THIRD AMENDMENT
AND MODIFICATION TO
AMENDED AND RESTATED
CREDIT AGREEMENT
THIRD AMENDMENT AND MODIFICATION (this "Amendment"), dated as of
November 19, 2001, among HOST MARRIOTT CORPORATION, a Maryland corporation
("Holdings"), HOST MARRIOTT, L.P., a Delaware limited partnership (the
"Borrower"), the lenders party to the Credit Agreement referred to below (the
"Banks"), and BANKERS TRUST COMPANY, as Administrative Agent (the
"Administrative Agent"). Unless otherwise defined herein, all capitalized terms
used herein and defined in the Credit Agreement are used herein as so defined.
W I T N E S S E T H:
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WHEREAS, Holdings, the Borrower, the Banks and the Administrative
Agent are parties to an Amended and Restated Credit Agreement, dated as of June
19, 1997, as amended and restated as of August 5, 1998, and as further amended
and restated as of May 31, 2000 (as further amended, modified or supplemented
through, but not including, the date hereof, the "Credit Agreement"); and
WHEREAS, Holdings and the Borrower have requested that the Banks amend
and/or modify certain provisions of the Credit Agreement and the Banks have
agreed to amend and/or modify such provisions, in each case on the terms and
conditions provided herein;
NOW, THEREFORE, subject to the terms and conditions set forth below,
it is agreed:
1. Notwithstanding anything to the contrary contained in the Credit
Agreement, for the period from September 19, 2001 through and including August
15, 2002, the Borrower shall not be permitted to incur (or request to incur) any
additional Revolving Loans; provided, however, that the Borrower shall be
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permitted to incur (and may request the incurrence of) (i) up to an additional
$50,000,000 of Revolving Loans in the aggregate only during the Borrower's
fiscal quarter ending closest to March 31, 2002, (ii) up to an additional
$25,000,000 of Revolving Loans in the aggregate only during the Borrower's
fiscal quarter ending closest to June 30, 2002 but only so long as no Revolving
Loans have been incurred pursuant to preceding clause (i) or, if any such
Revolving Loans have been so incurred, so long as same have theretofore been
repaid in full, and (iii) to the extent that any Revolving Loans have been
incurred pursuant to preceding clause (i) and remain outstanding, up to an
aggregate amount of Revolving Loans only during the Borrower's fiscal quarter
ending closest to June 30, 2002 equal to the difference (but only if positive)
between $25,000,000 and the aggregate principal amount of Revolving Loans
incurred pursuant to preceding clause (i) and which remain outstanding at the
time of any incurrence pursuant to this clause (iii); provided, further, that
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Revolving Loans may be incurred as otherwise permitted by this Section 1 only so
long as (A) all conditions to the incurrence thereof pursuant to Sections 5.02
and 5.03 of the Credit Agreement have been
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satisfied and (B) an Authorized Financial Officer of the Borrower certifies to
the Administrative Agent and each of the Banks (x) in writing (and shows the
calculations therefor in reasonable detail) that the Borrower would have been in
pro forma compliance with the financial covenants contained in Sections 8.08,
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8.10, 8.11 and 8.12 of the Credit Agreement (as amended by this Amendment) for
the Test Period then most recently ended calculated on a Pro Forma Basis as if
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such Revolving Loans had been incurred on the first day of, and had remained
outstanding throughout, such Test Period, and (y) in writing that, based on
reasonable projections at the time that such Revolving Loans are incurred, the
Leverage Ratio at the end of the fiscal quarter in which the Revolving Loans are
so incurred shall not be greater than 7.25:1.00.
2. Section 1.14(a) of the Credit Agreement is hereby amended by
inserting the words "after August 15, 2002 and" immediately following the words
"the Borrower shall have the right at any time and from time to time" appearing
therein.
3. Notwithstanding anything to the contrary contained in Section
3.02(c) of the Credit Agreement, an amount equal to 100% of the Net Sale
Proceeds received by Holdings or any of its Subsidiaries from all Asset Sales
effected on or after November 19, 2001 and on or prior to August 15, 2002 shall
be applied within one Business Day of the receipt thereof as a mandatory
repayment and/or commitment reduction in accordance with the requirements of
Section 6 of this Amendment; provided, however, that the Net Sale Proceeds from
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the sale of the Borrower's Marriott Hotel located in Vail, Colorado shall not be
required to be so applied as provided in such Section 6 so long as (i) no
Specified Default or Event of Default then exists or would result therefrom and
(ii) such Net Sale Proceeds are not otherwise required to be used to repurchase
(or to make an offer to repurchase) Senior Notes.
4. Section 3.02(d) of the Credit Agreement is hereby amended by (a)
inserting the text "(i) the Casualty Event occurring in September 2001 at the
World Trade Center Marriott in New York, New York and the Financial Center
Marriott in New York, New York or (ii)" in the first parenthetical thereof
immediately after the words "other than" and (b) inserting the following new
text at the end of such Section 3.02(d):
"Promptly upon receipt by the Borrower or any of its Subsidiaries of any
Net Insurance/Condemnation Proceeds in respect of the Casualty Event
occurring in September 2001 at the World Trade Center Marriott in New York,
New York (the "WTC Insurance Proceeds") or the Financial Center Marriott in
New York, New York (the "FC Insurance Proceeds"), an amount equal to (i)
100% of the WTC Insurance Proceeds shall be deposited into a segregated
account (the "Segregated WTC Account") and (ii) 100% of the FC Insurance
Proceeds shall be deposited into a separate segregated account (the
"Segregated FC Account"). Each of the Segregated WTC Account and the
Segregated FC Account shall be controlled by the Borrower (or, if required,
the ground lessor of the respective Hotel Property) and shall include only
the WTC Insurance Proceeds or the FC Insurance Proceeds, as applicable, and
shall not be commingled with any other funds of the Borrower or any of its
Subsidiaries. The WTC Insurance Proceeds shall not be withdrawn from the
Segregated WTC Account until such time as (i) the Borrower determines that
the WTC Insurance Proceeds will not be applied to replace the World Trade
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Center Marriott, in which case 100% of the WTC Insurance Proceeds remaining
on deposit in the Segregated WTC Account shall be applied as a mandatory
repayment and/or commitment reduction in accordance with the requirements
of Section 3.02(e) or (ii) the Borrower determines that the WTC Insurance
Proceeds will be applied to replace (consistent with the terms of the then
applicable insurance, loan documents, ground lease documents and management
agreements) the World Trade Center Marriott, in which case (x) the WTC
Insurance Proceeds shall be applied solely for the purpose of such
replacement and (y) upon the completion of such replacement, any WTC
Insurance Proceeds remaining on deposit in the Segregated WTC Account and
not otherwise required to fund such replacement shall be applied as a
mandatory repayment and/or commitment reduction in accordance with the
requirements of Section 3.02(e). The FC Insurance Proceeds shall not be
withdrawn from the Segregated FC Account for any purpose other than to make
expenditures to restore (consistent with the terms of the then applicable
insurance, loan documents, ground lease documents and management
agreements) the Financial Center Marriott. Upon the completion of such
restoration, 100% of the FC Insurance Proceeds remaining on deposit in the
Segregated FC Account and not otherwise required to fund such restoration
shall be applied as a mandatory repayment and/or commitment reduction in
accordance with the requirements of Section 3.02(e). Notwithstanding
anything to the contrary in this Section 3.02(d), the Borrower shall be
entitled at any time (including, without limitation, at the time that any
funds become required under this Section 3.02(d) to be applied in
accordance with Section 3.02(e)) to withdraw amounts on deposit in the
Segregated WTC Account and the Segregated FC Account (to the extent
permitted by the terms of the applicable insurance, loan documents, ground
lease documents and management agreements) for the purpose of funding any
contractual obligations described in clauses (i) through (vi) of the
definition of "Net Insurance/Condemnation Proceeds" that were not
previously taken into account in calculating the WTC Insurance Proceeds or
the FC Insurance Proceeds required to be deposited pursuant to this Section
3.02(d) into the Segregated WTC Account or the Segregated FC Account, as
applicable."
5. In addition to any other mandatory repayments or commitment
reductions otherwise required pursuant to Section 3.02 of the Credit Agreement,
the Borrower hereby agrees that, within five Business Days after each date on or
after November 19, 2001 and on or prior to August 15, 2002 upon which Holdings
or the Borrower receives any cash proceeds from any capital contribution or any
sale or issuance of its equity (other than cash proceeds received from the
issuance by Holdings or the Borrower of shares of its equity (including as a
result of the exercise of any options with regard thereto), or options to
purchase shares of its equity, in either case to officers, directors and
employees of Holdings and its Subsidiaries), the Borrower shall apply an amount
equal to 100% of the Net Equity Proceeds from such capital contribution or sale
or issuance of equity as a mandatory repayment and/or commitment reduction in
accordance with the requirements of Section 6 of this Amendment.
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6. Notwithstanding anything to the contrary contained in Section
3.02(e) of the Credit Agreement, for the period from November 19, 2001 through
and including August 15, 2002, all mandatory repayments and/or commitment
reductions otherwise required to be applied in accordance with such Section
3.02(e) instead shall be applied (i) first, to the repayment of the outstanding
principal amount of the Term Loans and (ii) second, to the extent in excess of
the amount required to be applied pursuant to preceding clause (i), to the
prepayment of the outstanding principal amount of Revolving Loans (with no
corresponding reduction to the Total Revolving Loan Commitment).
7. Section 6.05(a) of the Credit Agreement is hereby amended
by deleting the last sentence thereof and inserting the following new sentence
in lieu thereof:
"Except as, and to the extent, disclosed in the Borrower's Form 10-Q
filed with the SEC in October 2001, since December 31, 1999, nothing
has occurred that has had, or could reasonably be expected to have, a
Material Adverse Effect."
8. Section 7.01(d) of the Credit Agreement is hereby amended
by (i) inserting the text "7.19 (to the extent applicable)," immediately after
the word "Sections" appearing in clause (x) thereof and (ii) inserting the
following parenthetical immediately after the words "as the case may be"
appearing in such clause (x):
"(it being understood that, in any event, such officer's certificate
shall set forth in reasonable detail the calculations required to
establish the Consolidated Fixed Charge Coverage Ratio for the
relevant Test Period whether or not Section 8.09 is applicable for
such Test Period)".
9. Section 7.01 of the Credit Agreement is hereby further amended by
inserting the following new clauses (j) and (k) at the end thereof:
"(j) Within 10 days after the end of each four week accounting period
in each fiscal year of the Borrower (commencing with the first four week
accounting period ending following November 19, 2001), four week statements
for comparable Hotel Properties operated by Marriott International under
the Marriott flag (on a consolidated basis) in respect of which the
Borrower shall have received such information from the respective
management company of such Hotel Properties, including average daily rates,
occupancy rates and revenue per available room, in each case for such four
week accounting period and setting forth comparative figures for the
corresponding fiscal periods in the prior fiscal year.
(k) Within 30 days after the end of each four week accounting period
in each fiscal year of the Borrower (commencing with the first four week
accounting period ending following November 19, 2001), statements for Hotel
Properties (on a consolidated basis) in respect of which the Borrower shall
have received reports from the respective management company of such Hotel
Properties, including
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"EBITDA" for such Hotel Properties (determined on a basis consistent with
the definition of Consolidated EBITDA hereunder, but excluding any amounts
not directly attributable to such Hotel Properties), average daily rates,
occupancy rates and revenue per available room, in each case for such four
week accounting period and for the elapsed portion of the fiscal year ended
with the last day of such four week accounting period and setting forth
comparative figures for the corresponding fiscal periods in the prior
fiscal year."
10. Section 7 of the Credit Agreement is hereby further amended by
inserting the following new Section 7.19 at the end thereof:
"7.19 Unrestricted Cash and Cash Equivalents. The Borrower and its
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Subsidiaries shall have as of the last day of the Borrower's fiscal
quarters ending closest to each of December 31, 2001, March 31, 2002 and
June 30, 2002, on a consolidated basis, not less than $25,000,000 of
unrestricted cash and Cash Equivalents (it being understood that, in any
event, unrestricted cash and/or Cash Equivalents shall not include (i)
until forfeited to, or otherwise entitled to be retained by, the Borrower
or any of its Subsidiaries, tenant security and other restricted deposits
or (ii) any amounts subject to any Lien in favor of any Person)."
11. Notwithstanding anything to the contrary contained in Section
8.02(xiv) or (xv) of the Credit Agreement, on or prior to August 15, 2002,
neither the Borrower nor any of its Subsidiaries may make any acquisitions
otherwise permitted thereunder; provided, however, the Borrower or a Wholly-
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Owned Subsidiary thereof may consummate an acquisition pursuant to such Section
8.02(xiv) or (xv) so long as (i) the only consideration paid in respect of any
such acquisition consists solely of equity interests in Holdings or the Borrower
otherwise permitted to be issued under the Credit Agreement, Acquired
Indebtedness assumed as part of such acquisition and/or Indebtedness (other than
Revolving Loans) created and/or incurred the proceeds of which are used solely
to refinance any then existing Indebtedness of the property or Person so
acquired, (ii) the ratio of (A) all Indebtedness to be assumed, created and/or
incurred by the Borrower and/or its Subsidiaries as part of any such acquisition
to (B) the "EBITDA" of the property or Person so acquired for the Test Period
then most recently ended (with such "EBITDA" to be calculated on a basis
consistent with the definition of "Consolidated EBITDA" contained in the Credit
Agreement) does not exceed 3.50:1.00 and (iii) all other conditions set forth in
such Section 8.02(xiv) or (xv), as applicable, also are satisfied in connection
therewith.
12. Notwithstanding anything to the contrary contained in Section
8.02(xvi) or (xvii) of the Credit Agreement, on or prior to August 15, 2002,
neither the Borrower nor any other Subsidiary of Holdings may consummate a
merger otherwise permitted thereunder to the extent that any cash consideration
is paid to any third parties in connection therewith.
13. Notwithstanding anything to the contrary contained in Section
8.03(iv) of the Credit Agreement, on or prior to August 15, 2002, the only
Dividends permitted to be paid pursuant to such Section 8.03(iv) are (i)
Dividends on common stock that are required to maintain (and in an amount not to
exceed that amount required to maintain (taking into account
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all other Dividends theretofore or then being paid and/or declared)) Holdings'
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, so long as (x) such Dividends are declared and/or paid during the
Borrower's fiscal quarter ending closest to December 31, 2001 and (y) such
Dividends are otherwise permitted to be paid at such time pursuant to such
Section 8.03(iv), (ii) Dividends to the holders of any Qualified Preferred Stock
as constituted (and with respect to those shares outstanding) on November 19,
2001, so long as (w) such Dividends are otherwise permitted to be paid at such
time pursuant to such Section 8.03(iv), (x) the Leverage Ratio at the time of
the declaration of such Dividends, and immediately after giving effect to, such
Dividends (in each case calculated as if such Dividends were paid on the date of
declaration) is no greater than 7.25:1.00 (or, if less, the ratio then required
to be maintained under Section 8.11 of the Credit Agreement, as modified by this
Agreement, so that no Default or Event of Default exists), (y) such Dividends
are declared and/or paid on or before the last day of the Borrower's fiscal
quarter ending closest to June 30, 2002, and (z) an Authorized Financial Officer
of the Borrower certifies to the Administrative Agent and each of the Banks in
writing that the conditions described in preceding clauses (w), (x) and (y) of
this subclause (ii) are satisfied and, based on reasonable projections at the
time that such Dividends are declared, the Leverage Ratio at the end of the
fiscal quarter in which such Dividends are declared will be no greater than
7.25:1.00 (or, if less, the ratio required to be maintained at the end of such
fiscal quarter under Section 8.11 of the Credit Agreement, as modified by this
Amendment, so that no Default or Event of Default will exist), and (iii)
Dividends to the holders of any common stock, so long as (v) such Dividends are
otherwise permitted to be paid at such time pursuant to such Section 8.03(iv),
(w) such Dividends are, at the time declared (taking into account all other
Dividends theretofore or then being declared during the fiscal quarter in which
such Dividends are declared), in an amount not greater than one quarter of the
minimum annual amount required (based on reasonable projections of taxable
income for the fiscal year and taking into account all other Dividends
theretofore or then being declared during such fiscal year) to maintain
Holdings' 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, (x) the Leverage Ratio at the time of the declaration of
such Dividends, and immediately after giving effect to, such Dividends (in each
case calculated as if such Dividends were paid on the date of declaration) is
less than 6.25:1.00 (or, if less, the ratio then required to be maintained under
Section 8.11 of the Credit Agreement, as modified by this Amendment, so that no
Default or Event of Default exists), (y) such Dividends are declared and/or paid
after the Borrower's fiscal quarter ending closest to December 31, 2001 and on
or before the last day of the Borrower's fiscal quarter ending closest to June
30, 2002, and (z) an Authorized Financial Officer of the Borrower certifies to
the Administrative Agent and each of the Banks in writing that the conditions
described in preceding clauses (v), (w), (x) and (y) of this subclause (iii) are
satisfied and, based on reasonable projections at the time that such Dividends
are declared, the Leverage Ratio at the end of the fiscal quarter in which such
Dividends are declared will be less than 6.25:1.00 (or, if less, the ratio
required to be maintained a the end of such fiscal quarter under Section 8.11 of
the Credit Agreement, as modified by this Amendment, so that no Default or Event
of Default will exist).
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14. Notwithstanding anything to the contrary contained in Section
8.03(v), (vii) or (viii) of the Credit Agreement, on or prior to August 15,
2002, no Dividends may be paid pursuant to any such Section; provided, however,
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(i) Dividends may be paid pursuant to such Section 8.03(v) so long as (w) such
Dividends are otherwise permitted to be paid at such time pursuant to such
Section 8.03(v), (x) either (A) the payment of such Dividends is required to
enable Holdings to maintain (and in an amount not to exceed that amount required
to maintain (taking into account all other Dividends theretofore or then being
paid and/or declared)) Holdings' 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, provided that such Dividends are
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declared and/or paid during the Borrower's fiscal quarter ending closest to
December 31, 2001, or (B) the Leverage Ratio at the time of the declaration of
such Dividends, and immediately after giving effect to, such Dividends (in each
case, calculated as if such Dividends were paid on the date of declaration) is
no greater than 7.25:1.00 (or, if less, the ratio then required to be maintained
under Section 8.11 of the Credit Agreement, as modified by this Amendment, so
that no Default or Event of Default exists), (y) such Dividends are declared
and/or paid on or before the last day of the Borrower's fiscal quarter ending
closest to June 30, 2002, and (z) except for Dividends paid pursuant to clause
(x)(A) above, an Authorized Financial Officer of the Borrower certifies to the
Administrative Agent and each of the Banks in writing that the conditions
described in preceding clauses (w), (x) and (y) are satisfied and, based on
reasonable projections at the time that such Dividends are paid, the Leverage
Ratio at the end of the fiscal quarter in which such Dividends are paid will be
no greater than 7.25:1.00 (or, if less, the ratio required to be maintained at
the end of such fiscal quarter under Section 8.11 of the Credit Agreement, as
modified by this Amendment, so that no Default or Event of Default will exist),
and (ii) up to $1,000,000 of Dividends in the aggregate may be paid pursuant to
such Section 8.03(vii) so long as such Dividends are otherwise permitted to be
paid at such time pursuant to such Section 8.03(vii).
15. Notwithstanding anything to the contrary contained in Section
8.04(vi) of the Credit Agreement, on or prior to August 15, 2002, neither the
Borrower nor any of its Subsidiaries shall incur any additional Indebtedness
pursuant to such Section 8.04(vi) except (i) pursuant to committed credit
facilities (including this Agreement) existing on November 19, 2001, (ii) for
refinancings of Secured Indebtedness or Subsidiary Indebtedness constituting
Existing Indebtedness, (iii) for the Indebtedness assumed, created and/or
incurred as part of any acquisition permitted by Section 11 of this Amendment
and (iv) for other Indebtedness for borrowed money (and guaranties thereof by
Subsidiary Guarantors) so long as 100% of the Net Debt Proceeds therefrom are
applied on the date of receipt thereof as a mandatory repayment provided in
Section 6 of this Amendment (it being understood that nothing in this Section 15
shall prohibit an incurrence by the Borrower of Indebtedness for borrowed money
issued under the Senior Note Indenture (and guaranties thereof by Subsidiary
Guarantors) in an exchange offer in which one series of notes is exchanged for a
new series of notes under such Senior Note Indenture and so long as (x) neither
the aggregate principal amount of such Indebtedness nor the stated interest rate
thereon is increased as a result of such exchange offer and (y) such exchange
offer does not result in any cash proceeds), in each case to the extent that
such additional Indebtedness is otherwise permitted to be incurred under such
Section 8.04(vi) at the time of the incurrence thereof.
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16. Notwithstanding anything to the contrary contained in Section
8.05(x), (xi) or (xiii) of the Credit Agreement, on or prior to August 15, 2002,
neither Holdings, the Borrower nor any of their respective Subsidiaries may make
any additional Investments otherwise permitted pursuant to any such Section;
provided, however, up to $1,000,000 of Investments in the aggregate may be made
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pursuant to such Sections 8.05(x) and (xi) so long as such Investments are
otherwise permitted to be made at such time pursuant to such Section 8.05(x) or
(xi), as applicable.
17. Notwithstanding anything to the contrary contained in Section
8.05(xii) of the Credit Agreement, on or prior to August 15, 2002, neither the
Borrower nor its Subsidiaries may make additional Investments pursuant to such
Section 8.05(xii); provided, however, that the Borrower and its Subsidiaries
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(other than Taxable REIT Subsidiaries) may make additional Investments that are
otherwise permitted pursuant to such Section 8.05(xii) so long as such
additional Investments are permitted under one of the following categories: (i)
up to $45,000,000 of Investments in the aggregate (excluding for purposes of
such calculation any Investment which is paid as a Dividend from and after
November 19, 2001 to the Person who made the Investment) may be made so long as
(A) such Investments are made in Subsidiaries of the Borrower (other than HMC
Grand LLC or a Subsidiary thereof) that are not Subsidiary Guarantors, and (B)
such Investments are made in the form of intercompany loans or equity
contributions; (ii) up to $7,500,000 of Investments in the aggregate (excluding
for purposes of such calculation any Investment which is paid as a Dividend from
and after November 19, 2001 to the Person who made the Investment) may be made
in any one or more Persons of which the Borrower owns, directly or indirectly,
an equity interest in as of November 19, 2001 (other than a Subsidiary of
Holdings or the Borrower, but including HMC Grand LLC or a Subsidiary thereof)
so long as the amount of the Investment in any such Person does not exceed the
debt service of such Person during the period from November 19, 2001 through
August 15, 2002; or (iii) Investments in any Taxable REIT Subsidiary so long as
such Investment is made (A) in the form of intercompany loans or equity
contributions and (B) in order to (x) permit a Taxable REIT Subsidiary to pay
obligations owed to (or on behalf of) the Borrower or its other Subsidiaries or
(y) to provide the minimum capital necessary to maintain the existence of a
Taxable REIT Subsidiary, provided, however, to the extent that a rental payment
funded by this clause (iii) is used by a Subsidiary of Holdings or the Borrower
that is not a Subsidiary Guarantor to pay debt service to a third party lender,
such Investment shall be subject to and counted towards the $45,000,000
limitation on Investments pursuant to clause (i) of this Section 17.
18. Section 8.05 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing at the end of clause (xii) thereof, (ii)
deleting the period appearing at the end of clause (xiii) thereof and inserting
"; and" in lieu thereof and (iii) inserting the following new clause (xiv) at
the end thereof:
"(xiv) Taxable REIT Subsidiaries may make Investments in other Taxable
REIT Subsidiaries so long as such Investments are made (A) in the form of
intercompany loans or equity contributions and (B) in order to (x) permit a
Taxable REIT Subsidiary to pay obligations owed to (or on behalf of) the
Borrower or its other Subsidiaries or (y) to provide the minimum capital
necessary to maintain the existence of a Taxable REIT Subsidiary."
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19. Notwithstanding anything to the contrary contained in Section
8.07(ii) or (v) of the Credit Agreement, for the period from September 8, 2001
through and including August 15, 2002, (i) the aggregate amount of all Capital
Expenditures made pursuant to such Section 8.07(ii) (A) for the period from
September 8, 2001 through and including the last day of the Borrower's fiscal
quarter ending closest to December 31, 2001, shall not exceed $85,000,000, (B)
for the period from the beginning of the Borrower's fiscal quarter beginning
closest to January 1, 2002 through and including the last day of the Borrower's
fiscal quarter ending closest to March 31, 2002, shall not exceed an amount
equal to 5.25% of the Gross Revenues from all such Hotel Properties and other
high quality real estate for such period and (C) for the period from the
beginning of the Borrower's fiscal quarter beginning closest to April 1, 2002
through and including August 15, 2002, shall not exceed an amount equal to 5% of
the Gross Revenues from all such Hotel Properties and other high quality real
estate for such period; provided, however, to the extent that Capital
Expenditures not otherwise permitted under the immediately preceding clauses
(A), (B) or (C) are required during any such period on account of any emergency,
Holdings and its Subsidiaries may make such additional emergency Capital
Expenditures for the period from September 8, 2001 through and including August
15, 2002 in an aggregate amount not to exceed $5,000,000 (although nothing in
this Section 19 shall permit any Capital Expenditures in excess of the amounts
otherwise permitted by such Section 8.07(ii)) and (ii) no Capital Expenditures
may be made pursuant to such Section 8.07(v) except for Capital Expenditures in
respect of any Hotel Property set forth on Annex A attached to this Amendment in
an aggregate amount for such Hotel Property which at no time exceeds the
aggregate Capital Expenditures listed for such Hotel Property on such Annex A
for the period from September 8, 2001 through and including August 15, 2002.
20. Section 8.08 of the Credit Agreement is hereby deleted and the
following new Section 8.08 is inserted in lieu thereof:
"8.08 Minimum Consolidated Interest Coverage Ratio; Minimum
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Unsecured Interest Coverage Ratio. (a) Holdings and the Borrower
---------------------------------
will not permit the Consolidated Interest Coverage Ratio for any Test
Period ending on the last day of a fiscal quarter of the Borrower set
forth below to be less than the ratio set forth opposite such fiscal
quarter below:
Fiscal Quarter Ending Closest To Ratio
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September 30, 2001 2.15:1.00
December 31, 2001 1.75:1.00
March 31, 2002 1.60:1.00
June 30, 2002 1.50:1.00
The last day of each fiscal quarter thereafter 2.15:1.00".
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(b) Holdings and the Borrower will not permit the Unsecured
Interest Coverage Ratio for any Test Period ending on the last day of
a fiscal quarter of the Borrower set forth below to be less than the
ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ending Closest To Ratio
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September 30, 2001 1.80:1.00
December 31, 2001 1.55:1.00
March 31, 2002 1.40:1.00
June 30, 2002 1.30:1.00
The last day of each fiscal quarter thereafter 1.80:1.00".
21. Section 8.09 of the Credit Agreement is hereby deleted and the
following new Section 8.09 is inserted in lieu thereof:
"8.09 Minimum Consolidated Fixed Charge Coverage Ratio. Holdings and
the Borrower will not permit the Consolidated Fixed Charge Coverage
Ratio for any Test Period ending on the last day of a fiscal quarter
of the Borrower set forth below to be less than the ratio set forth
opposite such fiscal quarter below:
Fiscal Quarter ending Closest To Ratio
-------------------------------- -----
September 30, 2001 1.40:1.00
September 30, 2002 and the last day of each
fiscal quarter thereafter 1.40:1.00".
22. Section 8.11 of the Credit Agreement is hereby deleted and the
following new Section 8.11 is inserted in lieu thereof:
"8.11 Maximum Leverage Ratio. Holdings and the Borrower will
----------------------
not permit the Leverage Ratio at any time during a period set forth
below to be greater than the ratio set forth opposite such period
below:
10
Period Ratio
------ -----
Effective Date through and including the day immediately before last day of the
Borrower's fiscal quarter ending closest to December 31, 2001 5.50:1.00
The last day of the Borrower's fiscal quarter ending closest to December 31, 2001
through and including the day immediately before the last day of the Borrower's
fiscal quarter ending closest to March 31, 2002 6.50:1.00
The last day of the Borrower's fiscal quarter ending closest to March 31, 2002
through and including the day immediately before the last day of the Borrower's
fiscal quarter ending closest to June 30, 2002 7.40:1.00
The last day of the Borrower's fiscal quarter ending closest to June 30, 2002
through and including August 15, 2002 7.25:1.00
Thereafter 5.50:1.00".
23. Notwithstanding anything to the contrary contained in Section
8.13(i) of the Credit Agreement or in the last sentence of such Section 8.13(i),
on or prior to August 15, 2002, the Borrower may not prepay, redeem or otherwise
make any principal payments in respect of the Limited Partner Notes or the QUIPs
Debt otherwise permitted thereunder.
24. The definition of "Applicable Margin" appearing in Section 10.01
of the Credit Agreement is hereby amended as follows:
(i) the text "greater than or equal to "5.25:1.00" appearing opposite
"Level VI" in the table therein is deleted and the following new text is
inserted in lieu thereof:
"greater than or equal to 5.25:1.00 but less than or equal to
5:50";
(ii) the following new Level VII and VIII are inserted immediately
after such Level VI:
Level VII greater than 5.50:1.00 but less than or 2.125% 3.125%
equal to 6.50:1.00
Level VIII greater than 6.50:1.00 2.625% 3.625%
11
and (iii) the text "Level VI" appearing each place in the proviso and
further proviso of such definition is deleted and the text "Level VIII" is
inserted in each such place in lieu thereof.
25. The definition of "Consolidated Net Income" appearing in Section
10.01 of the Credit Agreement is hereby amended by inserting the following new
clause at the end thereof:
"; provided, further, that Consolidated Net Income for any period shall be
-------- -------
increased by the amount of any Insurance Proceeds received by the Borrower
or any of its Subsidiaries for business interruption or time element losses
for such period to the extent that such Insurance Proceeds have not already
been included in the computation of such Consolidated Net Income for such
period."
26. The definition of "Net Insurance/Condemnation Proceeds" appearing
in Section 10.01 of the Credit Agreement is hereby deleted and the following new
definition of "Net Insurance/Condemnation Proceeds" is inserted in lieu thereof:
"Net Insurance/Condemnation Proceeds" shall mean all Insurance
Proceeds on account of any Casualty Event to any Hotel Property or other
Real Property owned or leased by Holdings or any of its Subsidiaries or all
Condemnation Proceeds in respect of any Taking of any Hotel Property or any
such other Real Property, net of (i) 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, (ii) the amount of such Insurance
Proceeds or Condemnation Proceeds required to be used to repay any
Indebtedness which is secured by the respective property which is the
subject of such Casualty Event or Taking, (iii) amounts required to be used
under contractual obligations with a manager or ground lessor relating to
the respective property which is the subject of such Casualty Event or
Taking, (iv) Insurance Proceeds for business interruption or time element
losses, (v) the estimated marginal increase in income taxes which will be
payable by Holdings or any of its Subsidiaries as a result of such Casualty
Event or Taking, and (vi) amounts required to be distributed as a result of
the realization of gains from the respective Casualty Event or Taking in
order to maintain or preserve Holdings' status as a real estate investment
trust (including any such distributions by the Borrower to Holdings and to
all other holders of OP Units as otherwise permitted by Section
8.03(iv)(y)).
27. The definition of "Net Sale Proceeds" appearing in Section 10.01
of the Credit Agreement is hereby amended by deleting clauses (iii) and (iv)
thereof and inserting the following new clauses (iii) and (iv) in lieu thereof:
"(iii) the estimated marginal increase in income taxes which will be
payable by Holdings or any of its Subsidiaries as a result of such Asset
Sale, and (iv) amounts required to be distributed as a result of the
realization of gains from the respective
12
Asset Sale in order to maintain or preserve Holdings' status as a real
estate investment trust (including any such distributions by the Borrower
to Holdings and to all other holders of OP Units as otherwise permitted by
Section 8.03(iv)(y))."
28. The definition of "Subsidiary" appearing in Section 10.01 of the
Credit Agreement is hereby amended by (i) inserting "(a)" immediately after the
words "the term Subsidiary shall not include" appearing in clause (y) of the
proviso thereof and (ii) inserting the following new sub-clause (b) at the end
of such clause (y):
"or (b) for purposes of Sections 9.04 and 9.05 only, HMC Grand LLC only so
long as (A) the only material asset of such Person is the Hotel located at
75 14th Street, Atlanta, Georgia 30307, and the related Personal Property,
and (B) there is no recourse, whether contractual, by operation of law or
otherwise, against Holdings or any its other Subsidiaries in respect of the
Indebtedness and other liabilities of such Person (other than in respect of
Customary Non-Recourse Exclusions)".
29. In order to induce the Banks to enter into this Amendment, each
Credit Party hereto represents and warrants that (a) the representations and
warranties contained in Section 6 of the Credit Agreement are and will be as of
the Amendment Effective Date (as defined below), true and correct in all
material respects, and (b) there exists, and will exist as of the Amendment
Effective Date, no Default or Event of Default.
30. In order to induce the Banks to enter into this Amendment, the
Borrower hereby agrees to pay to each Bank which executes and delivers to the
Administrative Agent a counterpart of this Amendment on or before 5:00 P.M. (New
York time) on December 4, 2001, a non-refundable fee equal to .20% of the sum of
(I) such Bank's Revolving Loan Commitment on the Amendment Effective Date and
(II) the aggregate outstanding principal amount of such Bank's Term Loans on the
Amendment Effective Date, with such fee to be earned on the Amendment Effective
Date and payable on the Business Day immediately thereafter.
31. This Amendment shall become effective on the date (the
"Amendment Effective Date") when Holdings, the Borrower and the Supermajority
Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent at the Notice Office.
32. This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any provision of the Credit Agreement or
any other Credit Document except as specified above.
33. Notwithstanding anything to the contrary contained in this
Amendment, from and after such time, if any, as the Borrower shall have
delivered the financial statements and related officer's certificate pursuant to
Section 7.01(a) or (b) of the Credit Agreement, as applicable, and Section
7.01(d) of the Credit Agreement, with respect to any Test Period ending
13
on or after the last day of the Borrower's fiscal quarter ending closest to
December 31, 2001 and demonstrating that the Borrower would have been in
compliance with all of the provisions of the Credit Agreement (including, but
not limited to, Sections 8.08 through 8.12, inclusive), as such provisions were
in effect prior to giving effect to this Amendment, and so long as no Default or
Event of Default then exists, the provisions of this Amendment (and the
additional restrictions created hereby), other than the provisions contained in
Sections 4, 7, 18, 25, 26, 27 and 28 of this Amendment, shall cease to be of any
further force or effect and all of the provisions of the Credit Agreement, as
same were in effect prior to giving effect to this Amendment, shall continue to
be binding on Holdings, the Borrower and their respective Subsidiaries in
accordance with the terms thereof, as amended by Sections 4, 7, 18, 25, 26, 27
and 28 of this Amendment.
34. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.
35. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
36. From and after the Amendment Effective Date, all references in
the Credit Agreement and in the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended and/or
modified hereby.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
14
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
HOST MARRIOTT CORPORATION
By:_____________________________
Name:
Title:
HOST MARRIOTT, L.P.
By: Host Marriott Corporation,
its General Partner
By:_____________________________
Name:
Title:
15
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By:_____________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:_____________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:_____________________________
Name:
Title:
BANK LEUMI USA
By:_____________________________
Name:
Title:
BANK OF HAWAII
By:_____________________________
Name:
Title:
16
FLEET NATIONAL BANK
By:_____________________________
Name:
Title:
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By:_____________________________
Name:
Title:
FIRST COMMERCIAL BANK, NEW YORK AGENCY
By:_____________________________
Name:
Title:
HELLER FINANCIAL, INC.
By:_____________________________
Name:
Title:
BANK OF AMERICA, N.A.
By:_____________________________
Name:
Title:
17
SOCIETE GENERALE, SOUTHWEST AGENCY
By:_____________________________
Name:
Title:
THE BANK OF NEW YORK
By:_____________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:_____________________________
Name:
Title:
BANK ONE, N.A.
By:_____________________________
Name:
Title:
THE INTERNATIONAL COMMERCIAL BANK
OF CHINA, NEW YORK AGENCY
By:_____________________________
Name:
Title:
18
WELLS FARGO BANK, N.A.
By:_____________________________
Name:
Title:
KZH CNC LLC
By:_____________________________
Name:
Title:
WINGED FOOT FUNDING TRUST
By:_____________________________
Name:
Title:
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By:_____________________________
Name:
Title:
CHINATRUST COMMERCIAL BANK
By:_____________________________
Name:
Title:
19
TAIPEI BANK
By:_____________________________
Name:
Title:
ING PILGRIM CLO 1999-1, LTD.
By:_____________________________
Name:
Title:
ING SEQUILS PILGRIM-1, LTD.
By:_____________________________
Name:
Title:
BOS (USA) INC.
By:_____________________________
Name:
Title:
BANK OF SCOTLAND
By:_____________________________
Name:
Title:
PILGRIM PRIME RATE TRUST
By:_____________________________
Name:
Title:
20
Host Marriott Corporation
Summary of Expansions and Development Expenditures
(in thousands)
Q3, 2002
(through ------
Q4, 2001 Q1, 2002 Q2, 2002 8/15/02) Totals
-------- -------- -------- ------- ------
Expansions
Memphis 200 1,500 2,500 3,000 7,200
Orlando 300 400 100 -- 800
------- -------- ------- ------- --------
Subtotal Expansions 500 1,900 2,600 3,000 8,000
------- -------- ------- ------- --------
Development
Naples Golf Lodge 14,000 10,000 1,000 -- 25,000
Naples Golf Course 600 100 500 500 1,700
Tampa Convention Center 20 200 400 -- 620
------- -------- ------- ------- --------
Subtotal Development 14,620 10,300 1,900 500 27,320
------- -------- ------- ------- --------
Total Expansions & 15,120 12,200 4,500 3,500 35,320
Development ======== ======== ======= ======= =========
---------
21