EXHIBIT 1017(iv)
[CONFORMED COPY]
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Amendment No. 3 to
Line of Credit and Guarantee
Reimbursement Agreement
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Dated as of November 29, 1994
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Among
HMH Holdings, Inc.
as Borrower,
Marriott International, Inc.
as Lender,
and
Host Marriott Corporation; HMC Acquisitions, Inc.;
Host Marriott GTN Corporation; Host La Jolla, Inc.;
Marriott Properties, Inc.; and Willmar Distributors, Inc.
as Guarantors
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AMENDMENT NO. 3 TO
LINE OF CREDIT AND
GUARANTEE REIMBURSEMENT
AGREEMENT
This Amendment No. 3 to Line of Credit and Guarantee Reimbursement Agreement
(the "Amendment") dated as of November 29, 1994 between HMH Holdings, Inc., a
Delaware corporation, as borrower, Marriott International, Inc., a Delaware
corporation, as lender, and Host Marriott Corporation (formerly Marriott
Corporation), a Delaware corporation ("Host Marriott"), as guarantor, and
certain other Subsidiaries of Host Marriott signatory to this Amendment, as
additional guarantors.
RECITALS:
Whereas, the parties hereto are party to that certain Line of Credit and
Guarantee Reimbursement Agreement dated as of October 8, 1993, as amended by
that certain Amendment No. 1 dated as of January 19, 1994 and that certain
Amendment No. 2 dated as of October 4, 1994 (as so amended, the "Existing
Agreement"); and
Whereas, HMC Acquisition Properties, Inc., a wholly-owned direct subsidiary
of Acquisitions, wishes to enter into the Initial HMCAP Facility, as defined
below, which is conditioned upon, among other things, the delivery by Host
Marriott of a Permitted Host Marriott HMCAP Guarantee, as defined below; and
Whereas, Marriott International is willing to allow a Permitted Host Marriott
HMCAP Guarantee, although it is prohibited by Section 5.2(c)(1) of the Existing
Agreement, and because, among other things, Marriott International expects to
benefit from the opportunity to operate additional lodging properties for the
Host Marriott Group; and
Whereas, the parties now wish to further amend the Existing Agreement to
permit Host Marriott to enter into the Permitted Host Marriott HMCAP Guarantee;
and
Whereas, subject to the terms and conditions set forth below, the parties
hereto have agreed to amend the Existing Agreement as hereafter provided;
AGREEMENT:
Now, therefore, it is agreed:
A. CAPITALIZED TERMS. All capitalized terms used herein, unless otherwise
defined herein, shall have the same meanings as set forth in the Existing
Agreement.
B. SECTION 1.1 AND EXHIBIT A; NEW DEFINED TERMS. The following defined
terms are added to Exhibit A to the Agreement (as defined below):
"HMCAP" means HMC Acquisition Properties, Inc., a wholly-owned direct
subsidiary of Acquisitions.
"HMCAP FACILITY" means, at any time, the Initial HMCAP Facility as amended
(including any amendment and restatement thereof), modified and
supplemented at such time in accordance with its terms.
"HMCAP RELEASE DATE" means the date on which all of the following have
occurred: (i) the HMCAP Facility and any Replacement HMCAP Facility
have been canceled, (ii) all Permitted Host Marriott HMCAP Guarantees
have been terminated and cancelled, and (iii) all draws under any
Permitted Host Marriott HMCAP Guarantees described in clauses (ii) and
(iii) have been repaid in full.
"INITIAL HMCAP FACILITY" means the Credit Agreement dated as of November
29, 1994 among Acquisitions, HMCAP, Citibank, N.A., Credit Lyonnais
Cayman Island Branch, National Westminster Bank PLC, The Bank of Nova
Scotia and The First National Bank of Chicago, as Co-Agents, Bankers
Trust Company, as Administrative Agent, and the other lenders from
time to time party thereto, together with the "Credit Documents" and
the "Security Documents" as defined in such Credit Agreement,
including, without limitation, the "Host Marriott Guaranty" and the
agreement between Marriott International and the lenders thereunder
pursuant to which Marriott International, upon the occurrence and
continuation of an "Event of Default" thereunder, is entitled but not
obligated to purchase the loans thereunder at par plus all other
amounts then owing thereunder, in each case in the form in which such
documents existed on November 29, 1994, without giving any effect to
any subsequent amendment, supplement or other modification.
"PERMITTED HOST MARRIOTT HMCAP GUARANTEE" means
(1) the Host Marriott Guarantee under the Initial HMCAP Facility;
(2) the Host Marriott Guarantee under the HMCAP Facility so long as
(A) the provisions thereof are no more restrictive in any material
respect than those of the Host Marriott Guarantee under the
Initial HMCAP Facility and (B) the changes from the Host Marriott
Guarantee under the Initial HMCAP Facility do not materially and
adversely affect Marriott International's rights for repayment
under this Agreement, it being understood and agreed that
extensions of restrictive and financial covenants for periods
beyond the initial periods set forth in the HMCAP Facility shall
not be considered to be more restrictive so long as such
extensions are done on a reasonable basis;
(3) Any Host Marriott Guarantee of any Replacement HMCAP Facility
where, and only for so long as, all of the following conditions
are satisfied:
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(A) The principal amount of such Replacement HMCAP Facility does
not exceed the principal amount outstanding under the HMCAP
Facility (or Replacement HMCAP Facility) which is Replaced
thereby (determined at the time of such Replacement and
including for this purpose any available but unutilized
portion(s) of up to $10,000,000 in aggregate working capital
facilities under the HMCAP Facility and/or any Replacement
HMCAP Facilities) plus accrued but unpaid interest and fees
thereunder and reasonable refinancing costs at the time of
such Replacement;
(B) Host Marriott's Maximum Guarantee Exposure under such Host
Marriott Guarantee does not exceed the principal amount under
such Replacement HMCAP Facility as set forth in clause (A)
above plus interest thereon;
(C) The restrictive and financial covenants (regardless of whether
set forth in the form of covenants or events of default) under
such Replacement HMCAP Facility are not more restrictive in
any material respect than those included in the HMCAP
Facility, it being understood and agreed that extensions of
restrictive and financial covenants for periods beyond the
initial periods set forth in the HMCAP Facility shall not be
considered to be more restrictive so long as such extensions
are done on a reasonable basis; and
(D) Such Replacement HMCAP Facility provides Marriott
International with the right to buy the loans or securities
thereunder at par plus all other amounts owing thereunder
(including, without limitation, any yield maintenance
premiums, make-whole premiums, other similar prepayment
premiums and charges and breakage costs) upon an event of
default thereunder.
"REPLACEMENT HMCAP FACILITY" means each and every loan document, indenture,
or other debt-related document which evidences or otherwise forms a
part of any Replacement for the HMCAP Facility (except that to the
extent that the HMCAP Facility remains in effect after any such
Replacement, said HMCAP Facility shall not also constitute a
"Replacement HMCAP Facility," it being the intention of the parties
that no credit facility shall be deemed to be both the "HMCAP
Facility" and a "Replacement HMCAP Facility" for purposes of this
Agreement).
C. SECTION 1.1 AND EXHIBIT A; SUBJECT GUARANTEES. Paragraph (3) of the
definition of Subject Guarantees in Exhibit A is amended and restated as
follows:
(3) Guarantees made by any Parent Group Member entered into after the
Distribution Date to the extent such Guarantees are permitted under
the terms of Section 5.2(c)(1)(C), provided, however, that in no
event shall the Permitted Host Marriott HMCAP Guarantee constitute a
Subject Guarantee.
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D. SECTION 2.10(A)(6); USE OF PROCEEDS. Section 2.10(a)(6) of the Agreement
is amended and restated as follows:
(6) (A) payments under Subject Guarantees of the Parent Group when
due under the terms of such Subject Guarantees; and (B) payments under any
Permitted Host Marriott HMCAP Guarantee in an aggregate amount not to
exceed (for all such Permitted Host Marriott HMCAP Guarantees) the lesser
of (i) $46 million or (ii) 20% of the then remaining principal balance
under the HMCAP Facility (or, as the case may be, any Replacement HMCAP
Facility which is beneficiary of the Permitted Host Marriott HMCAP
Guarantee) on the date of any determination under this paragraph (without
giving effect to any repayments under the HMCAP Facility or such
Replacement HMCAP Facility, as the case may be, after the occurrence of an
event of default thereunder from sources other than the proceeds of
Regular Advances), it being the intention of the parties that the direct
and indirect support that this Agreement may provide for the Permitted
Host Marriott HMCAP Guarantee shall in no event exceed such amount.
E. SECTION 5.2(C)(1)(C); CERTAIN PARENT GROUP GUARANTEES. Section
5.2(c)(1)(C)(iv) of the Existing Agreement is deleted and replaced with the
following:
(iv) Permitted Host Marriott HMCAP Guarantees with an
aggregate Maximum Guarantee Exposure of not more than $230,000,000,
plus accrued and unpaid interest and fees under the HMCAP Facility
or Replacement HMCAP Facility, as the case may be, and reasonable
refinancing costs.
(v) Notwithstanding the foregoing, the aggregate Maximum
Guarantee Exposure of Parent Group Members under all Guarantees
permitted by clauses (i), (ii) and (iii) of this Section
5.2(c)(1)(C) may not exceed $104,000,000 at any time.
F. SECTION 5.4(E); COVENANTS PERTAINING TO ACQUISITIONS GROUP: OUTSTANDING
ADVANCES IN EXCESS OF $450 MILLION. The following is added as Section 5.4(e)(3)
of the Existing Agreement:
(3) Notwithstanding the foregoing, the provisions of this Section
5.4(e) shall not be applicable while any HMCAP Facility or Replacement
HMCAP Facility which is both permitted under Section 5.4(g)(2) and
supported by a Permitted Host Marriott HMCAP Guarantee remains in effect.
G. SECTION 5.4(F); COVENANTS PERTAINING TO ACQUISITIONS GROUP:
TRANSACTIONS WITH AFFILIATES. The following is added to the end of
Section 5.4(f) of the Existing Agreement:
Marriott International acknowledges that this Section 5.4(f) is only
intended to apply to transactions between Acquisitions Group Members and
other Host Marriott Group Members or Affiliates who are not members of the
Acquisitions Group, and accordingly
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is not intended to apply to transactions solely among Acquisitions Group
Members.
H. SECTIONS 5.4(G); HMCAP FACILITY PROVISIONS. The following is added as
Section 5.4(g) of the Agreement:
(g) HMCAP Facilities Provisions.
(1) HMCAP Facilities Covenants. Holdings, Host Marriott and
Acquisitions shall, at all times prior to the HMCAP Release Date, comply,
and cause HMCAP and each other Member of the Host Marriott Group which is
a party to the HMCAP Facility or any Replacement HMCAP Facility to comply,
with all of the affirmative and negative covenants of the HMCAP Facility
and any Replacement HMCAP Facility, as the case may be, as such covenants
may be duly waived, modified or amended from time to time by the lenders
or holders under the HMCAP Facility or any Replacement HMCAP Facility for
so long as such waiver, modification or amendment is effective. In
furtherance and not in limitation of the foregoing, the following
covenants and events of default shall be deemed to be incorporated herein
by reference to the same extent as if fully set forth herein, in each case
with such modifications as would be necessary to make Marriott
International, rather than the lenders under the applicable credit
facility, the beneficiary thereof:
(A) for so long as the HMCAP Facility or any Replacement HMCAP
Facility is in effect, each of the covenants and events of default
under such facility(ies), as in effect from time to time, which are
most closely analogous to those set forth in Sections 7, 8 and 9.12 of
the Credit Agreement under the Initial HMCAP Facility and Sections 12
and 13 of Host Marriott Guaranty under the Initial HMCAP Facility
(including without limitation any covenants which may be added after
the date of the Initial HMCAP Facility, whether such covenants take
the form of covenants or events of default), in each case as such
covenants or events of default may be duly waived, modified or amended
from time to time by the lenders or holders under such facility(ies)
for so long as such waiver, modification or amendment is effective; or
(B) If neither the HMCAP Facility nor any Replacement HMCAP
Facility remains in effect but the HMCAP Release Date has not
occurred, each of the covenants and events of default set forth in
Sections 7, 8 and 9.12 of the Credit Agreement under the Initial HMCAP
Facility and Sections 12 and 13 of the Host Marriott Guaranty under
the Initial HMCAP Facility.
Notwithstanding the foregoing, no provision of, or incorporated by
reference in, this Section 5.4(g)(1) which pertains to Host Marriott or
any Acquisitions Group Member or the of Host Marriott property of any
Acquisitions Group Member shall give rise to an Event of Default hereunder
until such time as all payments under Permitted Host Marriott HMCAP
Guarantees which are made from the proceeds of Regular Advances exceed in
the aggregate the amount specified in Section 2.10(a)(6)(B).
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(2) Acquisitions Group Indebtedness. Holdings, Host Marriott and
Acquisitions shall not at any time prior to the HMCAP Release Date permit
any Acquisitions Group Member to create, incur or assume, or otherwise
become liable with respect to (collectively, "incur") any Indebtedness
other than
(A) Indebtedness incurred pursuant to the HMCAP Facilities and
any Replacement HMCAP Facility, provided that the aggregate principal
amount outstanding under all Replacement HMCAP Facilities may not at
any time exceed (i) the aggregate principal amount of Indebtedness
under the HMCAP Facility that was Replaced thereby (determined at the
time of such Replacement and including for this purpose any available
but unutilized portion(s) of up to $10,000,000 in aggregate working
capital facilities under the HMCAP Facility and/or any Replacement
HMCAP Facilities) as reduced by any permanent principal repayment made
from any source other than the proceeds of a Replacement HMCAP
Facility plus (ii) accrued and unpaid interest and fees thereunder and
other reasonable refinancing costs, and provided further that each
such HMCAP Facility or Replacement HMCAP Facility shall require that
interest thereunder accrue and be due and payable in full no less
often than annually;
(B) Unsecured subordinated Indebtedness of Acquisitions or
HMCAP in an aggregate principal amount not to exceed $150,000,000 and
on terms and conditions approved in advance in writing by Marriott
International. Provided further that the holders of such Indebtedness
shall have entered into a subordination agreement acceptable to
Marriott International whereby, among other things, such Indebtedness
is fully subordinated to (1) all payments, due or previously deferred,
to Marriott International or any of its subsidiaries relating to its
role as manager or operator for an Acquisitions Group Member
(including without limitation payment of management fees and any other
amounts due) and (2) payments by Acquisitions or HMCAP, as applicable
to Host Marriott (whether in the form of a dividend, a repayment of
advances, or otherwise) in an aggregate amount equal to all payments
made by Host Marriott under any Permitted Host Marriott HMCAP
Guarantee, together with interest thereon.
(C) Intercompany Indebtedness of any Acquisitions Group Member
owing to any other Acquisitions Group Member or Host Marriott incurred
in the ordinary course of business;
(D) Indebtedness owing to any officer, director or employee of
any Acquisitions Group Member incurred in the ordinary course of
business as presently conducted pursuant to any Host Marriott Group
employee benefit plan;
(E) Interest Swap Obligations related to the HMCAP Facility or
any Replacement HMCAP Facility;
(F) Capitalized leases of equipment and machinery (including
telephone equipment, computer hardware and software, other office
equipment
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and vehicles) used in connection with the operation of a hotel
property incurred in the ordinary course of business the proceeds of
which are not used, directly or indirectly, to purchase land or
hotels; and
(G) Other Indebtedness incurred by Acquisitions Group Members
in the ordinary course of business for working capital and capital
expenditures to maintain existing hotels in an aggregate outstanding
principal amount not to exceed $10,000,000 the proceeds of which are
not used, directly or indirectly, to purchase land or hotels;
provided, that the aggregate principal amount of all Indebtedness under
clauses (A) and (B) above may not at any time exceed $380,000,000 plus
accrued and unpaid interest and fees thereunder, and reasonable
refinancing costs.
(3) Waiver by Marriott International of Certain Rights.
Notwithstanding anything to the contrary in this Agreement, for so long as
the HMCAP Facility or any Replacement HMCAP Facility which benefits from a
Permitted Host Marriott HMCAP Guarantee remains outstanding, Marriott
International agrees not to exercise its rights to receive Acquisitions
Group Net Cash Flow under Sections 5.4(e), 6.2(c) or 6.4(a) of this
Agreement, and none of Holdings, Host Marriott or Acquisitions shall be
required to comply with the portions of such provisions which relate to
Acquisitions Group Net Cash Flow nor shall an Event of Default occur as a
result thereof. Notwithstanding the foregoing, this Section 5.4(g)(3)
shall not impair either any of Marriott International's other rights or
any Host Marriott Group Member's other obligations under such provisions,
including, without limitation, rights and obligations with respect to
Parent Group Net Cash Flow.
(4) Indemnification for Subordinated Management Fees. Host
Marriott and Holdings hereby jointly, severally, and unconditionally agree
to indemnify Marriott International and its Subsidiaries for any fee which
would otherwise be payable under a Marriott International Operating
Agreement by an Acquisitions Group Member which at such time owns or
leases the applicable lodging property, but which fee is not then paid as
a result of any Management Subordination Agreement under the HMCAP
Facility or any similar agreement under any Replacement HMCAP Facility.
Accordingly, Holdings hereby further agrees and makes the irrevocable
direction to Marriott International that, if Host Marriott or Holdings
does not pay Marriott International or its applicable Subsidiary an amount
equal to such fee within five (5) Business Days after receipt of an
invoice therefor, such amount shall constitute a deemed Advance under
Section 2.1(b) and shall further constitute a Guarantee Advance for all
purposes hereunder as of the date such amount would have otherwise been
payable under the applicable Marriott International Operating Agreement.
To the extent that an Acquisitions Group Member subsequently pays any such
fee to Marriott International or its applicable Subsidiary, the amount of
such payment shall be treated as a prepayment under Section 2.5(b) as of
the date of such payment. Notwithstanding the foregoing, in the event
that the Available Commitment is insufficient to make any Regular Advance
requested for the purpose specified in
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Section 2.10(a)(6)(B), the Available Commitment shall, solely for the
purpose of determining the availability of such Regular Advance under
Section 2.1(a), be deemed to be increased by the lesser of (i) that
portion of such Advance which will be used for the purpose specified in
Section 2.10(a)(6)(B) and (ii) the excess, if any, of (x) all deemed
Advances under this Section 5.4(g)(4) over (y) the sum of all deemed
prepayments under this Section 5.4(g)(4) and all amounts by which the
Available Commitment was previously deemed increased pursuant to this
sentence.
I. REPRESENTATIONS AND WARRANTIES.
1. The Agreement and the Amendment. Each Host Marriott Party represents
and warrants that (a) each of the representations and warranties contained in
Section 4.1 through 4.4, inclusive, of the Existing Agreement is true and
correct with respect to such Host Marriott Party on and as of the date hereof,
as though made on and as of such date and (b) no Default or Event of Default has
occurred and is continuing on and as of the date hereof. Without limiting the
generality of the foregoing, each representation made in clause (a) with respect
to this Agreement shall be deemed to apply independently to both (i) this
Amendment and (ii) the Agreement.
2. Absence of Defaults. Each of Host Marriott, Holdings and Acquisitions
represents that, as of the date hereof, no event has occurred and is continuing,
or will result from the execution and delivery of this Amendment or the Initial
HMCAP Facility, which constitutes (A) a Default, (B) an Event of Default, (C) an
"Event of Default" under the Initial HMCAP Facility, or (D) an event that would
constitute an "event of Default" under the Initial HMCAP Facility but for the
requirement that notice be given or time elapse or both.
J. EXHIBIT E; REPORTING REQUIREMENTS. The following additional reporting
requirement is added to Exhibit E to the Existing Agreement:
XII. HMCAP INFORMATION. Host Marriott shall provide Marriott
International with (1) a copy of each document or instrument which
forms a part of the HMCAP Facility, forms a part of any Replacement
HMCAP Facility, or is entered into in connection with any Indebtedness
described in Section 5.4(g)(2)(B), within three Business days of the
date upon which such document or instrument first becomes effective;
(2) a copy of each notice or report delivered by a Host Marriott Group
Member to the lenders under, holders of, or trustee for any of the
foregoing concurrently with such delivery; and (3) a copy of each
notice from any of such lenders,
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holders or trustees to any Host Marriott Group Member within three
Business Days of receipt thereof.
K. LIMITATION ON MARRIOTT INTERNATIONAL'S RIGHT OF SET-OFF. In accordance
with Section 9.5(b) of the Agreement, Marriott International agrees that until
all of the lenders under the HMCAP Facility and any Replacement HMCAP Facility
which benefits from a Permitted Host Marriott HMCAP Guaranty have been paid in
full and none of the HMCAP Facility, any Replacement HMCAP Facility and any
subordinated Indebtedness permitted under Section 5.4(g)(2)(B) remain in effect,
Marriott International's right of set-off under Section 9.5 of the Agreement
shall not apply to (and Marriott International will not exercise any right of
set-off in connection with amounts owing under this Agreement, whether under
this Agreement or applicable law, against) the Acquisitions Group or its assets.
L. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective when
(such date, the "Amendment Effective Date"), and only when:
1. Marriott International shall have received (i) an original of this
Amendment fully executed by all Persons who are Host Marriott Parties as of
the Amendment Effective Date, (ii) certified copies of any resolutions of the
Board of Directors of each such Host Marriott Party which authorize such Host
Marriott Party to enter into this Amendment and which have not been
previously provided to Marriott International, and (iii) an opinion of
counsel dated as of the Amendment Effective Date substantially the form
attached hereto as Exhibit D-1; and
2. Holdings shall have received (i) an original of this Amendment fully
executed by Marriott International, and (ii) an opinion of counsel dated as
of the Amendment Date substantially the form attached hereto as Exhibit D-2.
M. REFERENCE TO AND EFFECT ON THE AGREEMENT. On and after the occurrence of
the Amendment Effective Date each reference in the Existing Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Agreement shall mean and be a reference to the Agreement as amended hereby.
Except as specifically amended hereby, the Existing Agreement is and shall
continue to be in full force and effect and is hereby in all respects ratified
and confirmed. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Marriott International nor constitute a waiver of any
provision of the Agreement.
N. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same agreement.
O. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND.
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In witness whereof, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first written above.
LENDER: BORROWER:
Marriott International, Inc. HMH Holdings, Inc.
By: /s/ Raymond G. Murphy By: /s/ Scott A. LaPorta
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Senior Vice President Vice President
and Treasurer
GUARANTORS:
Host Marriott Corporation
By: /s/ Matthew J. Hart
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Vice President
HMC Acquisitions, Inc.
By: /s/ Scott A. LaPorta
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Vice President
SUBSIDIARY GUARANTORS:
Host Marriott GTN Corporation
Host La Jolla, Inc.
Marriott Properties, Inc.
Willmar Distributors, Inc.
By: /s/ C. G. Townsend
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Vice President of each of the
Subsidiary Guarantors listed above
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