Exhibit 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
June [__], 2003, among STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland
corporation (the "Corporation"), each additional ALTERNATE CURRENCY REVOLVING
LOAN BORROWER from time to time party to the Credit Agreement (as referred to
below) (together with the Corporation, collectively, the "Borrowers"), the
LENDERS from time to time party to the Credit Agreement (the "Lenders"),
DEUTSCHE BANK AG, NEW YORK BRANCH, as Administrative Agent (in such capacity,
the "Administrative Agent"), X.X. XXXXXX XXXXX BANK, as Syndication Agent (in
such capacity, the "Syndication Agent"), BANK OF AMERICA, N.A., FLEET NATIONAL
BANK and SOCIETE GENERALE, as Co-Documentation Agents (in such capacity,
collectively, the "Co-Documentation Agents" and each, a "Co-Documentation
Agent"), and DEUTSCHE BANK SECURITIES INC. and XX XXXXXX SECURITIES INC. as
Co-Lead Arrangers and Joint Book Running Managers (in such capacity,
collectively, the "Managers"). Unless otherwise defined herein, all capitalized
terms used herein shall have the respective meanings provided such terms in the
Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Corporation, the Lenders, the Administrative Agent, the
Syndication Agent, the Co-Documentation Agents and the Managers are parties to
that certain Credit Agreement, dated as of October 9, 2002 (as amended, modified
and/or supplemented to, but not including, the date hereof, the "Credit
Agreement");
WHEREAS, the Corporation and its Subsidiaries desire to, inter alia,
(i) modify the maximum Consolidated Leverage Ratio set forth in Section 9.06 of
the Credit Agreement for the last day of each fiscal quarter ending June 30,
2003 through and including June 30, 2005; (ii) modify the definition of
"Applicable Margin" set forth in Section 11.01 of the Credit Agreement; (iii)
modify the definition of "Consolidated Indebtedness" set forth in Section 11.01
of the Credit Agreement; (iv) provide for certain conditions with respect to the
ability of the Corporation to pay certain Dividends to its shareholders; and (v)
permanently reduce the maximum ratio of Encumbered EBITDA to Consolidated EBITDA
provided in Section 9.08 of the Credit Agreement; and
WHEREAS, in connection with the foregoing, the Corporation and its
Subsidiaries wish to request certain modifications to provisions in the Credit
Agreement in order to permit the matters described herein, subject to all of the
terms and provisions contained in this Amendment and only to the extent set
forth in this Amendment.
NOW, THEREFORE, it is agreed:
PART I. AMENDMENTS TO THE CREDIT AGREEMENT.
SECTION 1. Maximum Consolidated Leverage Ratio; Section 9.06. From
and after the Second Amendment Effective Date (as defined below), Section 9.06
of the Credit Agreement shall be amended by (i) deleting the table appearing in
said Section in its entirety and (ii) inserting the following new table in lieu
thereof:
"Fiscal Quarter Ending Ratio
---------------------- -----
March 31, 2003 5.75:1.00
June 30, 2003 6.25:1.00
September 30, 2003 6.00:1.00
December 31, 2003 6.00:1.00
March 31, 2004 6.00:1.00
June 30, 2004 5.75:1.00
September 30, 2004 5.50:1.00
December 31, 2004 5.50:1.00
March 31, 2005 5.25:1.00
June 30, 2005 5.00:1.00
Each fiscal quarter ending on or after 4.50:1.00
September 30, 2005 and on or prior to
June 30, 2006
Each fiscal quarter ending after 4.00:1.00".
June 30, 2006
SECTION 2. Unencumbered EBITDA Ratio; Section 9.08. From and after
the Second Amendment Effective Date, Section 9.08 of the Credit Agreement shall
be amended by deleting the text "0.36:1.00" appearing in said Section and
inserting the text "(x) in the case of any Test Period ending on or prior to
June 30, 2003, 0.36:1.00 and (y) in the case of any Test Period ended
thereafter, 0.30:1.00" in lieu thereof.
SECTION 3. Definition of "Applicable Margin"; Section 11.01. From
and after the Second Amendment Effective Date, the definition of "Applicable
Margin" appearing in Section 11.01 of the Credit Agreement shall be amended by
(a) (i) deleting the text "or Xxxxx 0, as the case may be" appearing in said
definition and (ii) inserting the text ", Level 9 or Xxxxx 00, as the case may
be" in lieu thereof, (b) (i) deleting the table set forth after subsection (D)
of the first proviso appearing in said definition and (ii) inserting in lieu
thereof the following new table:
Base Rate Loan and
Consolidated Leverage Euro Rate Canadian Prime Rate
Level Ratio Loan Margin Loan Margin
----- ----- ----------- -----------
6 < 4.50 1.250% 0.250%
7 >, = 4.50 < 5.00 1.500% 0.500%
8 >, = 5.00 < 5.50 1.625% 0.625%
9 >, = 5.50 < 5.75 1.875% 0.875%
10 >, = 5.75x 2.250% 1.250%
and (c) (i) deleting each reference to "Level 9" in subclauses (x) and (z) of
the second proviso appearing in said definition and (ii) inserting in lieu
thereof the text "Level 10".
SECTION 4. Definition of "Consolidated Indebtedness"; Section 11.01.
From and after the Second Amendment Effective Date, the definition of
"Consolidated Indebtedness" appearing in Section 11.01 of the Credit Agreement
shall be amended by inserting the following text immediately prior to the period
at the end of the last sentence of said definition:
"and, provided further, that for purposes of calculating "Consolidated
Indebtedness" at any time on or prior to the earlier of (i) November
15, 2003 and (ii) the Segregated Funds Withdrawal Date, "Consolidated
Indebtedness" (determined as otherwise required above in this
definition) shall be reduced by the lesser of (x) the aggregate amount
of the Segregated Funds at such time (in the case of Segregated Funds
constituting Cash Equivalents, taking the fair market value thereof as
reasonably determined by management of the Corporation) and (y)
$250,000,000.".
SECTION 5. Certain New Definitions. From and after the Second
Amendment Effective Date, the following defined terms, as used in this
Amendment, shall have the following meanings and Section 11.01 of the Credit
Agreement is hereby amended by inserting in said Section 11.01, in appropriate
alphabetical order, the following defined terms:
"Designated Assets" shall mean any of those eighteen (18)
Hotels owned by Domestic Subsidiaries of the Corporation as set forth
in an officer's certificate from an Authorized Officer of the
Corporation delivered to the Administrative Agent prior to the date
hereof, which Hotels may be sold in a single transaction or in any
combination or series of transactions.
"Sheraton 7-Year Senior Notes" shall mean those certain Senior
Notes issued by Sheraton in the aggregate principal amount of $250.0
million due November 15, 2003, as described in the first line of item 1
on Part I of Schedule 7.17 to the Credit Agreement.
"Segregated Funds" shall mean cash and Cash Equivalents of the
Credit Parties which (i) represent (directly or indirectly) the net
sale proceeds received by any Credit Party from the sale of Designated
Assets, (ii) are specifically designated by the Corporation for use
solely to repay the Sheraton 7-Year Senior Notes pursuant to an
officer's certificate from an Authorized Officer of the Corporation (x)
delivered to the Administrative Agent within fifteen (15) Business Days
following the respective sale of Designated Assets and (y) specifically
identifying the initial amount of the cash and Cash Equivalents
constituting net sale proceeds from the respective sale of Designated
Assets to be so designated as "Segregated Funds" and (iii) are at all
times held in one or more
segregated accounts of the Credit Parties (and are not commingled with
any other funds of the Credit Parties) until utilized to repay in full
the Sheraton 7-Year Senior Notes in accordance with their terms;
provided that, notwithstanding the foregoing, (x) the cash and Cash
Equivalents described above shall not constitute "Segregated Funds" at
any time on or after the Segregated Funds Withdrawal Date, (y) the
Corporation may from time to time withdraw from the segregated accounts
described above cash and Cash Equivalents which solely represent
interest or other returns on investment on funds then constituting
"Segregated Funds", and (z) in the event that the Corporation or any
other Credit Party wishes to withdraw funds theretofore constituting
"Segregated Funds" from any segregated account described above (other
than in accordance with the requirements of preceding clause (y)), an
Authorized Officer of the Corporation shall deliver an officer's
certificate to the Administrative Agent (I) demonstrating "pro forma"
compliance with Section 9.06 as at the last day of the fiscal quarter
then last ended (for such purposes, recalculating the Consolidated
Leverage Ratio using Consolidated Indebtedness as at the last day of
such fiscal quarter (for such purposes, calculated as otherwise
required pursuant to this Agreement as at such date but without giving
effect to the last proviso appearing in the definition of "Consolidated
Indebtedness"), (II) containing the calculations (in reasonable detail)
required to demonstrate compliance pursuant to preceding clause (I),
and (III) acknowledging that upon any such withdrawal, the amount of
the "Segregated Funds" shall at all times thereafter be zero.
"Segregated Funds Withdrawal Date" shall mean the date of any
withdrawal of funds (whether cash or Cash Equivalents) then
constituting "Segregated Funds" from the segregated accounts referred
to in the definition thereof other than in reliance on clause (y) of
the proviso contained in said definition.
SECTION 6. Restrictions on Dividends. Notwithstanding anything to
the contrary contained in Section 9.03 of the Credit Agreement, from and after
the Second Amendment Effective Date to and including June 30, 2005, during the
364-day period ending on the date of a proposed dividend declaration, the
Corporation shall not, and shall not permit Starwood REIT to, declare the
payment of cash dividends to their respective shareholders (in the case of a
dividend declared by Starwood REIT, excluding dividends to be paid to the
Corporation or any Wholly-Owned Subsidiary of the Corporation) in an aggregate
amount in excess of 25% of Consolidated EBITDA for the Test Period last ended on
or prior to the respective date of declaration; provided, that (i) any dividend
declared in reliance on the preceding provisions of this Section 6 shall be paid
within 90 days of the respective date of declaration and (ii) nothing contained
in this Section 6 will limit the requirements applicable to the payment of
Dividends by the Corporation pursuant to Section 9.03(ii) of the Credit
Agreement.
SECTION 7. Acknowledgement. Each Borrower and each Lender
acknowledges and agrees that (I) any withdrawal of funds then constituting
"Segregated Funds" from the segregated accounts referred to in the definition
thereof other than (i) in accordance with clause (y) or (z) of the proviso
contained in the definition of "Segregated Funds" or (ii) to repay in full (on
such date of withdrawal) the Sheraton 7-Year Senior Notes in accordance with
their terms, and (II) any violation of the provisions of Section 6 of Part I of
this Amendment shall, in either
case, constitute an Event of Default for all purposes of the Credit Agreement
and the other Credit Documents.
PART II. MISCELLANEOUS PROVISIONS
A. Each Guarantor, by its signature below, hereby confirms that its
Guaranty shall remain in full force and effect and its Guaranty covers the
obligations of each of the relevant Borrowers under the Credit Agreement, as
modified and amended by this Amendment.
B. In order to induce the Lenders to enter into this Amendment, the
Corporation represents and warrants to the Lenders that, on the Second Amendment
Effective Date, before, as of and after giving effect to the execution, delivery
and performance by the Corporation of this Amendment and the transactions
contemplated hereby, (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained in the Credit Agreement and in
the other Credit Documents are true and correct in all material respects with
the same effect as though such representations and warranties had been made on
the Second Amendment Effective Date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be true and correct in all material respects only as of such specified
date).
C. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
D. 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 Corporation and the Administrative Agent.
E. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
F. This Amendment shall become effective on the date (the "Second
Amendment Effective Date") when each of the Borrowers, each Guarantor and the
Required Lenders 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 (or its designee).
Administrative Agent shall promptly deliver notice to the Corporation of the
occurrence of the Second Amendment Effective Date.
G. From and after the Second Amendment Effective Date, all
references in the Credit Agreement and each of the other Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
modified hereby. This Amendment shall constitute a Credit Document for all
purposes under the Credit Agreement and the other Credit Documents.
H. The Borrowers hereby covenant and agree that, so long as the
Second Amendment Effective Date occurs, they shall pay (and shall be jointly and
severally obligated to pay) each Lender which executes and delivers to the
Administrative Agent (or its designee) a counterpart hereof by the later to
occur of (x) the close of business on the Second Amendment Effective Date or (y)
12:00 p.m. (New York time) on Monday, June 30, 2003 (the "Outside Date"), or
which is an immediate or successive assignee of any Lender described above (with
respect to amounts obtained, directly or indirectly, by assignment from such
Lender), a non-refundable cash fee in an amount equal to twenty basis points
(0.20%) of an amount equal to the sum of (x) the outstanding principal amount of
Term Loans of such Lender and (y) the Revolving Loan Commitment of such Lender,
in each case as same is in effect on the Second Amendment Effective Date, which
fees shall be paid by the Borrowers to the Administrative Agent for distribution
to the Lenders not later than the fifth (5th) Business Day following the Outside
Date.
[Signatures appear on the following page.]
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.
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC., as the Borrower and
Guarantor
By:
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Name:
Title:
STARWOOD CANADA CORP., as an Alternate
Currency Revolving Loan Borrower
By:
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Name:
Title:
SHERATON HOLDING CORPORATION, as
Guarantor
By:
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Name:
Title:
DEUTSCHE BANK AG, NEW YORK
BRANCH,
Individually and as Administrative Agent
By:
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Name:
Title:
By:
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Name:
Title:
SIGNATURE PAGE TO THE SECOND AMENDMENT DATED
AS OF JUNE __, 2003, TO THE CREDIT
AGREEMENT, DATED AS OF OCTOBER 9, 2002,
AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
REVOLVING LOAN BORROWERS, THE VARIOUS
LENDERS PARTY THERETO, DEUTSCHE BANK AG, NEW
YORK BRANCH, AS ADMINISTRATIVE AGENT, X.X.
XXXXXX XXXXX BANK, AS SYNDICATION AGENT AND
BANK OF AMERICA, N.A., FLEET NATIONAL BANK
AND SOCIETE GENERALE, AS CO-DOCUMENTATION
AGENTS
NAME OF INSTITUTION:
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By:
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Name:
Title:
