destruction,
damage or similar event with respect to any Hotel Property or any Senior Living
Care Facility (or in each case any portion thereof).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.CA. (S) 9601 et seq.
-- ----
"Change of Control" shall mean (a) prior to the REIT Conversion Date,
either (i) Holdings shall at any time cease to own 100% of the economic and
voting interests of Hospitality, (ii) Hospitality shall at any time cease to own
100% of the economic and voting interests of the Borrower, (iii) the direct or
indirect acquisition by any Person or a group (as such term is defined in
Section 13(d)(3) of the Exchange Act), other than Marriott Family Members, of
beneficial ownership (as such term is defined in Rule 13D-3 promulgated under
the Securities Exchange Act) of 30% or more of the outstanding shares of common
stock of Holdings, (iv) the Board of Directors of Holdings shall not consist of
a majority of Continuing Directors or (v) any "change of control" or similar
event shall occur under any Qualified Preferred Stock, the Senior Notes or any
other Indebtedness (other than Permitted Non-Recourse Indebtedness) of Holdings
or the Borrower with an aggregate principal amount of $25,000,000 or more, and
(b) from and after the REIT Conversion Date, either (i) Holdings shall at any
time cease to own 100% of the general partnership interests of the Borrower,
(ii) the direct or indirect acquisition by any Person or a group (as such term
is defined in Section 13(d)(3) of the Exchange Act), other than Marriott Family
Members, of beneficial ownership (as such term is defined in Rule 13D-3
promulgated under the Securities Exchange Act) of 30% or more of the outstanding
shares of common stock of Holdings, (iii) the Board of Directors of Holdings
shall not consist of a majority of Continuing Directors or (iv) any "change of
control" or similar event shall occur under any Qualified Preferred Stock, the
Senior Notes or any other Indebtedness (other than Permitted Non-Recourse
Indebtedness) of Holdings or the Borrower with an aggregate principal amount of
$25,000,000 or more.
<PAGE>
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Co-Arranger" shall mean each of Wells Fargo Bank, National
Association, The Bank of Nova Scotia and Credit Lyonnais New York Branch.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder. Section references to
the Code are to the Code, as in effect at the date of this Agreement, and to any
subsequent provision of the Code, amendatory thereof, supplemental thereto or
substituted therefor.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Pledge and Security
Agreement.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
----
whether the Initial Term Loan Commitment, Additional Term Loan Commitment or
Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided in Section
2.01(a).
"Condemnation Proceeds" shall mean all compensation, awards, damages,
rights of action and proceeds awarded to any Credit Party or any of its
Subsidiaries by reason of any Taking.
"Consolidated EBITDA" shall mean, for any period, the Consolidated Net
Income of Holdings (or, from and after the REIT Conversion Date, the Borrower)
for such period adjusted (A) to add thereto (to the extent deducted in
determining Consolidated Net Income for such period), without duplication, the
sum of the amounts for such period of (i) Consolidated Interest Expense, (ii)
provisions for taxes based on income, (iii) depreciation and amortization
expense (provided that the depreciation and amortization expense of a non-
Wholly-Owned Subsidiary shall be included only to the extent of the equity
interest of such Person in such non-Wholly-Owned Subsidiary), (iv) any other
noncash items reducing Consolidated Net Income of Holdings (or, from and after
the REIT Conversion Date, the Borrower) for such period (except to the extent
that such noncash items relate to the write-off or write-down of any item
included in Consolidated Net Income in a prior period) and (v) any cash receipts
of such Person or a Subsidiary thereof during such period that represent items
included in Consolidated Net Income of Holdings (or, from and after the REIT
Conversion Date, the Borrower) for a prior period which were excluded from
Consolidated EBITDA in such prior period by virtue of clause (B) of this
definition, (B) to subtract therefrom, without duplication, the sum of the
amounts for such period of (i) all noncash items increasing Consolidated Net
Income of Holdings (or, from and after the REIT Conversation Date, the Borrower)
for such period and (ii) any cash expenditures of Holdings and its Subsidiaries
(or, from and after the REIT Conversion Date, the Borrower and its Subsidiaries)
during such period to the extent that such cash expenditures (x) did not reduce
Consolidated Net Income of Holdings for such period and (y) were applied against
reserves or accruals that constituted noncash items reducing Consolidated Net
Income of Holdings (or, from and after the REIT Conversion Date, the Borrower)
when reserved or accrued for in a prior period and (C) as provided in the
definition of Pro Forma Basis; provided that Consolidated EBITDA shall be
--------
determined without giving effect to (i) any extraordinary gains or losses
(including any taxes attributable to any such extraordinary gains or losses) or
gains or losses from sales of assets other than from sales of inventory
(excluding Real Property) in the ordinary course of business or (ii) any non-
recurring expenses incurred in connection with the REIT
<PAGE>
Transaction. Notwithstanding anything to the contrary contained in this
Agreement, for purposes of determining compliance with Sections 9.08, 9.09, 9.11
and 9.12 and for purposes of determining the Applicable Margin and the
Applicable Commitment Commission Percentage, to the extent that the portion of
Consolidated EBITDA for any period attributable to Non-Controlled Entities
exceeds 16% of the total Consolidated EBITDA for such period, such excess shall
be ignored in making such determinations.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period,
the ratio of (x) Consolidated EBITDA for such period to (y) the sum of (i)
Consolidated Interest Expense for such period, (ii) to the extent that same does
not constitute Consolidated Interest Expense for such period, all interest
expense on the QUIPs Debt for such period, (iii) preferred stock dividends (or
the equivalent thereof) accrued and/or paid in cash by Holdings and the Borrower
(without duplication) (or, from and after the REIT Conversion Date, the
Borrower) during such period, (iv) 5% of Gross Revenues during such period
received from all Hotel Properties and (v) 3% of Gross Revenues during such
period received from all Senior Living Care Facilities and other high quality
real estate.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Holdings and its Subsidiaries (or, from and
after the REIT Conversion Date, the Borrower) for such period (calculated
without regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capitalized Lease Obligations of such Person and
its Subsidiaries representing the interest factor for such period, but excluding
the amortization of any deferred financing costs; provided that (i) interest
expense on the QUIPs Debt shall only be included as Consolidated Interest
Expense for Test Periods ending on and after the last day of the Borrower's
fiscal quarter ending closest to June 30, 2000 and (ii) such Consolidated
Interest Expense shall be adjusted as provided in the definition of Pro Forma
Basis. Notwithstanding anything to the contrary contained elsewhere in this
Agreement or the requirements of GAAP, the amount of Capitalized Interest
incurred during any period shall be added as a component of Consolidated
Interest Expense.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of Holdings and its Subsidiaries (or, from and after the REIT
Conversion Date, the Borrower and its Subsidiaries) for such period, determined
on a consolidated basis; provided that (i) net income (or loss) of (x) any other
Person which is accounted for by such specified Person by the equity method of
accounting or (y) any Subsidiary of such Person that is restricted from
declaring or paying dividends or other distributions, directly or indirectly, by
operation of the terms of its charter, any applicable agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation or otherwise
shall (in each case) be included only to the extent of the amount of cash
dividends or distributions paid to the specified Person or a Wholly-Owned
Subsidiary of such Person, (ii) the net income (or loss) of any other Person
acquired by such specified Person or a Subsidiary of such Person in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iii) to the extent Consolidated Net Income reflects amounts
attributable to minority interests in Subsidiaries that are not Wholly-Owned
Subsidiaries of Holdings (or, from and after the REIT Conversion Date, the
Borrower), Consolidated Net Income shall be reduced by the amounts attributable
to such minority interests.
<PAGE>
"Consolidated Secured Debt" shall mean any Indebtedness of Holdings or
any of its Subsidiaries (or, from and after the REIT Conversion Date, the
Borrower or any of its Subsidiaries) that constitutes part of Consolidated Total
Debt to the extent that such Indebtedness is secured or collateralized by any
asset or property of Holdings or any of its Subsidiaries (or, from and after the
REIT Conversion Date, the Borrower or any of its Subsidiaries) (excluding, in
any event, all Loans, all Senior Notes, all Existing HMH Notes that remain
outstanding after the consummation of the Existing HMH Notes Tender
Offers/Consent Solicitations and all other Indebtedness that is secured solely
by a Lien under the Pledge and Security Agreement).
"Consolidated Total Debt" shall mean, at any time, all Indebtedness of
Holdings and its Subsidiaries (or, from and after the REIT Conversion Date, the
Borrower and its Subsidiaries) as would be required to be reflected on the
liability side of a balance sheet as prepared in accordance with generally
accepted accounting principles and as determined on a consolidated basis at such
time, including, in any event, all Loans, all Senior Notes, all Existing HMH
Notes that remain outstanding after the consummation of the Existing HMH Notes
Tender Offers/ Consent Solicitations, all Limited Partner Notes and all
Permitted Non- Recourse Indebtedness, excluding however, the amount of QUIPs
Debt outstanding at such time; provided that such Consolidated Total Debt shall
be further adjusted as provided in the definition of Pro Forma Basis.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee (including, without
limitation, as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner) any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
-------- -------
Obligation shall not include (x) endorsements of instruments for deposit or
collection in the ordinary course of business or (y) liabilities of Holdings or
any of its Subsidiaries arising solely as a result of their being a general
partner in a Person which is not a Subsidiary to the extent such liabilities are
of the type described in Section 9.04(iii) or are in respect of other
Indebtedness which provides that recourse thereunder is limited to those
circumstances of the type described in Section 13.18. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director, if such other director's nomination for
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors or is recommended by a committee of the Board of
<PAGE>
Directors a majority of which is composed of the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Pledge and Security Agreement and the Subsidiaries Guaranty.
"Credit Party" shall mean each Principal Credit Party and each
Subsidiary Guarantor.
"Creditors" shall mean and include the Administrative Agent, each Co-
Arranger, the Collateral Agent, each Bank and each Person (other than any Credit
Party) party to an Interest Rate Protection Agreement or Other Hedging Agreement
to the extent such Person constitutes a Secured Creditor under the Pledge and
Security Agreement.
"CRC" shall have the meaning provided in the first paragraph of this
Agreement.
"CRHC" shall mean HMC Capital Resources Holdings Corp., a Delaware
corporation.
"CRHC Merger" shall mean the merger of CRHC with and into HMH, with
HMH being the surviving corporation of such merger.
"CRHC Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of August 5, 1998, between CRHC and HMH.
"CRHC Merger Documents" shall mean the CRHC Merger Agreement, the
certificate of merger attached thereto as an exhibit and all other agreements
and documents related to the CRHC Merger.
"Debt Agreements" shall have the meaning provided in Section 4.05.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Immaterial Subsidiary" shall mean, prior to the
Partnership Roll-Up of the respective Subsidiary, each of Marriott MDAH One
Corporation and MOHS Corporation so long as (i) the only material asset of each
such Subsidiary is a 1% general partnership interest in Marriott Diversified
American Hotels, L.P. and Mutual Benefit Chicago Marriott Suite Hotel
Partnership , L.P., respectively, and up to $20,000,000 of intercompany notes in
aggregate principal amount for all such partnerships taken together from
Holdings and its other Subsidiaries, (ii) there is no recourse, whether
contractual, by operation of law or otherwise, against Holdings or any of its
Subsidiaries in respect of the Indebtedness and other liabilities of such
partnerships and (iii) at such time as the Designated Immaterial Subsidiary is
subject to an Event of Default under Section 10.05, any of the intercompany
notes referred to above in this definition and held by such Designated
Immaterial Subsidiary shall be treated as Indebtedness incurred under Section
9.04(xii).
"Determination Date" shall have the meaning provided in the definition
of "Pro Forma Basis."
"Dividends" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders,
partners or members or authorized or made any other distribution, payment or
delivery of
<PAGE>
property (other than common stock or other common equity interests of such
Person or Qualified Preferred Stock of Holdings or the Borrower) or cash to its
stockholders, partners or members in their capacity as such, or redeemed,
retired, purchased or otherwise acquired, directly or indirectly, for a
consideration any shares of any class of its capital stock or any other equity
interests outstanding on or after the Effective Date (or any options or warrants
issued by such Person with respect to its capital stock or other equity
interest), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock or any partnership
interests of such Person outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its capital stock or
other equity interest).
"Documents" shall mean and include (i) the Credit Documents, (ii) the
Existing HMH Notes Tender Offer/Consent Solicitation Documents, (iii) the CRHC
Merger Documents, (iv) the Senior Note Documents and (v) the REIT Transaction
Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of Holdings
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, any fund that invests in loans or any other "accredited
investor" (as defined in Regulation D under the Securities Act).
"End Date" shall mean, for any Margin Adjustment Period, the last day
of such Margin Adjustment Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law (hereafter "Claims") or any permit issued
under any such law, including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment relating to the environment, Hazardous
Materials or employee health or safety relating to Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.CA. (S) 2601 et seq., the Clean Air Act, 42 U.S.CA. (S) 7401 et
-- ---- --
seq.; the Safe Drinking Water Act, 42 U.S.CA. (S) 3803 et seq.; the Oil
- ---- -- ----
Pollution Act of 1990, 33 U.S.CA. (S) 2701 et seq.; the Emergency Planning and
-- ----
the Community Right-to-Know Act of 1986, 42 U.S.CA. (S) 11001 et seq., the
-- ----
Hazardous Material
<PAGE>
Transportation Act, 49 U.S.CA. (S) 1801 et seq. and the Occupational Safety and
-- ---
Health Act, 29 U.S.CA. (S) 651 et seq. (to the extent it regulates occupational
-- ---
exposure to Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"E&P Distribution" shall mean, collectively, one or more distributions
to the shareholders of Host Marriott and/or Host REIT of cash, securities or
other property, with a cumulative aggregate value equal to the amount estimated
in good faith by Host Marriott or Host REIT from time to time as being necessary
to assure that Host Marriott and Host REIT have distributed the accumulated
earnings and profits (as referenced in Section 857(a)(2)(B) of the Code) of Host
Marriott as of the last day of the first taxable year for which Host REIT's
election to be taxed as a real estate investment trust is effective.
Notwithstanding any other provision of this Agreement to the contrary, the E&P
Distribution may include shares of redeemable preferred stock of Host REIT (and
the Borrower may issue OP Units corresponding to such shares) and Host REIT
shall be permitted to redeem (and within 60 days after the issuance thereof
shall redeem) such shares (and Borrower shall be permitted to redeem the
corresponding OP Units) in accordance with the terms thereof, provided that the
--------
amount of such redemption obligation actually paid in cash shall be included in
the limit on the portion of the E&P Distribution payable in cash as set forth in
Section 9.03(b).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b),(c), (m)
or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding principal
amount of the Eurodollar Loan of BTCo with maturities comparable to the Interest
Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded off
to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next
highest 1/16 of 1%) by (b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
Adjusted Consolidated Net Income for such period, minus (b) the sum of, without
duplication, (i) the amount of
<PAGE>
all Capital Expenditures made by Holdings and its Subsidiaries (or, from and
after the REIT Conversion Date, the Borrower and its Subsidiaries) on a
consolidated basis during such period that are permitted under Section 9.07 (but
excluding Capital Expenditures to the extent (w) financed with Indebtedness, (x)
made with Insurance Proceeds or Condemnation Proceeds, (y) made with the
proceeds of equity issuances or capital contributions or (z) made with Net Sale
Proceeds), (ii) the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of Holdings and its Subsidiaries (or, from and
after the REIT Conversion Date, the Borrower and its Subsidiaries) during such
period (but excluding repayments made pursuant to the Refinancing Transaction
and repayments of Loans, provided that repayments of Loans shall be deducted in
--------
determining Excess Cash Flow if such repayments were (A) required as a result of
a Scheduled Repayment under Section 3.02(b) or (B) made as a voluntary
prepayment pursuant to Section 3.01 with internally generated funds (but in the
case of a voluntary prepayment of Revolving Loans, only to the extent
accompanied by a voluntary reduction to the Total Revolving Loan Commitment)),
(iii) the amount of cash Dividends paid by Holdings and the Borrower (without
duplication) after the REIT Conversion Date pursuant to Section 9.03(b) during
such period and (iv) all amounts paid by the Borrower to Holdings for Permitted
Tax Payments and to pay corporate overhead expenses, in each case to the extent
not otherwise deducted from Consolidated Net Income.
"Excess Cash Payment Date" shall mean the date occurring 90 days after
the last day of each fiscal year of Holdings (beginning with its fiscal year
ending closest to December 31, 1999).
"Excess Cash Payment Period" shall mean, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of Holdings.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Bonds" shall mean the approximately $35,000,000 aggregate
principal amount of four series of Indebtedness of Host Marriott outstanding on
the Effective Date.
"Exchange Bonds Documents" shall mean each of the documents and
agreements entered into in connection with the Exchange Bonds.
"Existing HMH Notes" shall mean each of (i) HMH's 9 1/2% Senior
Secured Notes due 2005, (ii) HMH's 8 7/8% Senior Notes due 2007 and (iii) HMH's
9% Senior Notes due 2007.
"Existing HMH Note Indenture Supplements" shall mean each of the
supplemental indentures to the Existing HMH Note Indentures in the forms
delivered to the Administrative Agent pursuant to Section 4.11 and entered into
by HMH and the respective trustee for the respective issue of the Existing HMH
Notes in connection with the Existing HMH Notes Tender Offer/Consent
Solicitation, which supplemental indentures shall eliminate substantially all of
the covenants and defaults contained in the Existing HMH Note Indentures.
"Existing HMH Note Indentures" shall mean each of the respective
indentures entered into by HMH, the subsidiary guarantors named therein and
Marine Midland Bank, as trustee in connection with the Existing HMH Notes.
"Existing HMH Notes Tender Offers/Consent Solicitations" shall mean
(i) the offer by HMH to purchase for cash any and all of the Existing HMH Notes
and (ii) the solicitation by HMH of consents from the holders of each issue of
Existing HMH
<PAGE>
Notes to amend each Existing HMH Note Indenture, each of the foregoing to be
effected pursuant to the Existing HMH Notes Tender Offer/Consent Solicitation
Documents and the Existing HMH Note Indentures.
"Existing HMH Notes Tender Offer/Consent Solicitation Documents" shall
mean each of the documents distributed and/or executed by HMH to effectuate the
Existing HMH Notes Tender Offer/Consent Solicitation, including the Existing HMH
Note Indenture Supplements and the offers to purchase the Existing HMH Notes.
"Existing Indebtedness" shall have the meaning provided in Section
7.21.
"Extension Fee" shall have the meaning provided in Section 2.01(b).
"Facility Manager" shall mean each manager of a Hotel Property or
Senior Living Care Facility pursuant to a Management Agreement.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 2.01.
"FF&E" shall mean, with respect to any Hotel Property or Senior Living
Care Facility, any furniture, fixtures and equipment, including any beds, lamps,
bedding, tables, chairs, sofas, curtains, carpeting, smoke detectors, mini bars,
paintings, decorations, televisions, telephones, radios, desks, dressers,
towels, bathroom equipment, heating, cooling, lighting, laundry, incinerating,
loading, swimming pool, landscaping, garage and power equipment, machinery,
engines, vehicles, fire prevention, refrigerating, ventilating and
communications apparatus, carts, dollies, elevators, escalators, kitchen
appliances, restaurant equipment, computers, reservation systems, software, cash
registers, switchboards, cleaning equipment or other items of furniture,
fixtures and equipment typically used in hotel properties or senior living care
facilities (including furniture, fixtures and equipment used in guest rooms,
lobbies and common areas (other than those items of furniture, fixtures and
equipment owned by the occupant or tenant in any such room)).
"Final Maturity Date" shall mean August 5, 2001, as the same may be
extended from time to time pursuant to Section 1.15, it being understood and
agreed, however, that no extension pursuant to such Section 1.15 shall be
effective if the Final Maturity Date would extend beyond August 5, 2003.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Affiliates primarily for the benefit of employees of Holdings or such
Affiliates residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code,
<PAGE>
and as to which plan neither the Borrower nor any Guarantor has any material
liability.
"Foreign Subsidiary" shall mean each Subsidiary of Holdings other than
a Domestic Subsidiary.
"Franchise Agreements" shall have the meaning provided in Section
4.05.
"Full-Service Hotel" shall mean a Hotel (including an all-suites
Hotel) which may reasonably be categorized as one which offers customary food
and beverage facilities and room service.
"Gross Revenues" shall mean, for any Hotel Property or Senior Living
Care Facility, all revenues and receipts of every kind derived from operating
such Hotel Property or Senior Living Care Facility and parts thereof, including,
but not limited to: income (from both cash and credit transactions), before
commissions and discounts for prompt or cash payments, from rentals or sales of
rooms, stores, offices, meeting space, exhibit space or sales space of every
kind; license, lease and concession fees and rentals (not including gross
receipts of licensees, lessees and concessionaires); net income from vending
machines; health club membership fees; food and beverage sales; sales of
merchandise (other than proceeds from the sale of FF&E no longer necessary to
the operation of such Hotel Property or Senior Living Care Facility); service
charges, to the extent not distributed to the employees at such Hotel Property
or Senior Living Care Facility as, or in lieu of, gratuities; and proceeds, if
any, from business interruption or other loss of income insurance; provided,
--------
however, that Gross Revenues shall not include the following: gratuities to
- -------
employees of such Hotel Property or Senior Living Care Facility, federal, state
or municipal excise, sales, use or similar taxes collected directly from
tenants, patrons or guests or included as part of the sales price of any goods
or services; insurance proceeds (other than proceeds from business interruption
or other loss of income insurance); condemnation proceeds; or any proceeds from
any sale of such Hotel Property or Senior Living Care Facility.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal of, and interest on each Note issued by, and all Loans made to, the
Borrower under this Agreement, together with all the other obligations and
liabilities (including, without limitation, indemnities, expenses, fees and
interest thereon) of the Borrower to the Creditors now existing or hereafter
incurred under, arising out of or in connection with this Agreement or any other
Credit Document and the due performance and compliance with all the terms,
conditions and agreements contained in the Credit Documents by the Borrower and
(ii) the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations and liabilities of the Borrower
owing under, or with respect to, any Interest Rate Protection Agreement or Other
Hedging Agreement entered into with any Creditor, whether such Interest Rate
Protection Agreement or Other Hedging Agreement is now in existence or hereafter
arising, and the due performance and compliance by the Borrower with all of the
terms, conditions and agreements contained therein.
"Guarantor" shall mean each Parent Guarantor and each Subsidiary
Guarantor.
"Guaranty" shall mean the Parents Guaranty and the Subsidiaries
Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea
<PAGE>
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous wastes," "restrictive
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
applicable Environmental Law.
"HMC Capital" mean HMC Capital Corporation, a Delaware corporation.
"HMH" shall have the meaning provided in the first paragraph of this
Agreement.
"HMH Merger" shall mean the merger of HMH with and into the Operating
Partnership, with the Operating Partnership being the surviving Person of such
merger.
"HMH Merger Agreement" shall mean the merger agreement to be entered
into between HMH and the Operating Partnership in connection with the HMH
Merger.
"HMH Merger Documents" hall mean the HMH Merger Agreement, the
certificate of merger related thereto and all other agreements and documents
related to the HMH Merger.
"Holdings" shall mean, (x) prior to the REIT Conversion Date, Host
Marriott, and (y) on and after such date, Host REIT.
"Hospitality" shall have the meaning provided in the first paragraph
of this Agreement.
"Hospitality Merger" shall mean the merger of Hospitality with and
into the Operating Partnership with the Operating Partnership being the
surviving Person of such merger.
"Hospitality Merger Agreement" shall mean the merger agreement to be
entered into between Hospitality and the Operating Partnership.
"Hospitality Merger Documents" shall mean the Hospitality Merger
Agreement, the certificate of merger related thereto and all other agreements
and documents related to the Hospitality Merger.
"Host REIT" shall mean Host Marriott Trust, a Maryland real estate
investment trust.
"Host Marriott" shall mean have the meaning provided in the first
paragraph of this Agreement.
"Hotel" shall mean any Real Property (including Improvements thereon
and any retail, golf, tennis, spa or other resort amenities appurtenant thereto)
comprising an operating facility offering hotel or lodging services.
"Hotel Property" shall mean each Hotel owned or leased by Holdings or
any of its Subsidiaries (including the furniture, fixture and equipment
thereon), provided that the term "Hotel Property" shall not include any casino
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or gaming hotel.
"Improvements" shall mean all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to any Real Property, including all
building materials, water, sanitary and storm sewers, drainage, electricity,
steam, gas, telephone and other utility facilities, parking areas, roads,
driveways, walks and other site improvements; and all additions
<PAGE>
and betterments thereto and all renewals, substitutions and replacements
thereof.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person, (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee, (v) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay and similar
----
obligations, (vi) all Contingent Obligations of such Person, and (vii) all
obligations of such Person under any Interest Rate Protection Agreement or Other
Hedging Agreement or under any similar type of agreement or arrangement.
"Initial Term Loan" shall have the meaning provided in Section
1.01(a)(A).
"Initial Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Initial Term Loan Commitment", as same may be (x) reduced from
time to time pursuant to Sections 2.03, 3.02 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 13.04(b).
"Initial Transaction" shall mean (i) the Refinancing Transaction, (ii)
the issuance of the Senior Notes, (iii) the CRHC Merger and (iv) the entering
into of this Agreement and the incurrence of Loans on the Effective Date.
"Insurance Premiums" shall have the meaning provided in Section
8.03(c).
"Insurance Proceeds" shall mean all insurance proceeds, damages,
claims and rights of action and the right thereto under any insurance policies
relating to any portion of any Hotel Property or Senior Living Care Facility.
"Intangible Asset" shall mean, with respect to any Person, a long-
lived asset that is useful in the operations of such Person, that is not
directly used in revenue generation and is not held for sale, and is without
physical qualities, including but not limited to patents, copyrights and
goodwill, but excluding capitalized costs associated with the acquisition of
brand names, franchises and trademarks, franchise agreements and management
agreements.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.
"Investment" shall have the meaning provided in Section 9.05.
<PAGE>
"IRS Ruling" shall mean a final ruling issued by the Internal Revenue
Service for the benefit of the Borrower and its Subsidiaries, in form and
substance reasonably satisfactory to the Administrative Agent, to the effect
that (i) the Borrower and its Subsidiaries may refinance Indebtedness secured by
Liens on Hotel Properties with designated unsecured Indebtedness without
adversely affecting the federal income tax position of the third parties owning
equity interests in such Hotel Properties who will be exchanging such equity
interests for OP Units or capital stock of Host REIT and (ii) the pledge by the
Credit Parties pursuant to the Pledge and Security Agreement of the equity
interests in all Wholly-Owned Subsidiaries of Holdings or the Borrower that are
Look-Through Subsidiaries will not hinder the ability of the Borrower and its
Subsidiaries to consummate the refinancings described in clause (i) above, all
as more particularly described in the memorandum dated July 27, 1998 to the
Banks from the Borrower's outside counsel.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under any lease or
license of land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Limited Partner Note" shall mean an unsecured note of the Operating
Partnership which a limited partner of a Public Partnership can elect to receive
at the time of the Partnership Roll-Up for such Public Partnership instead of or
in exchange for OP Units, which Limited Partner Notes shall not have any
maturity or amortization prior to December 15, 2005 (except in connection with
the sale of assets formerly owned, directly or indirectly, by such Public
Partnership to which such Limited Partner Note relates as contemplated by the
definition of "Net Sale Proceeds").
"Loan" shall mean (i) each Term Loan and (ii) each Revolving Loan.
"Look-Through Subsidiary" shall mean a Wholly-Owned Subsidiary of the
Borrower that is not recognized as existing for federal income tax purposes
(such as, but not limited to, a single member limited liability company or a
partnership in which the sole partners are the Borrower and/or other Look-
Through Subsidiaries of the Borrower).
"Management Agreements" shall have the meaning provided in Section
4.05. With respect to each Hotel Property or Senior Living Care Facility
acquired after the Effective Date, the terms and conditions of the Management
Agreement with respect thereto shall be consistent with those contained in
Management Agreements which have been approved by the Administrative Agent prior
to the Effective Date, with any material differences to be reasonably approved
by the Administrative Agent, and the manager thereunder shall be a Permitted
Facility Manager.
"Margin Adjustment Period" shall mean each period which shall commence
on the date occurring after the Effective Date on which the respective officer's
certificates are delivered pursuant to Section 8.01(d) and which shall end on
the earlier of (i) the date of actual delivery of the next officer's
certificates pursuant to Section 8.01(d) and (ii) the latest date on
<PAGE>
which the next officer's certificates are required to be delivered pursuant to
Section 8.01(d).
"Margin Stock" shall have the meaning provided in Regulation U.
"Marriott Family Members" shall mean any of Alice Marriott, J.W.
Marriott, Jr., Richard E. Marriott, any brother or sister of J.W. Marriott, Sr.
(deceased), any children or grandchildren of any of the foregoing, any spouses
of any of the foregoing, or any trust or other entity established primarily for
the benefit of one or more of the foregoing.
"Marriott International" shall mean Marriott International, Inc., a
Delaware corporation.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans,
$5,000,000 and (ii) for Term Loans, $10,000,000.
"Minimum Tangible Net Worth" shall mean, at any time, the sum of (i)
75% of Tangible Net Worth as of the Effective Date plus (ii) 75% of the
aggregate Net Equity Proceeds received by Holdings or the Borrower (without
duplication) (or, from and after the REIT Conversion Date, by the Borrower)
after the Effective Date in connection with any issuance of Stock, Stock
Equivalents or any OP Units, in each case to any Person other than Holdings (or
from after the REIT Conversion Date, the Borrower) or any Subsidiary thereof.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA subject to Title IV of ERISA.
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other costs associated therewith) received by the
respective Person from the respective incurrence of such Indebtedness for
borrowed money.
"Net Equity Proceeds" shall mean, with respect to each issuance or
sale of any equity by any Person or any capital contribution to such Person, the
cash proceeds (net of underwriting discounts and commissions and other costs
associated therewith) received by such Person from the respective sale or
issuance of its equity or from the respective capital contribution.
"Net Insurance/Condemnation Proceeds" shall mean all Insurance
Proceeds on account of any Casualty Event to any Hotel Property or Senior Living
Care Facility or all Condemnation Proceeds in respect of any Taking of any Hotel
Property or Senior Living Care Facility, minus the reasonable cost, if any, of
recovering such proceeds and of paying out such proceeds, including reasonable
attorneys' fees and costs allocable to inspecting the Work and the plans and
specifications therefor.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received from any
Asset Sale, net of (i) reasonable transaction costs (including, without
limitation, any underwriting, brokerage or other customary selling commissions
and reasonable legal, advisory and other fees and expenses, including title and
recording expenses, associated therewith), (ii) the amount of such gross cash
proceeds required to be used to repay any Indebtedness (other than the Loans,
the Senior Notes or any other Indebtedness secured pursuant to the Pledge and
Security Agreement) which is secured by the respective assets which were sold,
or, in the case of the Limited Partner Notes, the
<PAGE>
amount of such gross cash proceeds which is required to be used to repay such
Limited Partner Notes as a result of such Asset Sale and (iii) the estimated
marginal increase in income taxes which will be payable by Holdings'
consolidated group with respect to the fiscal year in which the sale occurs as a
result of such Asset Sale.
"Non-Borrower Subsidiary" shall mean each direct or indirect
Subsidiary of Host Marriott other than Hospitality and its Subsidiaries.
"Non-Conforming Assets" shall mean various assets (principally
comprising partnership or other interests in Hotels which are not leased,
certain international hotels in which Holdings or its Subsidiaries own
interests, and certain FF&E relating to Hotels owned by the Operating
Partnership and its Subsidiaries) which assets, if owned by the Operating
Partnership, could jeopardize Host REIT's status as a REIT or otherwise could
cause significant adverse tax consequences to Holdings and its Subsidiaries.
"Non-Controlled Entity" shall mean any corporation, limited
partnership or limited liability corporation in which Holdings and its
Subsidiaries own at least 94% of the economic interests of such entity and no
more than 6% of the voting rights or controlling interests of such entity and
whose assets consist primarily of Non-Conforming Assets.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Term Note and each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Gloria
Argueta, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, any Co-Arranger, the Collateral Agent or any Bank pursuant to the terms
of this Agreement or any other Credit Document.
"Operating Lease" shall mean a lease or sublease between the Borrower
or any Subsidiary thereof, as lessor, and an Approved Lessee, as lessee, which
lease shall be reasonably satisfactory to the Administrative Agent and shall
provide for rent payments which provide an economic return to the lessor
thereunder generally comparable to the economic returns provided to the lessors
from the rent payments under the Operating Leases originally delivered to and
approved by the Administrative Agent prior to the REIT Conversion Date. With
respect to each Hotel Property acquired after the REIT Conversion Date, the
terms and conditions of the Operating Lease with respect thereto shall be
consistent with those contained in Operating Leases which have been approved by
the Administrative Agent prior to the REIT Conversion Date, with any material
differences to be reasonably approved by the Administrative Agent, and the
lessee thereunder shall be an Approved Lessee.
"Operating Partnership" shall have the meaning provided in the first
paragraph of this Agreement.
<PAGE>
"OP Units" shall mean the partnership units of the Operating
Partnership.
"Original Banks" shall mean each Person which was a Bank under, and as
defined in, the Original Credit Agreement.
"Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Parent Guarantor" shall mean and include each of Host Marriott and
Hospitality.
"Parents Guaranty" shall mean the guaranty of the Parent Guarantors
pursuant to Section 14.
"Partnership Roll-Up" shall mean the transactions described on
Schedule VII.
"Partnership to be Rolled Up" shall have the meaning provided in
Section 6.04(c)
"Payment Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, or such other office as
the Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Designated Investments" shall mean and include (i) any
promissory note or other evidences of indebtedness executed by a maker in favor
of Holdings or any of its Subsidiaries and evidencing indebtedness secured by
real estate assets or equity interests of Persons (other than a Subsidiary of
Holdings) owning such real estate assets, (ii) any cash equity investment in a
Person engaged primarily in the ownership of hotel properties or other high
quality real estate consistent with the quality of the Borrower's and its
Subsidiaries' existing portfolio of Hotel Properties, or (iii) any cash equity
investment in and/or loan to a Subsidiary of the Borrower that is not a
Subsidiary Guarantor.
"Permitted Facility Manager" shall mean, with respect to each Hotel
Property or Senior Living Care Facility, Marriott International, a Wholly-Owned
Subsidiary of Marriott International, Interstate Hotels Corporation (or a
successor thereto (so long as such successor remains a first-class nationally
recognized hotel management company)), a Wholly-Owned Subsidiary of Interstate
Hotels Corporation (or such successor), Hyatt Corporation, a Wholly-Owned
Subsidiary of Hyatt Corporation, Four Seasons Hotel Limited, a Wholly-Owned
Subsidiary of Four Seasons Hotel Limited, Swissotel Management (US) LLC or
another first-class nationally recognized hotel management company in good
standing reasonably acceptable to the Administrative Agent.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Permitted Like-Kind Exchange Property" shall mean, with respect to
any sale of real estate property (and related
<PAGE>
personal property), one or more other real estate assets (and related personal
property) with a fair market value reasonably equivalent to the property sold
(either by itself or together with cash paid for such assets), so long as (i)
such other real estate assets (and related personal property) is designated to
be received as consideration for such sale within 45 days of the consummation of
such sale and (b) such other real estate assets (and related personal property)
are actually received by Holdings or its respective Subsidiary within 180 days
of the consummation of such sale.
"Permitted Non-Recourse Indebtedness" shall mean, with respect to any
Specified Subsidiary, Indebtedness permitted to be incurred by such Specified
Subsidiary pursuant to Section 9.04(xii) to finance the purchase of or to
finance the renovation of a Hotel Property or Senior Living Care Facility
acquired pursuant to Section 9.02(viii), or to preserve the tax basis in the
respective asset by the outside limited partners, which Indebtedness (i) shall
be secured only by such Hotel Property or Senior Living Care Facility, as the
case may be, including any fixtures, furniture and equipment related thereto,
(ii) shall be made expressly non-recourse to Holdings and its other Subsidiaries
and (iii) shall have (A) a final maturity date of not earlier than August 5,
2004, (B) a remaining amortization schedule based upon a schedule of no less
than 20 years and (C) a market rate of interest.
"Permitted Refinancing Indebtedness" shall mean any Indebtedness of
the Borrower or any of its Subsidiaries or, prior to the REIT Conversion Date,
of any Non-Borrower Subsidiary issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund
(collectively, to "Refinance"), Existing Indebtedness or Indebtedness permitted
by Section 9.04(x); provided that (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced plus the reasonable costs and fees associated therewith; (ii) the
remaining amortization schedule of such Permitted Refinancing Indebtedness shall
be based upon a schedule of no less than 15 years; (iii) if the Indebtedness
being Refinanced is subordinated in right of payment to the Obligations under
this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in
right of payment to such Obligations on terms at least as favorable to the Banks
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iv) no Permitted
Refinancing Indebtedness shall have different obligors, or greater guarantees or
security, than the Indebtedness being Refinanced (except that, from and after
the REIT Conversion Date, such Permitted Refinancing Indebtedness may be
incurred by the Borrower and the Subsidiary Guarantors so long as such Permitted
Refinancing Indebtedness is unsecured, except as otherwise permitted by Section
9.01(iv)) and (v) in no event shall any Permitted Refinancing Indebtedness be
secured by any Pledge and Security Agreement Collateral (whether equally and
ratably with, or junior to, the Secured Creditors or otherwise) except as
otherwise permitted by Section 9.01(iv).
"Permitted REIT Subsidiary" shall mean a Wholly-Owned Subsidiary of
Holdings established solely for the purpose of holding de minimis equity
interests in Subsidiaries of the Borrower or OP Units.
"Permitted Sharing Arrangements" shall mean any contracts, agreements
or other arrangements between the Borrower and/or one or more of its
Subsidiaries and Holdings and/or one or more other Subsidiaries of Holdings,
pursuant to which such Persons share centralized services, establish joint
payroll arrangements, procure goods or services jointly or otherwise make
payments with respect to goods or services on a joint basis, or allocate
corporate expenses (other than taxes based on income)
<PAGE>
(provided that (i) such Permitted Sharing Arrangements are, in the determination
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of management of the Borrower, the Subsidiary Guarantors or their Subsidiaries
in the best interests of the Borrower, the Subsidiary Guarantors or their
Subsidiaries and (ii) the liabilities of the Borrower, the Subsidiary Guarantors
and their Subsidiaries under such Permitted Sharing Arrangements are determined
in good faith and on a reasonable basis).
"Permitted Tax Payments" shall mean payment of any liability of
Holdings, the Borrower or any of their respective Subsidiaries for all Federal,
state, local, and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto, imposed by any domestic or
foreign governmental authority responsible for the administration of any such
taxes.
"Person" shall mean any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Personal Property" means, for any person, to the extent owned by such
Person, all machinery, equipment, fixtures (including but not limited to all
heating, air conditioning, plumbing, lighting, communications, elevator
fixtures, inventory, and goods), inventory and articles of personal property and
accessions thereof and renewals, replacements thereof and substitutions,
therefor (including, but not limited to, beds, bureaus, chiffoniers, chests,
chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes,
draperies, curtains, shades, venetian blinds, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas,
chinaware, linens, pillows, blankets, glassware, silverware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry
systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, private telephone systems, medical equipment,
potted plants, heating, lighting and plumbing fixtures, fire prevention and
extinguishing apparatus, cooling and air-conditioning systems, elevators,
escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry
machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning,
waxing and polishing equipment, call systems, brackets, electrical signs, bulbs,
bells, ash and fuel, conveyors, cabinets, lockers, shelving, spotlighting
equipment, dishwashers, garbage disposals, washers and dryers), other customary
hotel equipment and other tangible property of every kind and nature whatsoever,
now or hereafter located upon the Hotel Properties and Senior Living Care
Facilities, or appurtenances thereto, or usable in connection with the present
or future operation and occupancy of the Hotel Properties and all building
equipment, materials and supplies of any nature whatsoever, now or hereafter
located upon the Hotel Properties and Senior Living Care Facilities.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) Holdings or any of its Subsidiaries or ERISA
Affiliates, and each such plan for the five-year period immediately following
the latest date on which Holdings or any of its Subsidiaries or ERISA Affiliates
maintained, contributed to or had an obligation to contribute to such plan.
"Pledge and Security Agreement" shall have the meaning provided in
Section 4.06.
<PAGE>
"Pledge and Security Agreement Collateral" shall mean all "Collateral"
as defined in the Pledge and Security Agreement.
"Pledged Securities" shall have the meaning provided in the Pledge and
Security Agreement.
"Policies" shall have the meaning provided in Section 8.03(c).
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Principal Credit Party" shall mean, at any time, each of Holdings,
HMH, Hospitality, the Operating Partnership and CRC to the extent that such
Person is a party to this Agreement at such time.
"Pro Forma Basis" shall mean, with respect to any incurrence,
--- -----
acquisition or assumption of Indebtedness or acquisition or sale of a Hotel
Property, Senior Living Care Facility or other assets with a fair market value
of $5,000,000 or more (or the equity interest of the Person or Persons owning
such Hotel Property, Senior Living Care Facility or other assets) occurring
after the Effective Date, the calculation of the consolidated results of
Holdings and its Subsidiaries otherwise determined in accordance with this
Agreement as if the respective Indebtedness, acquisition or sale (and all other
Indebtedness incurred or assumed or other such acquisition or sale effected
during the respective Calculation Period or thereafter and on or prior to the
date of determination) (each such date, a "Determination Date") had been
effected on the first day of the respective Calculation Period; provided that
all such calculations shall take into account the following assumptions:
(i) pro forma effect shall be given to (1) any Indebtedness incurred
--- -----
subsequent to the end of the Calculation Period and prior to the
Determination Date, (2) any Indebtedness incurred during such period to the
extent such Indebtedness is outstanding at the Determination Date and (3)
any Indebtedness to be incurred on the Determination Date, in each case as
if such Indebtedness had been incurred on the first day of such Calculation
Period and after giving effect to the application of the proceeds thereof
(but excluding normal fluctuations in revolving indebtedness incurred for
working capital purposes and not to finance any acquisition or Investment);
(ii) interest expense attributable to interest or dividends on any
Indebtedness (whether existing or being incurred) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement
has a remaining term in excess of 12 months) had been the applicable rate
for the entire period;
(iii) there shall be excluded from interest expense any interest
expense related to any amount of Indebtedness that was outstanding during
such Calculation Period or thereafter but that is not outstanding or is to
be permanently repaid on the Determination Date; and
(iv) pro forma effect shall be given to all sales and acquisitions of
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Hotel Properties, Senior Living Care
<PAGE>
Facilities and other assets with a fair market value of $5,000,000 or more
(by excluding or including, as the case may be, the historical financial
results for the respective Hotel Properties, Senior Living Care Facilities
and/or such other assets) that occur during such Calculation Period or
thereafter and on or prior to the Determination Date (including any
Indebtedness assumed or acquired in connection therewith) as if they had
occurred on the first day of such Calculation Period, provided that in
connection with any such acquisitions, pro forma effect (for periods prior
to such acquisition) shall be given to the management fees payable pursuant
to the respective Management Agreement as if such management fees had been
payable throughout the Calculation Period.
"Projections" shall mean the Projections, dated on or about June 25,
1998, which were prepared by Host Marriott and delivered to the Banks prior to
the Effective Date.
"Public Partnerships" shall mean, collectively, Atlanta Marriott
Marquis II Limited Partnership, a Delaware limited partnership; Desert Springs
Marriott Limited Partnership, a Delaware limited partnership; Hanover Marriott
Limited Partnership, a Delaware limited partnership; Marriott Diversified
American Hotels, L.P., a Delaware limited partnership; Marriott Hotel Properties
II Limited Partnership, a Delaware limited partnership; Mutual Benefit Chicago
Marriott Suite Hotel Partners, L.P., a Rhode Island Limited partnership; or, as
the context may require, any such entity together with its Subsidiaries, or any
of such Subsidiaries.
"Qualified Insurer" shall have the meaning provided in Section
8.03(c).
"Qualified Preferred Stock" shall mean any preferred stock or other
preference shares of Holdings or the Operating Partnership, so long as the terms
of such preferred stock or other preference shares (i) do not provide any
collateral security, (ii) do not provide any guaranty or other support by
Holdings or any of its Subsidiaries, (iii) do not require any cash dividends or
cash distributions (other than dividends or distributions payable when and if
declared by the Board of Directors of Holdings or the Operating Partnership) or
contain any mandatory put, redemption, repayment, sinking fund or other similar
provision in each case occurring before August 5, 2004 (other than any such
provision that can be satisfied, at the election of Holdings or the Borrower, by
the issuance of OP Units or common stock or Qualified Preferred Stock of Host
REIT), (iv) do not contain any covenants other than periodic reporting
requirements, (v) do not grant the holders thereof any voting rights expect for
(x) voting rights required to be granted to such holders under applicable law or
listing requirements and (y) limited customary voting rights on fundamental
matters such as mergers, consolidations, sales of all or substantially all of
the assets of Holdings, liquidations involving Holdings or dividend arrearages,
and (vi) do not provide for the conversion into, or the exchange for (unless at
the sole discretion of the issuer thereof), debt securities.
"Quarterly Excess Cash Flow" shall mean, in respect of any fiscal
quarter of Holdings (or, from and after the REIT Conversion Date, the Borrower),
the amount of Excess Cash Flow of Holdings (or, from and after the REIT
Conversion Date, the Borrower) for such fiscal quarter.
"QUIPs" shall mean the 6 3/4% Convertible Preferred Securities issued
by Host Financial Trust, a statutory business trust and a Subsidiary of Host
Marriott.
<PAGE>
"QUIPs Debt" shall mean the $567,000,000 aggregate principal amount of
6 3/4% convertible subordinated debentures due 2026 of Host Marriott, held by
Host Marriott Financial Trust, a statutory business trust and a Subsidiary of
Host Marriott.
"Rating Agencies" shall mean both S&P and Moody's.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. (S) 6901 et seq.
-- ----
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Refinancing Documents" shall mean all agreements and documents
related to the Refinancing Transaction.
"Refinancing Transaction" shall mean, collectively, (i) the
consummation of the Existing HMH Notes Tender Offer/Consent Solicitation and
(ii) the payment of all amounts owing under the Original Credit Agreement.
"Register" shall have the meaning provided in Section 13.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"REIT Conversion" shall mean the conversion of Host Marriott from a C-
corporation to a real estate investment trust pursuant to the REIT Merger.
"REIT Conversion Date" shall mean the date on which all of the
conditions contained in Section 6 are satisfied.
"REIT Merger" shall mean the merger of Host Marriott with and into
Host REIT, with Host REIT being the surviving Person of such merger.
"REIT Merger Agreement" shall mean the merger agreement to be entered
into between Host Marriott and Host REIT in connection with the REIT Merger.
"REIT Merger Documents" shall mean the REIT Merger Agreement, the
certificate of merger related thereto and all other agreements and documents
related to the REIT Merger.
"REIT Transaction" shall mean, collectively, (i) the consummation of
the HMH Merger, (ii) the consummation of the Subsidiaries Mergers, (iii) the
consummation of the Hospitality Merger, (iv) the consummation of the SLC
Spinoff, (v) the consummation of the REIT Merger, (vi) the consummation of the
Partnership Roll-Up, (vii) the contribution by Host Marriott to the Operating
Partnership of substantially all of Host Marriott's assets, and (viii) such
other related transactions and steps, occurring prior to or substantially
concurrent with or within a reasonable time after
<PAGE>
the REIT Conversion Date as may be reasonably necessary to complete the above
transactions or otherwise to permit Host REIT to elect to be treated as a real
estate investment trust for Federal income tax purposes.
"REIT Transaction Documents" shall mean and include (i) the HMH Merger
Documents, (ii) the Hospitality Merger Documents, (iii) the SLC Spinoff
Documents, (iv) the REIT Merger Documents and (v) the documents entered into in
connection with the transactions specified in clauses (vi) and (vii) of the
definition of REIT Transaction.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Single Employer Plan other than those events as to which
the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of
PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans) represent an amount greater than 50% of
the sum of all outstanding Term Loans of Non-Defaulting Banks and the Total
Revolving Loan Commitment less the Revolving Loan Commitments of Defaulting
Banks at such time (or after the termination of the Total Revolving Loan
Commitment, the then total outstanding Revolving Loans of all Non-Defaulting
Banks).
"Returns" shall have the meaning provided in Section 7.09.
"Revolver Conversion Date" shall mean August 5, 2001, but only so long
as the Final Maturity Date has been extended beyond such date pursuant to
Section 1.15; and if the Final Maturity Date is not so extended, the Revolver
Conversion Date shall not occur.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 2.02, 2.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"S&P" shall mean Standard & Poor's Ratings Services.
"Scheduled Repayment" shall have the meaning provided in Section
3.02(b), as modified by the proviso therein.
"SEC" shall have the meaning provided in Section 8.01(g).
<PAGE>
"Section 3.04(b)(ii) Certificate" shall have the meaning provided in
Section 3.04(b).
"Secured Creditors" shall have the meaning provided in the Pledge and
Security Agreement.
"Secured Debt Leverage Ratio" shall mean, at any time, the ratio of
Consolidated Secured Debt to Consolidated Total Debt at such time.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Living Care Facility" shall mean each senior living care
property owned or leased by Holdings or any of its Subsidiaries (including the
furniture, fixtures and equipment thereon, except for any furniture, fixtures
and equipment in individual rooms which are owned by individual tenants),
provided that such facility is predominantly an independent or assisted living
- --------
facility.
"Senior Note Documents" shall mean the Senior Note Indenture, the
Senior Notes and each other document or agreement relating to the issuance of
the Senior Notes.
"Senior Note Indenture" shall mean the Indenture, dated as of August
5, 1998, among HMH, the subsidiary guarantors named therein and Marine Midland
Bank as Trustee, in connection with the Senior Notes.
"Senior Notes" shall mean each of (i) the $500,000,000 7-7/8% Series A
Senior Notes due 2005 of HMH and (ii) the $1,200,000,000 7-7/8% Series B Senior
Notes due 2008 of HMH.
"Single Employer Plan" shall have the meaning set forth in Section
7.10.
"SLC" shall have the meaning provided in Section 6.04.
"SLC Spinoff" shall have the meaning provided in Section 6.04.
"SLC Spinoff Documents" shall mean all agreements and documents
relating to the SLC Spinoff.
"Specified Default" shall mean any Default under Sections 10.01, 10.03
(solely as a result of a failure to comply with Section 8.01(a), 8.01(b), or
8.01(d)), 10.05 or 10.09.
"Specified Indebtedness for Borrowed Money" shall mean any
Indebtedness issued or incurred pursuant to Section 9.04(xi) or (xii), provided
that Permitted Refinancing Indebtedness shall not be considered Specified
Indebtedness for Borrowed Money to the extent that either (i) such Permitted
Refinancing Indebtedness is unsecured (other than in respect of a Lien permitted
under Section 9.01(iv)) and the proceeds therefrom are used to refinance secured
Indebtedness or (ii) such Permitted Refinancing Indebtedness is incurred to
refinance the Indebtedness being Refinanced within 90 days of its final
maturity.
"Specified Subsidiary" shall mean any Subsidiary of the Borrower
(other than any Subsidiary Guarantor) so long as such Subsidiary has no material
assets other than the Hotel Property or Senior Living Care Facility to be
financed with Permitted Non-Recourse Indebtedness incurred pursuant to Section
9.04(xii).
<PAGE>
"Start Date" shall mean, with respect to any Margin Adjustment Period,
the first day of such Margin Adjustment Period.
"Stock" shall mean shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" shall mean all securities (other than Stock)
convertible into or exchangeable for Stock and all warrants, options or other
rights to purchase or subscribe for any stock, whether or not presently
convertible, exchangeable or exercisable.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person, (ii) any partnership, limited liability
company, association, joint venture or other entity (other than a corporation)
in which such Person and/or one or more Subsidiaries of such Person has more
than a 50% equity interest at the time and (iii) any partnership in which such
Person or one or more Subsidiaries of such Person is, at the time, a general
partner and which is controlled by such Person in a manner sufficient to permit
its financial statements to be consolidated with the financial statements of
such Person in conformance with generally accepted accounting principles and the
financial statements of which are so consolidated, provided that the term
Subsidiary shall include for all purposes of this Agreement any Non-Controlled
Entity that the Borrower has elected to treat as a Subsidiary under the
Agreement, but only so long as the terms of the organizational documents of any
such Non-Controlled Entity expressly require that at any time that an Event of
Default exists and is continuing, such Non-Controlled Entity will pay, on a
quarterly basis, the maximum amount of cash Dividends that such Non-Controlled
Entity is permitted to pay under applicable law (although such Non-Controlled
Entity may retain, and not pay as a Dividend, cash in an amount that such Non-
Controlled Entity reasonably determines is necessary to meet its current
liabilities and expenses as well as to make current anticipated Capital
Expenditures). An election pursuant to this definition with respect to any Non-
Controlled Entity shall be made on not less than ten Business Days prior written
notice to the Administrative Agent and may not be made to the extent that a
Default or an Event of Default then exists or would result from such an
election.
"Subsidiary Guarantor" shall mean each Subsidiary of Holdings (other
than Hospitality and the Borrower) which executes and delivers the Subsidiaries
Guaranty, or a counterpart thereof, as required by Sections 4.07, 8.18 or any
other provision of this Agreement; provided that any such Subsidiary shall cease
to be a Subsidiary Guarantor at such time, if any, as it is released from the
Subsidiaries Guaranty in accordance with the express provisions thereof.
"Subsidiaries Guaranty" shall have the meaning provided in Section
4.07.
"Subsidiaries Mergers" shall mean the various mergers of Subsidiaries
of HMH as described in Schedule IV.
"Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks
<PAGE>
under, and as defined in, this Agreement if the percentage "50%" contained
therein were changed to "66-2/3%."
"Taking" shall mean the taking or appropriation (including by deed in
lieu of condemnation or by voluntary sale or transfer under threat of
condemnation or while legal proceedings for condemnation are pending) of any
Hotel Property or Senior Living Care Facility, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation proceeding, or in any other
manner or any damage or injury or diminution in value through condemnation,
inverse condemnation or other exercise of the power of eminent domain. The term
"Taken" used as a verb has a correlative meaning.
"Tangible Net Worth" shall mean, (A) on any date prior to the REIT
Conversion Date, without duplication, (a) the shareholders' equity of Holdings
on a consolidated basis in accordance with generally accepted accounting
principles minus (b) the sum of all Intangible Assets (net of accumulated
amortization) of Holdings and its Subsidiaries, each as shown on the
consolidated balance sheet of Holdings as of such date, and (B) on any date from
and after the REIT Conversion Date, without duplication, (a) the value of all OP
units minus (b) the sum of all Intangible Assets (net of accumulated
amortization) of the Borrower and its Subsidiaries, each as shown on the
consolidated balance sheet of the Borrower as of such date, provided that the
Tangible Net Worth shall be calculated without giving effect to the SLC Spinoff
and the E&P Distribution.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Term Loan" shall mean each Initial Term Loan, each Additional Term
Loan and each Revolving Loan converted to a Term Loan pursuant to Section
1.01(c).
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean the four consecutive fiscal quarters of
Holdings then last ended, in each case taken as one accounting period.
"Total Additional Term Loan Commitments" shall mean, at any time, the
sum of the Additional Term Loan Commitments of each of the Banks.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Initial Term Loan Commitment" shall mean, at any time, the sum
of the Initial Term Loan Commitments of each of the Banks.
"Total Leverage Ratio" shall mean, at any time, the ratio of
Consolidated Total Debt at such time to Consolidated EBITDA for the Test Period
then last ended.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the Total Revolving Loan Commitment then
in effect less (y) the aggregate principal amount of Revolving Loans
outstanding.
<PAGE>
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being two separate Tranches, i.e., (i)
----
Term Loans and (ii) Revolving Loans.
"Treasury Regulation" shall mean regulations promulgated under the
Code.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unconsolidated Entity" shall mean, with respect to any Person, at any
date, any other Person in whom such Person holds an Investment, and whose
financial results would not be consolidated under generally accepted accounting
principles with the financial results of such Person on the consolidated
financial statements of such Person, if such statements were prepared as of such
date.
"Unencumbered EBITDA" shall mean, for any period, that portion of
Consolidated EBITDA for such period attributable to those Hotel Properties and,
prior to the REIT Conversion Date, Senior Living Care Facilities which are not
encumbered by Liens securing Indebtedness (excluding Indebtedness that is
secured solely by Liens under the Pledge and Security Agreement).
"Unencumbered EBITDA Ratio" shall mean, for any period, the ratio of
Unencumbered EBITDA to Consolidated EBITDA for such period.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
such Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by such Plan's actuary in the most recent annual valuation of
such Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unsecured Debt Rating" shall mean, with respect to a Person, the
rating assigned by the Rating Agencies to such Person's long term senior
unsecured and non-credit enhanced Indebtedness.
"Unsecured Interest Coverage Ratio" shall mean, for any period, the
ratio of Unencumbered EBITDA to Unsecured Interest Expense.
"Unsecured Interest Expense" shall mean, for any period, that portion
of Consolidated Interest Expense attributable to Indebtedness which does not
constitute Consolidated Secured Debt.
"Unutilized Revolving Loan Commitment" with respect to any Bank at any
time shall mean such Bank's Revolving Loan Commitment at such time, if any, less
the aggregate outstanding principal amount of all Revolving Loans made by such
Bank at such time.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such
<PAGE>
Person and (ii) any partnership, limited liability company, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Administrative Agent; Co-Arrangers.
--------------------------------------
12.01 Appointment. The Banks hereby designate BTCo as Administrative
-----------
Agent (for purposes of this Section 12, the term "Administrative Agent" shall
include BTCo in its capacity as Arranger pursuant to this Agreement and as
Collateral Agent pursuant to the Pledge and Security Agreement) to act as
specified herein and in the other Credit Documents. The Banks hereby designate
Credit Lyonnais New York Branch, The Bank of Nova Scotia and Wells Fargo Bank,
National Association as Co-Arrangers to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and each holder of
any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, the Administrative Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The
Administrative Agent may perform any of its duties hereunder by or through its
respective officers, directors, agents, employees or affiliates.
12.02 Nature of Duties. The Administrative Agent shall not have any
----------------
duties or responsibilities except those expressly set forth in this Agreement
and in the other Credit Documents. Neither the Administrative Agent nor any of
its respective officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank or the holder of
any Note; and nothing in this Agreement or any other Credit Document, expressed
or implied, is intended to or shall be so construed as to impose upon the
Administrative Agent obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent. Independently
--------------------------------------------
and without reliance upon the Administrative Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of each Credit Party and each of their Subsidiaries in connection with
the making and the continuance of the Loans and the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of each Credit Party and each of its Subsidiaries and, except as expressly
provided in this Agreement, the Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Bank
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. The Administrative Agent shall not be responsible
to any Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of
<PAGE>
this Agreement or any other Credit Document or the financial condition of any
Credit Party or any of its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of any Credit Party or any of its Subsidiaries or the existence or
possible existence of any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks
or, if required by Section 13.12, the Supermajority Banks or all of the Banks,
as the case may be; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no Bank
or the holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks or, if required by
Section 13.12, the Supermajority Banks or all of the Banks, as the case may be.
12.05 Reliance. The Administrative Agent shall be entitled to rely,
--------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
12.06 Indemnification. To the extent the Administrative Agent is not
---------------
reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to its "percentage" as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Administrative Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
12.07 The Administrative Agent in its Individual Capacity. With
---------------------------------------------------
respect to its obligation to make Loans under this Agreement, the Administrative
Agent shall have the rights and powers specified herein for a "Bank" and may
exercise the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, make equity investments in, and
generally engage in any kind of banking, trust or other business with, any
Credit Party or any Affiliate of any Credit Party as if they were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
<PAGE>
12.08 Holders. The Administrative Agent may deem and treat the payee
-------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or endorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent and the Co-Arrangers;
-------------------------------------------------------------
Removal of the Administrative Agent. (a) The Administrative Agent may resign
- -----------------------------------
from the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 30 Business Days' prior written
notice to the Borrower and the Banks. Such resignation shall take effect upon
the appointment of a successor Administrative Agent pursuant to clauses (b) and
(c) below or as otherwise provided below. Each Co-Arranger may resign from the
performance of all of its functions and duties hereunder and/or under the other
Credit Documents at any time by giving notice to the Borrower, the
Administrative Agent and the Banks. Such resignation shall take effect upon
delivery of such notice.
(b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 30 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 35th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Co-Arrangers (if one or more so
agrees), or if there are no Co-Arrangers or no Co-Arranger so agrees, then the
Banks, shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(e) In addition, the Required Banks shall have the right to remove the
Administrative Agent and appoint a successor Administrative Agent who shall be a
commercial bank or trust company reasonably acceptable to the Borrower in the
event that the Administrative Agent has been grossly negligent or has willfully
misconducted itself in performing its functions and duties under this Agreement
or any other Credit Document.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The Borrower agrees that it shall:
-------------------------
(i) whether or not the transactions contemplated herein are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case LLP, local counsel and environmental, engineering, real estate and
insurance independent consultants retained by the Administrative Agent) in
connection with the preparation, execution, delivery and performance of this
Agreement and the
<PAGE>
other Credit Documents and the documents and instruments referred to herein and
therein, any amendment, waiver or consent relating hereto or thereto, of the
Administrative Agent in connection with its syndication efforts with respect to
this Agreement and, upon the occurrence and during the continuance of an Event
of Default, the reasonable costs and expenses of each of the Banks in connection
with the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent and, following an Event of Default, for each of the Banks)
(it being understood that the provisions of this clause (i) does not include the
normal administrative charges of the Administrative Agent in administering the
Loans (which amounts are included in a separate letter with the Administrative
Agent)); (ii) pay and hold each of the Banks harmless from and against any and
all present and future stamp, excise and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify the Administrative Agent, each Co-Arranger and each Bank, and each of
their respective officers, directors, employees, representatives, affiliates and
agents from and hold each of them harmless against any and all liabilities,
obligations (including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent, such Co-Arranger or
any Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other Credit Document or the use or proposed use of the
proceeds of any Loans hereunder or the consummation of any transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property owned
or at any time operated by Holdings or any of its Subsidiaries, the Release,
generation, storage, transportation, handling or disposal of Hazardous Materials
at any location, whether or not owned or operated by Holdings or any of its
Subsidiaries, the non-compliance of any Real Property with foreign, federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against Holdings, any of its Subsidiaries or any Real Property owned or at any
time operated by Holdings or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the undertaking
to indemnify, pay or hold harmless the Administrative Agent, any Co-Arranger or
any Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby
<PAGE>
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Bank (including, without limitation, by branches and agencies of such Bank
wherever located or by any Person controlling such Bank) to or for the credit or
the account of any Credit Party against and on account of the Obligations and
liabilities of such Credit Party to such Bank under this Agreement or under any
of the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section 13.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
the Borrower's address specified opposite its signature below; if to Holdings,
at Holdings' address specified opposite its signature below; if to Hospitality,
at Hospitality's address specified opposite its signature below; if to any Co-
Arranger or Bank, at its address specified opposite its name on Schedule II; and
if to the Administrative Agent, at the Notice Office; or, as to the Borrower,
the Administrative Agent or any Co-Arranger, at such other address as shall be
designated by such party in a written notice to the other parties hereto and, as
to each Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed, telegraphed, telexed, telecopied, or
cabled or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Administrative Agent and the Borrower shall not be
effective until received by the Administrative Agent or the Borrower, as the
case may be (or when the addressee refuses to accept delivery).
13.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, that neither Holdings nor
-------- -------
the Borrower may assign or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the prior written consent
of the Banks (except as otherwise contemplated by the definition of "Holdings"
and the "Borrower") and, provided further, that, although any Bank may transfer,
----------------
assign or grant participations in its rights hereunder, such Bank shall remain a
"Bank" for all purposes hereunder (and may not transfer or assign all or any
portion of its Commitments hereunder except as provided in Section 13.04(b)) and
the transferee, assignee or participant, as the case may be, shall not
constitute a "Bank" hereunder and, provided further, that no Bank shall transfer
----------------
or grant any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
final scheduled maturity of any Loan or Note in which such participant is
participating, or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of applicability of any post-
default increase in interest rates) or reduce the principal amount thereof (it
being understood that any amendment or modification to the financial definitions
in this Agreement or to Section 13.07(a) shall not constitute a reduction in any
rate of interest or Fees for purposes of this clause (i), so long as the primary
purpose of the respective amendments or modifications to the financial
definitions was not to reduce the interest or Fees payable hereunder), or
<PAGE>
increase the amount of the participant's participation over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in the Total Commitment shall not constitute
a change in the terms of such participation, and that an increase in any
Commitment or Loan shall be permitted without the consent of any participant if
the participant's participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Pledge and Security Agreement Collateral under the Pledge and Security
Agreement (except as expressly provided in the Credit Documents) supporting the
Loans hereunder in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans to (i) its parent company and/or any affiliate of such
Bank which is at least 50% owned by such Bank or its parent company or to one or
more Banks or (ii) in the case of any Bank that is a fund that invests in loans,
any other fund that invests in loans and is managed or advised by the same
investment advisor of such Bank or by an Affiliate of such investment advisor or
(y) assign all or a portion of all of the assigning Bank's Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or outstanding
principal amount of Term Loans to an Eligible Transferee, and, in the case of a
partial assignment of such Revolving Loan Commitment and/or outstanding Term
Loans, such assignment shall be in a minimum amount of $5,000,000 or such lesser
amount as is acceptable to the Administrative Agent (and the assignor shall
maintain a minimum amount of $5,000,000 for its own account unless the assignor
shall assign its entire interest), and all assignees shall become a party to
this Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that (i) at such time Schedule I shall be deemed modified to reflect
- --------
the Revolving Loan Commitments and/or outstanding Term Loans, as the case may
be, of such new Bank and of the existing Banks, (ii) upon surrender of the old
Notes, if any, new Notes will be issued to such new Bank and to the assigning
Bank (to the extent requested by such Banks), such new Notes to be in conformity
with the requirements of Section 1.05 (with appropriate modifications) to the
extent needed to reflect the revised Revolving Loan Commitments and/or
outstanding Terms Loans, as the case may be, (iii) the consent of the
Administrative Agent shall be required in connection with any such assignment
pursuant to clause (y) above (which consent shall not be unreasonably withheld)
and (iv) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 and, provided further, that such transfer or assignment
-------- -------
will not be effective until recorded by the Administrative Agent on the Register
pursuant to Section 13.16. The Administrative Agent will promptly give the
Borrower notice of any assignment to an Eligible Transferee pursuant to clause
(y) of the first sentence of this Section 13.04(b), although the failure to give
any such notice shall not affect such assignment or result in any liability by
the Administrative Agent. To the extent of any assignment pursuant to this
Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Revolving Loan Commitments and/or its
outstanding Term Loans. At the time of each assignment pursuant to this Section
13.04(b) to a Person which is not already a Bank hereunder
<PAGE>
and which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
3.04(b)(ii) Certificate) described in Section 3.04(b). To the extent that an
assignment of all or any portion of a Bank's Revolving Loan Commitments and
related outstanding Obligations and/or outstanding Term Loans pursuant to
Section 1.13 or this Section 13.04(b) would, at the time of such assignment,
result in increased costs under Section 1.10, 1.11 or 3.04 from those being
charged by the respective assigning Bank prior to such assignment, then the
Borrower shall not be obligated to pay or reimburse such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Administrative Agent, any Bank which is a fund may pledge all or
any portion of its Loans and Notes to its trustee in support of its obligations
to its trustee. No pledge pursuant to this clause (c) shall release the
transferor Bank from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Co-Arranger or any Bank or any holder of
any Note in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower or any other
Credit Party and the Administrative Agent or any Co-Arranger or any Bank or the
holder of any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights,
powers and remedies herein or in any other Credit Document expressly provided
are cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Co-Arranger or any Bank or the holder of any Note
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or any Co-Arranger or any Bank or the holder of any Note to
any other or further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
-----------------
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
--- ----
pro rata based upon their respective shares, if any, of the Obligations with
- --- ----
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Extension Fee or Commitment Commission, of a sum which with
respect to the related sum or sums received by other Banks is in a greater
proportion than the total of such Obligation then owed and due to such Bank
bears to the total of such Obligation then owed and due to all of the Banks
immediately prior to such receipt, then such Bank receiving such excess
<PAGE>
payment shall purchase for cash without recourse or warranty from the other
Banks an interest in the Obligations of the respective Credit Party to such
Banks in such amount as shall result in a proportional participation by all the
Banks in such amount; provided that if all or any portion of such excess amount
--------
is thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); provided that, except as otherwise specifically provided herein, all
--------
computations of Quarterly Excess Cash Flow and Annual Excess Cash Flow, and all
computations determining compliance with Sections 9.07 through 9.12, inclusive
shall utilize accounting principles and policies in conformity with those used
to prepare the historical financial statements referred to in Section 7.05(a).
Notwithstanding anything to the contrary contained in this Agreement, from and
after the REIT Conversion Date, to the extent that Holdings has any
Indebtedness, liabilities, operating expenses or taxes, such Indebtedness,
liabilities, operating expenses or taxes, as applicable, shall be treated as
obligations of the Borrower for the purposes of calculating compliance with the
financial covenants contained in Sections 9.08 through 9.12, inclusive, as well
as for purposes of determining Excess Cash Flow, the Applicable Margin and the
Applicable Commitment Commission Percentage.
(b) All computations of interest, Commitment Commission and other
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, Commitment Commission or other Fees are
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
- ----------
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PRINCIPAL CREDIT PARTY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. EACH PRINCIPAL CREDIT PARTY HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY,
AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH
PRINCIPAL CREDIT
<PAGE>
PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PRINCIPAL
CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PRINCIPAL CREDIT PARTY
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS
WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT, ANY CO-ARRANGER, ANY BANK OR THE HOLDER OF ANY NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) EACH PRINCIPAL CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which (i) Holdings, Hospitality, HMH, the
Operating Partnership, CRC, the Administrative Agent, each Co-Arranger and each
of the Banks set forth on Schedule I shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the same
to the Administrative Agent at the Notice Office or, in the case of the Banks,
shall have given to the Administrative Agent telephonic (confirmed in writing)
or written notice at such office that the same has been signed and mailed to it
and (ii) the conditions contained in Section 4 are met to the satisfaction of
the Administrative Agent and the Required Banks. Unless the Administrative
Agent has received actual notice from any Bank that the conditions described in
clause (ii) of the preceding sentence have not been met to its satisfaction,
upon the satisfaction of the condition described in clause (i) of the
immediately
<PAGE>
preceding sentence and upon the Administrative Agent's good faith determination
that the conditions described in clause (ii) of the immediately preceding
sentence have been met, then the Effective Date shall have deemed to have
occurred, regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the Effective
Date shall not release the Borrower from any liability for failure to satisfy
one or more of the applicable conditions contained in Section 4). The
Administrative Agent will give Holdings, Hospitality, the Borrower, each Co-
Arranger and each Bank prompt written notice of the occurrence of the Effective
Date.
13.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
-------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank having Obligations being directly
affected thereby (other than a Defaulting Bank), (i) extend the final scheduled
maturity of any Loan or Note, or reduce the rate or extend the time of payment
of interest or Fees thereon, or reduce the principal amount thereof (except to
the extent repaid in cash) (it being understood that any amendment or
modification to the financial definitions in this Agreement or to Section
13.07(a) shall not constitute a reduction in any rate of interest or Fees for
purposes of this clause (i), so long as the primary purpose of the respective
amendments or modifications to the financial definitions was not to reduce the
interest or Fees payable hereunder), (ii) waive, or decrease the amount of, any
Scheduled Repayment or extend the date on which any Scheduled Repayment is
required to be made, (iii) release all or substantially all of the Pledge and
Security Agreement Collateral or Guarantors from their Guaranties (except (in
either case) as expressly provided in the Credit Documents), (iv) amend, modify
or waive any provision of this Section 13.12, (v) reduce the percentage
specified in the definition of Required Banks or Supermajority Banks (it being
understood that, with the consent of the Required Banks, additional extensions
of credit pursuant to this Agreement may be included in the determination of the
Required Banks and Supermajority Banks on substantially the same basis as the
extensions of Term Loans and Revolving Loan Commitments are included on the
Effective Date) or (vi) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement; provided further, that
----------------
no such change, waiver, discharge or termination shall (w) increase the
Commitments of any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Total Commitment shall not constitute an increase of the
Commitment of any Bank, and that an increase in the available portion of the
Commitment of any Bank shall not constitute an increase in the Commitment of
such Bank), (x) without the consent of the Administrative Agent or any Co-
Arranger affected thereby, amend, modify or waive any provision of Section 12 as
same applies to the Administrative Agent or such Co-Arranger or any other
provision as same relates to the rights or obligations of the Administrative
Agent or such Co-Arranger, (y) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or obligations of
the Collateral Agent, or (z) without the consent of the Supermajority Banks,
either (A) increase the amount of the Total Commitment to an amount that exceeds
the sum of (I) the Total Commitment as in effect on the Effective Date plus (II)
<PAGE>
$250,000,000 or (B) amend, modify or waive any provision of Section 9.08, 9.09
or 9.11.
(b) If, in connection with any proposed change, waiver, discharge
or termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (vi), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as no Default or Event of
Default has occurred and is continuing and all non-consenting Banks whose
individual consent is required are treated as described in either clause (A) or
(B) below, to either (A) replace each such non-consenting Bank or Banks with one
or more Replacement Banks pursuant to Section 1.13 so long as at the time of
such replacement, each such Replacement Bank consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Bank's
Revolving Loan Commitment and repay such non-consenting Bank's outstanding Loans
in accordance with Sections 2.02(b) and/or 3.01(b), provided that, unless the
--------
Revolving Loan Commitments are terminated, and Loans repaid, pursuant to the
preceding clause (B) are immediately replaced in full at such time through the
addition of new Banks or the increase of the Revolving Loan Commitments and/or
outstanding Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to the preceding clause (B)
the Required Banks (determined before giving effect to the proposed action)
shall specifically consent thereto, provided further, that in any event the
----------------
Borrower shall not have the right to replace a Bank, terminate its Revolving
Loan Commitment or repay its Loans solely as a result of the exercise of such
Bank's rights (and the withholding of any required consent by such Bank)
pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 1.10, 1.11, 3.04, 13.01 and 13.06 shall survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans.
13.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 13.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, or 3.04 from those
being charged by the respective Bank prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective transfer).
13.15 Confidentiality. (a) Subject to the provisions of clause (b)
---------------
of this Section 13.15, each Bank agrees that it will use its reasonable efforts
not to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Bank if such Bank or such
Bank's holding or parent company in its reasonable good faith discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 13.15 to the
same extent as such Bank) any information with respect to any Credit Party or
any of its Subsidiaries which has been, is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is designated
by any Credit Party to the Banks in writing as confidential, provided that any
--------
Bank may disclose any such information (a) as has become generally available to
the public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory
<PAGE>
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in respect to any summons or subpoena or
in connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank, (e) to the Administrative Agent or
the Collateral Agent and (f) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of any
of the Notes, Commitments or Loans or any interest therein by such Bank,
provided, that such prospective transferee agrees to be subject to the
- --------
provisions of this Section 13.15(a).
(b) Holdings and the Borrower hereby acknowledge and agree that
each Bank may share with any of its affiliates any information related to Credit
Parties or any of their respective Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of the Credit
Parties and their respective Subsidiaries, provided such Persons shall be
subject to the provisions of this Section 13.15 to the same extent as such
Bank), it being understood that for purposes of this Section 13.15(b) the term
"affiliate" shall mean any direct or indirect holding company of a Bank as well
as any direct or indirect Subsidiary of such holding company.
13.16 Register. The Borrower hereby designates the Administrative
--------
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.16, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 13.16, provided that the
Borrower shall have no obligation to indemnify the Administrative Agent for any
loss, claim, damage, liability or expense which resulted solely from the gross
negligence or willful misconduct of the Administrative Agent.
13.17 Commercial Loan Transactions. Each of the Banks acknowledges
----------------------------
that the making of its Loans and the issuance by the Borrower of a Note to such
Bank are in the nature of a commercial loan transaction, and that no such Bank
shall assert that such actions are a securities transaction regulated under the
Exchange Act, the Securities Act or any other Federal or state securities laws,
it being understood that nothing in this Section
<PAGE>
13.17 shall limit the rights of the Banks pursuant to Section 13.01 or 13.04.
13.18 Limitations on Recourse. (a) Notwithstanding anything to the
-----------------------
contrary set forth in this Agreement or in any of the other Credit Documents but
subject to the last sentence of this Section 13.18(a) and clause (b) of this
Section 13.18, from and after the REIT Conversion Date, the Borrower's
Obligations hereunder and under the other Credit Documents shall be limited
recourse obligations of the Borrower, enforceable against the Borrower (and its
assets) only and not against any constituent partner in the Borrower. The
foregoing provisions of this Section 13.18 shall not impair the liability of the
Subsidiary Guarantors under the Subsidiaries Guaranty or the liens and security
interests created by the Pledge and Security Agreement which were granted as
security for the Obligations of the Borrower and the Guaranteed Obligations of
the Subsidiary Guarantors.
(b) Notwithstanding the foregoing provisions of clause (a) of this
Section 13.18, from and after the REIT Conversion Date and so long as Holdings
is released from any guaranty given in respect of the Senior Notes, (x) the
Administrative Agent and the Banks shall have recourse to Host REIT (in its
capacity as the general partner in the Borrower) to the extent (but only to the
extent) of any loss, cost, damage, expense or liability incurred by the
Administrative Agent or any of the Banks by reason of (i) any fraudulent
misrepresentation made by Host REIT in or pursuant to the Credit Documents, (ii)
any unlawful act on the part of Host REIT, or (iii) any misappropriation of
funds by Host REIT in contravention of the provisions of the Credit Documents
and (y) Host REIT shall automatically be and become jointly and severally
obligated with the Borrower in respect of all of the Obligations from and after
any breach by Host REIT of the covenant contained in Section 9.16(b).
Additionally, upon the occurrence of the event specified in clause (y) of the
preceding sentence, the Pledge and Security Agreement shall be reinstated as to
Host REIT for purposes of securing the joint and several liability of Host REIT
in respect of the Obligations. At the request of the Administrative Agent, Host
REIT shall (at its expense) take all actions deemed reasonably necessary by the
Administrative Agent to confirm the provisions of this Section 13.18(b).
SECTION 14. Parents Guaranty.
----------------
14.01 The Guaranty. In order to induce the Administrative Agent, the
------------
Co-Arrangers and the Banks to enter into this Agreement and to extend credit
hereunder and in recognition of the direct benefits to be received by each
Parent Guarantor from the proceeds of the Loans and the entering into by the
Borrower of Interest Rate Protection Agreements or Other Hedging Agreements,
each Parent Guarantor hereby agrees with the Administrative Agent, the Co-
Arrangers and the Banks as follows: each Parent Guarantor hereby jointly and
severally, and absolutely, unconditionally and irrevocably, guarantees as
primary obligor and not merely as surety all of the Guaranteed Obligations of
the Borrower to each Creditor. If any or all of the Guaranteed Obligations
becomes due and payable hereunder, each Parent Guarantor, jointly and severally,
and absolutely, unconditionally and irrevocably promises to pay such
indebtedness to the Creditors or order, on demand, together with any and all
reasonable expenses which may be incurred by the Creditors in collecting any of
the Guaranteed Obligations. This Parents Guaranty shall constitute a guaranty
of payment, and not of collection.
14.02 Bankruptcy. Additionally, each Parent Guarantor, jointly and
----------
severally, and absolutely, unconditionally, irrevocably, guarantees the payment
of any and all of the Guaranteed Obligations of the Borrower to the Creditors
whether
<PAGE>
or not then due or payable by the Borrower upon the occurrence in respect of the
Borrower of any of the events specified in Section 10.05, and unconditionally
and irrevocably promises to pay such Guaranteed Obligations to the Creditors, or
order, on demand, in lawful money of the United States.
14.03 Nature of Liability. The liability of each Parent Guarantor
-------------------
hereunder is joint and several and exclusive and independent of any security for
or other guaranty of the Guaranteed Obligations of the Borrower whether executed
by such Parent Guarantor, the other Parent Guarantor, any other guarantor or by
any other party, and the liability of each Parent Guarantor hereunder shall not
be affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of
any such other guaranty or undertaking except to the extent that such payment
actually results in a permanent reduction of the Guaranteed Obligations, or (d)
any dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to any Creditor on the indebtedness which such
Creditor repays the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Parent Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
14.04 Independent Obligation. The obligations of each Parent
----------------------
Guarantor hereunder are independent of the obligations of the other Parent
Guarantor, any other guarantor or the Borrower, and a separate action or actions
may be brought and prosecuted against either Parent Guarantor whether or not
action is brought against the other Parent Guarantor, any other guarantor or the
Borrower and whether or not the other Parent Guarantor, any other guarantor or
the Borrower be joined in any such action or actions. Each Parent Guarantor
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Borrower or other circumstance which operates to toll any statute
of limitations as to the Borrower shall operate to toll the statute of
limitations as to each Parent Guarantor.
14.05 Authorization. Each Parent Guarantor authorizes the
-------------
Administrative Agent and the other Creditors without notice or demand or consent
(except as shall be required by applicable statute and cannot be waived), and
without affecting or impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, impair, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or any other Person or otherwise act or refrain
from acting;
<PAGE>
(d) release or substitute any one or more endorsers, guarantors,
the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and subordinate the payment
of all or any part thereof to the payment of any liability (whether due or not)
of the Borrower to its creditors other than the Creditors, provided that the
Creditors will not, without the prior written consent of each Parent Guarantor,
contractually subordinate the payment of all or any part of the Guaranteed
Obligations to any other creditor or creditors of the Borrower, provided further
that if any consent required by the immediately preceding proviso is not
obtained and contractual subordination as described therein is agreed to, then
(x) any part of the Guaranteed Obligations not so subordinated will continue to
be entitled to the full benefits of this Parents Guaranty and (y) with respect
to any part of the Guaranteed Obligations so contractually subordinated, each
Parent Guarantor will be relieved of its obligations hereunder only to the
extent each establishes that it has been actually damaged by such contractual
subordination;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of what
liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of any
Parent Guarantor from its liabilities under this Section 14.
14.06 Reliance. It is not necessary for the Administrative Agent or
--------
the other Creditors to inquire into the capacity or powers of the Borrower or
any other Credit Party or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Guaranteed Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
14.07 Subordination. Any of the indebtedness of the Borrower now or
-------------
hereafter owing to any Parent Guarantor is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Administrative Agent and the other
Creditors; and if the Administrative Agent so requests at a time when an Event
of Default exists, all such indebtedness of the Borrower to such Parent
Guarantor shall be collected, enforced and received by such Parent Guarantor for
the benefit of the Creditors and be paid over to the Administrative Agent on
behalf of the Creditors on account of the Guaranteed Obligations of the Borrower
to the Creditors, but without affecting or impairing in any manner the liability
of such Parent Guarantor under the other provisions of this Parents Guaranty.
Prior to the transfer by any Parent Guarantor of any note or negotiable
instrument evidencing any of the indebtedness relating to the Guaranteed
Obligations of the Borrower to such Parent Guarantor, such Parent Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the foregoing,
each Parent Guarantor hereby agrees with the Creditors that it will not exercise
any right of subrogation which it may at any time otherwise have as a result of
this Parents Guaranty (whether contractual, under Section 509 of the Bankruptcy
Code, or otherwise) until all Guaranteed Obligations have been paid in full in
cash (it being understood that no Parent Guarantor is waiving
<PAGE>
any right of subrogation that it may otherwise have but is only waiving the
exercise thereof as provided above).
14.08 Waiver. (a) Each Parent Guarantor waives any right (except as
------
shall be required by applicable statute and cannot be waived) to require the
Administrative Agent or the other Creditors to (i) proceed against the Borrower,
any other guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other guarantor or any other party or (iii)
pursue any other remedy in the Administrative Agent's or the other Creditors'
power whatsoever. Each Parent Guarantor waives any defense based on or arising
out of any defense of the Borrower, such Parent Guarantor the other Parent
Guarantor, any other guarantor or any other party, other than payment in full of
the Guaranteed Obligations, based on or arising out of the disability of the
Borrower, any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Administrative Agent and the other Creditors may,
at their election, foreclose on any security held by the Administrative Agent,
the Collateral Agent or the other Creditors by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Administrative Agent and the other Creditors may
have against the Borrower or any other party, or any security, without affecting
or impairing in any way the liability of any Parent Guarantor hereunder except
to the extent the Guaranteed Obligations have been paid. Each Parent Guarantor
waives any defense arising out of any such election by the Administrative Agent
and the other Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Parent Guarantor against the Borrower or any other party or any security.
(b) Each Parent Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Each Parent Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Parent Guarantor assumes and incurs hereunder, and agrees that
the Administrative Agent and the other Creditors shall have no duty to advise
any Parent Guarantor of information known to them regarding such circumstances
or risks.
Each Parent Guarantor warrants and agrees that each of the waivers set forth
above is made with full knowledge of its significance and consequences and that
if any of such waivers is determined to be contrary to any applicable law or
public policy, such waivers shall be effective only to the maximum extent
permitted by law.
14.09 Nature of Liability. It is the desire and intent of each
-------------------
Parent Guarantor and the Creditors that this Parents Guaranty shall be enforced
against each Parent Guarantor to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If, however, and to the extent that, the obligations of any Parent Guarantor
under this Parents Guaranty shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers), then the amount
of the Guaranteed Obligations shall be deemed to be reduced and such Parent
Guarantor shall pay the maximum amount of the
<PAGE>
Guaranteed Obligations which would be permissible under applicable law.
14.10 Interest Rate Protection Agreements and Other Hedging
-----------------------------------------------------
Agreements. Notwithstanding anything to the contrary contained in this Parents
- ----------
Guaranty, no Interest Rate Protection Agreement or Other Hedging Agreement shall
be entitled to the benefits of this Parents Guaranty unless such Interest Rate
Protection Agreement or Other Hedging Agreement is reasonably related to the
Loans (including, in any event, any Interest Rate Protection Agreement entered
into to satisfy the requirements of Section 8.14) or such Interest Rate
Protection Agreement or Other Hedging Agreement provides that it is to be
entitled to the benefits of this Parents Guaranty or the Pledge and Security
Agreement generally.
14.11 Termination. Notwithstanding anything to the contrary
-----------
contained in this Section 14, this Parents Guaranty shall automatically
terminate on the REIT Conversion Date (after giving effect to the consummation
of the REIT Transaction and all other transactions contemplated to occur on such
date and the Administrative Agent, at the request and expense of the Parent
Guarantors, will promptly execute and deliver to each of the Parent Guarantors a
proper instrument or instruments acknowledging the satisfaction and termination
of this Parents Guaranty.
* * *
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
10400 Fernwood Road HOST MARRIOTT CORPORATION
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3588
Attention: General Counsel, Dept. 923 By
-------------------------------
Name: W. Edward Walter
with a copy to: Title: Vice President
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Senior Vice President and
Treasurer, Dept. 916
10400 Fernwood Road HOST MARRIOTT HOSPITALITY, INC.
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3588
Attention: General Counsel, Dept. 923 By
-------------------------------
Name: Karen J. Schramm
Title: Vice President
with a copy to:
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Senior Vice President
and Treasurer, Dept. 916
<PAGE>
10400 Fernwood Road HMH PROPERTIES, INC.
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3588
Attention: General Counsel, Dept. 923 By
-------------------------------
Name: Karen J. Schramm
Title: Vice President
with a copy to:
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Senior Vice President and
Treasurer, Dept. 916
10400 Fernwood Road HOST MARRIOTT, L.P.
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3588
Attention: General Counsel, Dept. 923 By: HMC Real Estate Corporation,
its General Partner
By
-------------------------------
Name: Karen J. Schramm
with a copy to: Title: Vice President
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Senior Vice President and
Treasurer, Dept. 916
10400 Fernwood Road HMC CAPITAL RESOURCES CORP.
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3588
Attention: General Counsel, Dept. 923
By
---------------------------------
Name: Karen J. Schramm
Title: Vice President
with a copy to:
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Senior Vice President and
Treasurer, Dept. 916
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Arranger
and Administrative Agent
By
-----------------------------------
Name:
Title:
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Individually and as Co-Arranger
By
----------------------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA,
Individually and as Co-Arranger
By
------------------------------------
Name:
Title:
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
Individually and as Co-Arranger
By
------------------------------------
Name:
Title:
<PAGE>
BARCLAYS BANK PLC
By
-----------------------------------
Name:
Title:
<PAGE>
CITICORP USA, INC.
By
-----------------------------------
Name:
Title:
<PAGE>
NATIONSBANK, N.A.
By
------------------------------------
Name:
Title:
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY
By
------------------------------------
Name:
Title:
<PAGE>
THE BANK OF NEW YORK
By
------------------------------------
Name:
Title:
<PAGE>
DEUTSCHE BANK AG NEW YORK BRANCH AND/OR
CAYMAN ISLAND BRANCH
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
<PAGE>
DLJ CAPITAL FUNDING, INC.
By
---------------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By
---------------------------------
Name:
Title:
<PAGE>
AMSOUTH BANK
By
---------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA NT&SA
By
---------------------------------
Name:
Title:
By
---------------------------------
Name:
Title:
<PAGE>
RIGGS BANK N.A.
By
---------------------------------
Name:
Title:
<PAGE>
BANK OF HAWAII
By
---------------------------------
Name:
Title:
<PAGE>
FIRST AMERICAN BANK TEXAS, S.S.B.
By
---------------------------------
Name:
Title:
<PAGE>
FIRST COMMERCIAL BANK, NEW YORK AGENCY
By
---------------------------------
Name:
Title:
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By
------------------------------------------
Name:
Title:
<PAGE>
THE INTERNATIONAL COMMERCIAL BANK OF CHINA,
NEW YORK AGENCY
By
------------------------------------------
Name:
Title:
<PAGE>
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By
------------------------------------------
Name:
Title:
<PAGE>
CONSECO LIFE INSURANCE COMPANY
By
-----------------------------------
Name:
Title:
<PAGE>
BANK LEUMI USA
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
<PAGE>
KZH-CNC CORPORATION
By
-----------------------------------
Name:
Title:
<PAGE>
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Blackstone Acquisition
SCHEDULE IV Subsidiary Mergers
SCHEDULE V Subsidiaries
SCHEDULE VI Existing Indebtedness
SCHEDULE VII Certain Partnerships
SCHEDULE VIII Existing Liens
SCHEDULE IX Pledge of Equity Interests
SCHEDULE X Certain Excluded Hotels
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Revolving Note
EXHIBIT C Section 3.04(b)(ii) Certificate
EXHBIT D-1 Opinion of Christopher Townsend, Esq., General Counsel
EXHIBIT D-2 Opinion of Hogan & Hartson L.L.P.
EXHIBIT E Officers' Certificate
EXHIBIT F Pledge and Security Agreement
EXHIBIT G Subsidiaries Guaranty
EXHIBIT H Officer's Solvency Certificate
EXHIBIT I Acknowledgment and Joinder Agreement
EXHIBIT J Assignment and Assumption Agreement
<PAGE>
COMMITMENTS
-----------
Bank Initial Revolving
- ---- ------- ---------
Term Loan Loan
--------- ----
Commitment Commitment
---------- ----------
Bankers Trust Company $ 27,737,500 $ 71,325,000
Wells Fargo Bank, National Association 27,737,500 71,325,000
The Bank of Nova Scotia 27,737,500 71,325,000
Credit Lyonnais New York Branch 27,737,500 71,325,000
Barclays Bank PLC 27,737,500 71,325,000
Citicorp USA, Inc. 27,737,500 71,325,000
NationsBank, N.A. 27,737,500 71,325,000
Societe Generale, Southwest Agency 27,737,500 71,325,000
The Bank of New York 14,000,000 36,000,000
Deutsche Bank AG New York Branch
and/or Cayman Island Branch 14,000,000 36,000,000
DLJ Capital Funding, Inc. 14,000,000 36,000,000
The First National Bank of Chicago 14,000,000 36,000,000
AmSouth Bank 9,800,000 25,200,000
Bank of America NT&SA 9,800,000 25,200,000
Riggs Bank N.A. 7,000,000 18,000,000
Bank of Hawaii 5,600,000 14,400,000
First American Bank Texas, S.S.B. 5,600,000 14,400,000
First Commercial Bank, New York Agency 5,600,000 14,400,000
Massachusetts Mutual Life Insurance Company 5,600,000 14,400,000
The International Commercial Bank of China,
New York Agency 5,600,000 14,400,000
Chang Hwa Commercial Bank, Ltd.,
New York Branch 4,200,000 10,800,000
Conseco Life Insurance Company 0 14,400,000
Bank Leumi USA 2,100,000 5,400,000
KZH-CNC Corporation 5,600,000 0
Erste Bank der Oesterreichischen
Sparkassen AG 5,600,000 14,400,000
------------ ------------
TOTAL: $350,000,000 $900,000,000
<PAGE>
BANK ADDRESSES
--------------
<TABLE>
<CAPTION>
Bank Address
- ---- -------
<S> <C>
Bankers Trust Company 130 Liberty Street
New York, NY 10006
Attention: Laura Burwick
Telephone No.: (212) 250-2568
Facsimile No.: (212) 669-0743
Credit Lyonnais New York Branch 1301 Avenue of the Americas
New York, NY 10019
Attention: Mary Daly
Telephone No.: (212) 261-7842
Facsimile No.: (212) 261-7532
Wells Fargo Bank, National Association 2020 K Street, NW, Suite 420
Washington, DC 20006
Attention: Christopher Jordan
Kimberly Perrell
Telephone No.: (202) 296-5577
Facsimile No.: (202) 296-6036
AmSouth Bank Commercial Real Estate Department
1900 Fifth Avenue North
Birmingham, AL 35203
Attention: Arthur J. Sharbell, III
Telephone No.: (205) 581-7647
Facsimile No.: (205) 326-4075
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Bank Leumi USA 562 Fifth Avenue
New York, NY 10036
Attention: Cynthia C. Wilbur
Howard Epstein
Telephone No.: (212) 626-1147
Facsimile No.: (212) 626-1239
Bank of America 555 S. Flower St., 6th Fl.
Los Angeles, CA 90071
Attention: Kirk Malmrose
Telephone No.: (213) 228-6327
Facsimile No.: (213) 228-3421
with copy to:
O'Melveny & Myers, LLP
610 Newport Center Drive, Suite 1700
Newport Beach, CA 92660
Attention: Pat Forbes
Telephone No.: (714) 823-6905
Facsimile No.: (714) 823-6994
Bank of Hawaii 1850 North Central Avenue, Suite 400
Phoenix, AZ 85004
Attention: Donna Parker
Telephone No.: (602) 257-2436
Facsimile No.: (602) 257-2235
</TABLE>
<PAGE>
<TABLE>
<S> <C>
The Bank of New York One Wall Street, 21st Floor
New York, NY 10286
Attention: Rick Laudisi
David Fowler
Richard Katz
Telephone No.: (212) 635-7621
Facsimile No.: (212) 809-9526
Bank of Nova Scotia Real Estate Banking
One Liberty Plaza
New York, NY 10006
Attention: Bruce G. Ferguson
Telephone No.: (416) 866-3594
with copy to:
44 King Street West
Toronto, Ontario M5H1H1
Attention: George Wilson
Telephone No.: (416) 866-3594
Barclays Bank PLC 222 Broadway, 8th Floor
New York, NY 10038
Attention: John Giannone
Telephone No.: (212) 412-3276
Facsimile No.: (212) 412-7511
with a copy to:
Hawkins Delafield & Wood
67 Wall Street
Attention: Maria Harris
Telephone No.: (212) 820-9502
Facsimile No.: (212) 820-9666
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Chang Hwa Commercial Bank, Ltd., New York One World Trade Center, Suite 3211
Branch New York, NY 10048
Attention: Kevin Lee
Telephone No.: (212) 390-7040 ext. 24
Facsimile No.: (212) 390-0120
Citicorp USA, Inc. 399 Park Avenue, 8th Floor Zone 6
New York, NY 10043
Attention: Diane Pockaj
Telephone No.: (212) 559-4649
Facsimile No.: (212) 793-0289
Deutsche Bank AG New York and/or Cayman 31 West 52nd Street
Island Branch New York, NY 10019
Attention: Andrew Neumeier
Telephone No.: (212) 469-8675
Facsimile No.: (212) 469-8212
DLJ Capital Funding, Inc. 277 Park Avenue, 17th Fl.
New York, NY 10172
Attention: Dana Klein
Telephone No.: (212) 892-7911
Facsimile No.: (212) 892-7542
First American Bank Texas, S.S.B. 14651 Dallas Parkway, Suite 400
Dallas TX 75240
Attention: Jeffrey C. Schultz
Telephone No.: (972) 419-3414
Facsimile No.: (972) 419-3308
The First National Bank of Chicago One First National Plaza, Suite 0315
Chicago, IL 60670
Attention: Patricia Leung
Telephone No.: (312) 732-8619
Facsimile No.: (312) 732-1117
</TABLE>
<PAGE>
<TABLE>
<S> <C>
First Commercial Bank, New York Agency 2 World Trade Center, Suite 7868
New York, NY 10048
Attention: Jeffrey Wang
Telephone No.: (212) 432-6590
Facsimile No.: (212) 432-7250
Conseco Life Insurance Company 11825 N. Pennsylvania
Carmel, IN 46032
Attention: Eric Johnson
Telephone No.: (317) 817-6806
Facsimile No.: (317) 817-2763
with copy to:
Baker & Daniels
300 Meridian St.
Indianapolis, IN 46204
Attention: Jim Carr
Telephone No.: (317) 237-1190
Facsimile No.: (317) 237-1000
Massachusetts Mutual Life Insurance Company 12959 State Street
Springfield, MA 01111
K-412
Attention: Robert F. Little
Telephone No.: (413) 744-7601
Facsimile No.: (413) 744-6123
NationsBank, N.A. 6610 Rockledge Drive, 6th Fl.
Bethesda, MD 20817
Attention: Cheryl D. Fitzgerald
Mary L. Baxa
Telephone No.: (301) 571-9036
Facsimile No.: (301) 493-2885
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Riggs Bank N.A. 808 17th Street, NW
Washington, DC 20036
Attention: Jordan O'Neill
Joe Cahill
Telephone No.: (202) 835-4304
Facsimile No. (202) 835-5977
Societe Generale, Southwest Agency 2001 Ross Avenue, Suite 4900
Dallas, TX 75201
Attention: Carina Huynh
Telephone No.: (214) 979-2781
Facsimile No. (214) 979-2727
with copy to:
Bracewell & Petterson
Lincoln Plaza, Suite 4000
500 N. Akard
Dallas, TX 75201
The International Commercial Bank of China, 65 Liberty Street
New York Agency New York, NY 10005
Attention: Mong-Shyr-Wu
Yen-Nan Kao
Telephone No.: (212) 815-9113
Facsimile No.: (212) 766-5006
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Erste Bank der Oesterreichischen 280 Park Avenue
Sparkassen AG West Bldg, 32nd Fl.
New York, NY 10017
Attention: Paul Judicke
Telephone No.: (212) 984-5634
Facsimile No.: (212) 984-5627
or
John Fay
Operations: Renee Dudley
280 Park Avenue
West Bldg
New York, NY 10017
Telephone No.: (212) 984-5654
Facsimile No.: (212) 984-5626
</TABLE>
<PAGE>
BLACKSTONE ACQUISITION
----------------------
<PAGE>
SUBSIDIARY MERGERS
------------------
<PAGE>
SUBSIDIARIES
------------
Subsidiary Owner Percentage Owned
- ---------- ----- ----------------
<PAGE>
EXISTING INDEBTEDNESS
---------------------
<PAGE>
CERTAIN PARTNERSHIPS
--------------------
<PAGE>
EXISTING LIENS
--------------
<PAGE>
PLEDGE OF EQUITY INTERESTS
--------------------------
<PAGE>
CERTAIN EXCLUDED HOTELS
-----------------------
