Exhibit 10.2
------------
FIRST AMENDMENT TO CREDIT AGREEMENT
This first amendment to credit agreement ("Amendment") is made and
entered into as of July 23, 1998, among CAVANAUGHS HOSPITALITY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Borrower"), the
several financial institutions that are party to this Agreement
(collectively, the "Lenders"; individually, a "Lender"), and
U. S. BANK NATIONAL ASSOCIATION ("U. S. Bank"), as administrative
agent for the Lenders (the "Agent").
RECITALS:
A. On May 5, 1998, the Borrower and U. S. Bank, as the Agent and a
Lender, entered into that certain credit agreement (together with
all amendments, supplements, exhibits, and modifications thereto,
the "Credit Agreement") whereby the Lenders agreed to extend
certain credit facilities to the Borrower. The other Lenders
that are parties to this Amendment have become Lenders under the
Credit Agreement since May 5, 1998.
B. The Borrower has requested the Lenders to (1) modify certain
provisions of the Credit Agreement, (2) consent to the
acquisition of certain hotel properties by the Borrower, and
(3) consent to the inclusion as Eligible Real Property of hotel
properties owned by the Borrower and located in Salt Lake City,
Utah and Post Falls, Idaho (collectively, the "Additional
Property").
C. The purpose of this Amendment is to set forth the terms and
conditions under which the Lenders will agree to the Borrower's
requests.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, the parties agree as follows:
ARTICLE I. AMENDMENT
The Credit Agreement, as well as all of the other Loan Documents, are
hereby amended as set forth herein. Except as specifically provided
for herein, all of the terms and conditions of the Credit Agreement
and each of the other Loan Documents shall remain in full force and
effect throughout the terms of the Loans, as well as any extensions or
renewals thereof.
ARTICLE II. DEFINITIONS
As used herein, capitalized terms shall have the meanings given to
them in the Credit Agreement, except as otherwise defined herein, or
as the context otherwise requires.
ARTICLE III. ACQUISITION AND ADDITIONAL PROPERTY
3.1 Consent to Acquisition
Notwithstanding the provisions of Sections 8.4(d) and 8.7 of the
Credit Agreement, the Lenders hereby consent to (a) the acquisition by
the Borrower from Sunstone Hotels, L.L.C. of four hotel properties,
one each located in Boise, Idaho, Twin Falls, Idaho, Pocatello, Idaho
and Helena, Montana for a total purchase price of $30,516,050, and (b)
the use of Loan proceeds to finance such acquisition.
3.2 Consent to Inclusion
Notwithstanding the provisions of Section 7.13 of the Credit
Agreement, and subject to the satisfaction of the conditions set forth
in Section 5.3 of the Credit Agreement as to the Additional Property,
the Lenders hereby consent to the inclusion of the Additional Property
as "Eligible Real Property."
3.3 Advance Against Additional Property
(a) The Approved Appraised Value has not been established for the
Additional Property. However, subject to the satisfaction of the
conditions set forth in Section 5.3 of the Credit Agreement as to
the Additional Property, the Lenders hereby agree to include
$20,300,000 in the Borrowing Base until the earlier of
(i) October 31, 1998, or (ii) the date that the Approved
Appraised Value of the Additional Property is established.
(b) As a condition to establishing the Approved Appraised Value of
the Additional Property, the Agent shall have ordered, reviewed
and approved in writing an M.A.I. appraisal of each of the
Additional Properties that is in compliance with the Financial
Institutions Reform, Recovery and Enforcement Act. Once the
Approved Appraised Value of the Additional Property has been
established and provided that the conditions set forth in
Section 5.3 of the Credit Agreement have been complied with as to
the Additional Property, such Approved Appraised Value shall be
added to the Collateral Pool Value.
ARTICLE IV. MODIFICATION OF COVENANTS
4.1 Use of Proceeds
Section 8.7(g) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(g) except as otherwise approved in writing by Lenders holding
51% or more of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding,
Lenders then having Pro Rata Shares equal to or greater than 51%
of the Commitments, to finance or refinance Acquisitions in an
aggregate amount in excess of (i) $80,000,000 in any 12-month
period through June 2, 1999, and (ii) $50,000,000 in any 12-month
period thereafter.
4.2 Capitalization Ratio
(a) Section 8.14(d) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
As of the end of each fiscal quarter, the Capitalization Ratio
shall not exceed 0.60:1.00.
(b) The reference to a Capitalization Ratio of 0.50:1.00 in Section
8.10(c)(iv) of the Credit Agreement is hereby amended to
0.60:1.00.
ARTICLE V. FORM OF DEED OF TRUST
The form of Deed of Trust attached to the Credit Agreement as
Exhibit B shall be modified to the form attached to this Amendment as
Exhibit A in order to reflect changes to the Deed of Trust Act of the
State of Washington enacted since the date of the Credit Agreement.
ARTICLE VI. CONDITIONS PRECEDENT
The modifications set forth in this Amendment shall not be effective
unless and until the following conditions have been fulfilled to
Lenders' satisfaction:
(a) The Agent shall have received this Amendment, duly executed and
delivered by the Borrower and each of the Lenders;
(b) The Agent shall have received an opinion of counsel to the
Borrower addressed to the Agent and the Lenders, substantially in
the form of Exhibit B;
(c) The Borrower shall have paid to the Agent a nonrefundable fee in
the amount of $80,000;
(d) The Agent shall have received, at the Borrower's sole cost and
expense, a 110.5 endorsement in a form acceptable to the Agent to
each of the Title Insurance Policies insuring Deeds of Trust on
each parcel of Eligible Real Property (excluding the Additional
Property) as of the date of this Amendment;
(e) There shall not exist any Default or Event of Default under the
Credit Agreement or any other Loan Document;
(f) All representations and warranties of the Borrower contained in
the Credit Agreement or otherwise made in writing in connection
therewith or herewith shall be true and correct and in all
material respects have the same effect as though such
representations and warranties had been made on and as of the
date of this Amendment; and
(g) The Agent shall have received a certified resolution of the board
of directors of CHC in the form attached hereto as Exhibit C.
ARTICLE VII. GENERAL PROVISIONS
7.1 Representations and Warranties
The Borrower hereby represents and warrants to the Lenders that as of
the date of this Amendment, there exists no Default or Event of
Default. All representations and warranties of the Borrower contained
in the Credit Agreement and the other Loan Documents, or otherwise
made in writing in connection therewith, are true and correct as of
the date of this Amendment. The Borrower acknowledges and agrees that
all of the Borrower's Indebtedness to the Lenders under the Credit
Agreement is payable without offset, defense or counterclaim.
7.2 Security
All Loan Documents evidencing the Agent's security interest in the
Collateral on behalf of the Lenders shall remain in full force and
effect, and shall continue to secure, without change in priority, the
payment and performance of the Loans and all other secured obligations
of the Borrower to the Agent on behalf of the Lenders.
7.3 Survival of Loan Documents
The terms and conditions of the Credit Agreement and each of the other
Loan Documents shall survive until all of the Borrower's obligations
under the Credit Agreement have been satisfied in full. By execution
of this Amendment, CHC consents to this Amendment and reaffirms its
obligations under the Guaranty, the Security Agreement and each of the
other Loan Documents executed by CHC.
7.5 Counterparts
This Amendment may be executed in one or more counterparts, each of
which shall constitute an original agreement, but all of which
together shall constitute one and the same agreement.
7.6 Statutory Notice
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the Borrower, the Agent, and the Lenders have
caused this Agreement to be duly executed by the respective, duly
authorized signatories as of the date first above written.
CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP
By: Cavanaughs Hospitality Corporation,
General Partner
By ______________________________________
Title ______________________________________
CAVANAUGHS HOSPITALITY CORPORATION
By ______________________________________
Title ______________________________________
U. S. BANK NATIONAL ASSOCIATION, as Agent
By ______________________________________
Title ______________________________________
U. S. BANK NATIONAL ASSOCIATION, as a Lender
By ______________________________________
Title ______________________________________
BANK OF SCOTLAND
By ______________________________________
Title ______________________________________
BANK LEUMI USA
By ______________________________________
Title ______________________________________
IMPERIAL BANK
By ______________________________________
Title ______________________________________
FIRST SECURITY BANK, N.A.
By ______________________________________
Title ______________________________________
EXHIBIT A
to First Amendment to Credit Agreement
FORM OF DEED OF TRUST
EXHIBIT B
to First Amendment to Credit Agreement
FORM OF OPINION LETTER
EXHIBIT C
to First Amendment to Credit Agreement
FORM OF CAVANAUGHS HOSPITALITY CORPORATION
ACTION OF DIRECTORS
SECOND AMENDMENT TO CREDIT AGREEMENT
This second amendment to credit agreement ("Amendment") is made and
entered into as of February 5, 1999, among CAVANAUGHS HOSPITALITY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Borrower"),
the several financial institutions that are party to this Agreement
(collectively, the "Lenders"; individually, a "Lender"), and
U. S. BANK NATIONAL ASSOCIATION ("U. S. Bank"), as administrative
agent for the Lenders (the "Agent").
RECITALS:
A. On May 5, 1998, the Borrower and U. S. Bank, as the Agent and a
Lender, entered into that certain credit agreement (together with
all amendments, supplements, exhibits, and modifications thereto,
the "Credit Agreement") whereby the Lenders agreed to extend
certain credit facilities to the Borrower. The other Lenders
that are parties to this Amendment have become Lenders under the
Credit Agreement since May 5, 1998. The Credit Agreement has
been amended by that certain first amendment to credit agreement
dated as of July 23, 1998.
B. The Borrower has requested the Lenders to (1) increase the
Commitment from $80,000,000 to $100,000,000, and (2) eliminate
the limitations on the use of the proceeds of the Loans for the
acquisition of hotel properties.
C. The purpose of this Amendment is to set forth the terms and
conditions under which the Lenders will agree to the Borrower's
requests.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, the parties agree as follows:
ARTICLE I. AMENDMENT
The Credit Agreement, as well as all of the other Loan Documents, are
hereby amended as set forth herein. Except as specifically provided
for herein, all of the terms and conditions of the Credit Agreement
and each of the other Loan Documents shall remain in full force and
effect throughout the terms of the Loans, as well as any extensions or
renewals thereof.
ARTICLE II. DEFINITIONS
2.1 Defined Terms
As used herein, capitalized terms shall have the meanings given to
them in the Credit Agreement, except as otherwise defined herein or as
the context otherwise requires.
2.2 Amended Defined Terms
Section 1.1 of the Credit Agreement is hereby amended to modify the
following defined terms:
"Commitment" means $100,000,000 less the aggregate amount of mandatory
prepayments made in accordance with Section 2.6.
"Interest Margin" means the number of basis points per annum
determined in accordance with the following matrix and based upon the
quarterly financial statements of the Borrower provided to the Agent
in accordance with the terms of this Agreement for the preceding
fiscal quarter. Adjustments shall be made 45 days after the end of
each fiscal quarter (when quarterly financial statements are required
to be delivered to the Agent); provided, however, that if the Borrower
has not delivered its financial statements for the previous fiscal
quarter within 45 days of the end of such fiscal quarter, then the
Interest Margin in effect for the previous fiscal quarter shall
continue to apply unless the Agent exercises its right to impose
interest at the default rate as provided for in this Agreement:
Funded Debt Ratio Level I Level II Level III Level IV
----------------- ------- ----------- ----------- --------
Funded Debt Ratio <3.00 >3.00 <35.0 >3.50 <4.00 >4.00
- - -
Reference Margin 0 0 25 37.5
LIBOR Margin 180 200 225 250
> means greater than or equal to
-
< means less than
The margins set forth above shall apply unless there exists an Event
of Default, in which case the Agent may elect to impose the default
rate as provided for in this Agreement.
ARTICLE III. MODIFICATION OF THE LOANS
3.1 Modification of Pro Rata Shares
Schedule 2.1 to the Credit Agreement is hereby replaced with
Schedule 2.1 attached to this Amendment.
3.2 Renewal Promissory Note
Concurrently with the execution of this Amendment, the Borrower shall
execute and deliver to the Agent, for the benefit of the Lenders, a
renewal promissory note in the form attached hereto as EXHIBIT A
("Renewal Note"). The Renewal Note shall be in substitution for, but
not in payment of, the Note, which shall be marked "renewed" and shall
be retained by the Agent until the Loans have been repaid in full and
the Commitment under the Credit Agreement is terminated.
ARTICLE IV. COVENANTS
4.1 Deletion of Covenant Limiting Use of Proceeds
Section 8.7(g) of the Credit Agreement is hereby deleted in its
entirety.
4.2 Repayment of Bridge Loan
Concurrently with the first Loan advanced after the date of this
Amendment, the Borrower shall pay in full the $6,180,000 loan extended
by U. S. Bank to the Borrower on November 30, 1998.
ARTICLE V. CONDITIONS PRECEDENT
The modifications set forth in this Amendment shall not be effective
unless and until the following conditions have been fulfilled:
(a) The Agent shall have received this Amendment and the Renewal
Note, duly executed and delivered by the respective parties
thereto;
(b) The Agent shall have received, duly executed and delivered by the
Borrower, amendments to the Deeds of Trust on each parcel of
Eligible Real Property as of the date of this Amendment in the
form attached hereto as EXHIBITS B-1 through B-6;
(c) The Agent shall have received, at the Borrower's sole cost and
expense, a 110.5 endorsement and such other endorsements as
reasonably deemed necessary by the Agent in forms acceptable to
the Agent to each of the Title Insurance Policies insuring Deeds
of Trust on each parcel of Eligible Real Property as of the date
of this Amendment;
(d) The conditions set forth in that certain commitment letter dated
as of December 18, 1998, between the Agent and the Borrower shall
have been satisfied;
(e) The Agent shall have received an opinion of counsel to the
Borrower, addressed to the Agent and the Lenders, substantially
in the form of EXHIBIT C;
(f) There shall not exist any Default or Event of Default under the
Credit Agreement or any other Loan Document;
(g) All representations and warranties of the Borrower contained in
the Credit Agreement or otherwise made in writing in connection
therewith or herewith shall be true and correct and in all
material respects have the same effect as though such
representations and warranties had been made on and as of the
date of this Amendment; and
(h) The Borrower shall have paid an amendment fee to the Agent for
the benefit of each of the Lenders that evidences its approval of
this Amendment by executing a counterpart original of this
Amendment and returning the same to the Agent on or before
February 28, 1999. The amount of the amendment fee shall be
equal to 20 basis points of each such Lender's Pro Rata Share of
$80,000,000 prior to this Amendment becoming effective, as
reflected on Schedule 2.1 attached to this Amendment.
ARTICLE VI. GENERAL PROVISIONS
6.1 Representations and Warranties
The Borrower hereby represents and warrants to the Lenders that as of
the date of this Amendment, there exists no Default or Event of
Default. All representations and warranties of the Borrower contained
in the Credit Agreement and the other Loan Documents, or otherwise
made in writing in connection therewith, are true and correct as of
the date of this Amendment. The Borrower acknowledges and agrees that
all of the Borrower's Indebtedness to the Lenders under the Credit
Agreement is payable without offset, defense or counterclaim.
6.2 Security
All Loan Documents evidencing the Agent's security interest in the
Collateral on behalf of the Lenders shall remain in full force and
effect, and shall continue to secure, without change in priority, the
payment and performance of the Loans and all other secured obligations
of the Borrower to the Agent on behalf of the Lenders.
6.3 Survival of Loan Documents
The terms and conditions of the Credit Agreement and each of the other
Loan Documents shall survive until all of the Borrower's obligations
under the Credit Agreement have been satisfied in full.
6.4 Consent of CHC
By execution of this Amendment, CHC consents to this Amendment,
including, without limitation, the increase in the Commitment provided
for herein, and reaffirms its obligations under the Guaranty, the
Security Agreement and each of the other Loan Documents executed by
CHC.
6.5 Year 2000
The Borrower has reviewed and assessed its business operations and
computer systems and applications to address the "year 2000 problem"
(that is, that computer applications and equipment used by the
Borrower, directly or indirectly through third parties, may be unable
to properly perform date-sensitive functions before, during and after
January 1, 2000). The Borrower reasonably believes that the year 2000
problem will not result in a material adverse change in the Borrower's
business condition (financial or otherwise), operations, properties or
prospects or ability to repay the Lenders. The Borrower agrees that
this representation will be true and correct on and shall be deemed
made by the Borrower on each date that the Borrower requests any
advance under a Loan or delivers any information to the Agent. The
Borrower will promptly deliver to the Agent such information relating
to this representation as the Agent requests from time to time.
6.6 Counterparts
This Amendment may be executed in one or more counterparts, each of
which shall constitute an original agreement, but all of which
together shall constitute one and the same agreement.
6.7 Statutory Notice
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the Borrower, the Agent, and the Lenders have
caused this Amendment to be duly executed by the respective, duly
authorized signatories as of the date first above written.
CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP
By: Cavanaughs Hospitality Corporation,
General Partner
By ______________________________________
Title ______________________________________
CAVANAUGHS HOSPITALITY CORPORATION
By ______________________________________
Title ______________________________________
U. S. BANK NATIONAL ASSOCIATION, as Agent
By ______________________________________
Title ______________________________________
U. S. BANK NATIONAL ASSOCIATION, as a Lender
By ______________________________________
Title ______________________________________
BANK OF SCOTLAND
By ______________________________________
Title ______________________________________
BANK LEUMI USA
By ______________________________________
Title ______________________________________
IMPERIAL BANK
By ______________________________________
Title ______________________________________
FIRST SECURITY BANK, N.A.
By ______________________________________
Title ______________________________________