EXHIBIT 10.3
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SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amendment to Amended and Restated Credit Agreement
("Amendment") is made and entered into as of June 8, 2001, among WESTCOAST
HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited partnership, formerly known
as Cavanaughs Hospitality Limited Partnership (the "Borrower"), the several
financial institutions that are party to this Amendment (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 December 29, 1999, the Borrower, the Lenders and the Agent
entered into that certain Amended and Restated 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 Borrower, the Lenders and the Agent have entered into one
amendment to the Credit Agreement.
B. On May 25, 2001, the Borrower, the Lenders and the Agent entered
into that certain Second Amendment to Amended and Restated Credit Agreement (the
"Initial Second Amendment"), which did not become effective in that certain
conditions to its effectiveness were not satisfied. This Amendment restates and
supercedes the Initial Second Amendment in its entirety.
C. The Borrower is in the process of refinancing four of its hotel
properties, each of which constitutes Eligible Real Property. The Eligible Real
Property located in Seattle, Washington is to be refinanced by Xxxxxx Guaranty
Trust Company of New York (the "Xxxxxx Refinancing"). The Eligible Real
Properties located in Helena, Montana, Spokane, Washington (Inn at the Park) and
Olympia, Washington are to be refinanced by a lender or lenders yet to be
determined (the "Subsequent Refinancings").
D. The lender under the Xxxxxx Refinancing has required, and it is
anticipated that the lenders under the Subsequent Refinancings will require,
that the loans be made to special purpose, bankruptcy remote entities. In order
to comply with this requirement, the Borrower has formed or intends to form a
Delaware limited liability company for each of the properties to be refinanced,
each of which shall be a wholly owned Subsidiary of the Borrower (the "Tier I
LLCs"). Each Tier I Subsidiary has formed or intends to form a Delaware limited
liability company that shall be a wholly owned Subsidiary of such Tier I LLC
(the "Tier II LLCs"). Each property to be refinanced is to be contributed to the
Tier I LLC formed for such property. The Tier I LLC formed for each property to
be refinanced is
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to contribute such property to its respective Tier II LLC. Each loan is to be
made to a Tier II LLC on a nonrecourse basis and secured only by the property
contributed to such Tier II LLC.
E. The Borrower has requested the Lenders to amend certain provisions
of the Credit Agreement and waive certain other provisions of the Credit
Agreement in order to permit the Borrower to complete the Xxxxxx Refinancing,
the Subsequent Refinancings.
F. 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 add or
modify (as the case may be) the following defined terms:
"Adjustment to Book Value" means an amount equal to (a) the appraised
value of all real property (including improvements thereon) owned by WHC and its
Subsidiaries as of the last day of the applicable period, less (b) the net book
value of such real property (including improvements thereon), less (c) an amount
equal to all federal, state and local income and gross receipts taxes that would
be payable in the event that such real property (including improvements thereon)
were sold during the applicable period, assuming for purposes of such
calculation that the amount of the gain is an amount equal to the amount of
clause (a) less the amount of clause (b). The Borrower acknowledges and agrees
that if the Adjustment to Book Value is a negative number, the effect of the
Adjustment to Book Value is to reduce the Adjusted Tangible Net Worth. For
purposes of determining the appraised value of such real property, the most
recent M.A.I. appraisals of such real property that have been approved by the
Agent in writing in its reasonable discretion shall be used. For purposes of
this definition, the Agent reserves the right, in its discretion or at the
request of the Required Lenders, to
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require reappraisals of any real property at the Borrower's sole cost, provided
that once an appraisal of a parcel of real property has been approved by the
Agent in writing, the Agent may not require a reappraisal of such real property
for one year from the date of the approved appraisal. In the event that there is
no approved appraisal of any parcel of real property, then there shall be no
Adjustment to Book Value for such parcel of real property.
"Borrowing Base" means, on each day that any Loans are outstanding or
any day that there is any Letter of Credit Usage, an amount equal to (a) during
the time period from June 8, 2001, through the day immediately preceding the
date of the initial funding of the Xxxxxx Refinancing, the lesser of (i) 60% of
the Collateral Pool Value or (ii) the Implied Debt Service Coverage Cap; (b)
during the time period from the day of the initial funding of the Xxxxxx
Refinancing through the day immediately preceding the date of the initial
funding under the first of the Subsequent Refinancings, the lesser of (i)
$75,000,000, (ii) 67.86% of the Collateral Pool Value, or (iii) the Implied Debt
Service Coverage Cap; (c) during the time period from the day of the initial
funding under the first of the Subsequent Refinancings through December 30,
2001, the lesser of (i) 70% of the Collateral Pool Value, or (ii) the Implied
Debt Service Coverage Cap; and (d) thereafter, the lesser of (i) 60% of the
Collateral Pool Value or (ii) the Implied Debt Service Coverage Cap.
Notwithstanding the foregoing, during the time period from June 8, 2001, through
December 30, 2001, the Borrowing Base is subject to adjustment in accordance
with the provisions of Section 4.4 of the Second Amendment.
"Collateral Pool Value" means the sum of the Approved Appraised
Values of all Eligible Real Property from time to time; provided that from the
date of this Amendment through December 30, 2001, the Approved Appraised Values
of the following parcels of Eligible Real Property shall be as follows (so long
as each such parcel of property continues to constitute Eligible Real Property
during that time period): (a) Salt Lake City, Utah - $8,838,000; (b) Spokane,
Washington (Ridpath) - $5,365,000; and (c) Hillsboro, Oregon - $3,472,000.
"Commitment" means an amount equal to $120,000,000 less the
following: (a) $30,000,000 as of the date of the initial advance of funds under
the Xxxxxx Refinancing, (b) $13,800,000 as of the date of the initial advance of
funds under the Subsequent Refinancing of the Eligible Real Property located in
Spokane, Washington (Inn at the Park), (c) $6,200,000 as of the date of the
initial advance of funds under the Subsequent Refinancing of the Eligible Real
Property located in Olympia, Washington, and (d) the aggregate amount of
mandatory prepayments made in accordance with Section 2.6, excluding any
prepayments made as a result of the Xxxxxx Refinancing and any of the Subsequent
Refinancings.
"Fixed Charge Coverage Ratio" means the ratio of (a) for the
applicable period, the sum of (i) EBITDA less (ii) an amount equal to 4% of the
aggregate of all amounts which, in accordance with GAAP, would be included as
gross revenue on a consolidated statement of income of WHC and its Subsidiaries
arising out of or related to hotel or restaurant operations (including, without
limitation, gross revenues from the lease or licensing of space in any of
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the hotels or restaurants of WHC and its Subsidiaries), to (b) for the
applicable period, the sum of (i) scheduled payments of principal on
Indebtedness of WHC and its Subsidiaries (including the portion of payments on
capitalized leases allocable to principal, but excluding (A) mandatory
prepayments of the Loans required under Section 2.6, and (B) balloon payments
made with the proceeds of Indebtedness permitted pursuant to Section 8.5),
whether or not made, (ii) Interest Expense, (iii) income and gross receipts
taxes paid in cash or cash equivalents, (iv) dividends and distributions paid in
cash or cash equivalents (excluding distributions of cash made by the Borrower
to WHC in an amount necessary to allow WHC to pay income and gross receipts
taxes on the taxable income of the Borrower that is recognized by WHC for tax
purposes and excluding distributions made by any of the direct or indirect
Subsidiaries of the Borrower to the Borrower or by the Tier II LLCs to the Tier
I LLCs), plus (v) payments made to redeem or otherwise acquire for value any
partnership units of the Borrower or shares of capital stock of WHC or any
warrants, rights or options to acquire such partnership units or shares.
"Xxxxxx Refinancing" has the meaning set forth in Recital C to the
Second Amendment.
"Refinanced Properties" means the Eligible Real Properties located in
Seattle, Washington that is to be refinanced under the Xxxxxx Refinancing and
the Eligible Real Properties located in Helena, Montana, Spokane, Washington
(Inn at the Park) and Olympia, Washington that are to be refinanced under the
Subsequent Refinancings.
"Second Amendment" means the Second Amendment to Amended and Restated
Credit Agreement dated as of June 8, 2001, and entered into among the Borrower,
the Lenders and the Agent.
"Subsequent Refinancings" has the meaning set forth in Recital C to
the Second Amendment.
"Tier I LLC" has the meaning set forth in Recital D to the Second
Amendment.
"Tier II LLC" has the meaning set forth in Recital D to the Second
Amendment.
ARTICLE III. APPROVAL OF REFINANCINGS
3.1 XXXXXX REFINANCING AND SUBSEQUENT REFINANCINGS
Subject to the terms and conditions of this Amendment, the Lenders
hereby approve the Xxxxxx Refinancing and the Subsequent Refinancings as
described in Recitals C and D of this Amendment. Among other conditions set
forth in this Amendment, the approval of the Lenders is conditioned on (a) the
funding of the Xxxxxx Refinancing prior to the funding of any of the Subsequent
Refinancings and (b) approval by the Agent of the documents evidencing the
Xxxxxx Refinancing and each of the Subsequent Refinancings.
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3.2 TIER I LLCS AND TIER II LLCS
Notwithstanding any provisions of this Amendment to the contrary,
each of the Tier I LLCs and the Tier II LLCs shall constitute a "Subsidiary" for
all purposes under the provisions of the Credit Agreement and the other Loan
Documents.
3.3 CONVEYANCE OF PROPERTY AND RELEASE OF COLLATERAL
In order to accommodate the Xxxxxx Refinancing and the Subsequent
Refinancings and subject to the terms and conditions of this Amendment, the
Lenders hereby consent to (a) the reconveyance of the Deeds of Trust that
encumber the Refinanced Properties concurrently with the refinancing of each
such Refinanced Property and (b) the contribution of the Refinanced Properties
by the Borrower to the respective Tier I LLCs and the contribution of the
Refinanced Properties by the Tier I LLCs to the respective Tier II LLCs
concurrently with or immediately preceding the refinancing of each such
Refinanced Property. To the extent of the contributions described in clause (b)
of the previous sentence, the Lenders hereby waive the provisions of Section
8.2(a), 8.4 and 8.6 of the Credit Agreement.
3.4 NO MODIFICATION OF REFINANCING DOCUMENTS
Without the prior written consent of the Agent, none of the
agreements, instruments or other documents arising out of or related to the
Xxxxxx Refinancing or the Subsequent Refinancings shall be amended, modified or
replaced after the date of the initial funding of such refinancings.
3.5 LOANS AND CONTRIBUTIONS TO THE LLCS
(a) Unless there exists a Default or an Event of Default, the
Borrower is permitted to make loans or contributions of capital to the Tier II
LLCs (either directly or indirectly through the Tier I LLCs) in amounts not to
exceed the amounts determined by the Borrower to be reasonably necessary to (i)
fund working capital needs not met by the operating cash flow from the
respective property and (ii) fund capital expenditures that cannot be funded by
the operating cash flow from the respective property.
(b) Notwithstanding the provisions of Section 3.5(a) of this
Amendment, (i) the Borrower shall not use any proceeds of the Loans to fund
loans or capital contributions to the Tier I LLCs or the Tier II LLCs and (ii)
no Letters of Credit shall be issued for the benefit of the Tier I LLCs or the
Tier II LLCs.
3.6 NO FURTHER LOANS; GUARANTIES
(a) With the exception of the Xxxxxx Refinancing, the Subsequent
Refinancings and loans from the Borrower permitted pursuant to Section 3.5(a) of
this Amendment, none of the Tier I LLCs or the Tier II LLCs shall incur any
Indebtedness except Indebtedness incurred by each Tier II LLC in the ordinary
course of its business and in an amount not to
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exceed 4% of the initial amount of the Xxxxxx Refinancing or Subsequent
Refinancing (as the case may be) made to such Tier II LLC.
(b) The Borrower shall not suffer or permit any of the Tier I LLCs or
the Tier II LLCs to, create, incur, assume or suffer to exist any Contingent
Obligations.
3.7 REQUIRED DISTRIBUTIONS
The Borrower shall cause the Tier I LLCs and the Tier II LLCs to
distribute to the Borrower (in the case of the Tier II LLCs, through the Tier I
LLCs), not less frequently than quarterly, all cash in excess of that necessary
in the reasonable opinion of the Borrower to meet short term working capital
needs and short term capital expenditure needs of the Tier II LLCs.
ARTICLE IV. MODIFICATION OF THE LOANS
4.1 APPLICATION OF REFINANCING PROCEEDS
The Borrower shall cause all proceeds from the Xxxxxx Refinancing and
the Subsequent Refinancings (net of ordinary and necessary loan fees and closing
costs) to be paid out of the escrow for each such refinancing directly to the
Agent for application against the Loans. The minimum amounts of principal
reduction payments (whether from net refinancing proceeds or other sources) from
such refinancings are (a) $36,000,000 from the Xxxxxx Refinancing, (b)
$6,000,000 from the Subsequent Refinancing of the Eligible Real Property located
in Helena, Montana, (c) $14,200,000 from the Subsequent Refinancing of the
Eligible Real Property located in Spokane, Washington (Inn at the Park), and (d)
$6,800,000 from the Subsequent Refinancing of the Eligible Real Property located
in Olympia, Washington.
4.2 REDUCTION IN COMMITMENT
The Borrower and the Lenders agree that the amount of the Commitment
shall be reduced in accordance with modified definition of the term "Commitment"
set forth in Section 2.2 of this Amendment.
4.3 REAPPRAISAL
The Borrower and the Lenders agree that the Agent shall order updated
M.A.I. appraisals of the parcels of Eligible Real Property located in Salt Lake
City, Utah, Spokane, Washington (Ridpath) and Hillsboro, Oregon, which updated
appraisals shall be in compliance with the Financial Institutions Reform,
Recovery and Enforcement Act and shall be subject to approval by the Agent in
writing in its reasonable discretion. The Approved Appraised Values for such
parcels of Eligible Real Property based of the updated appraisals shall be
effective as of December 31, 2001. The Borrower agrees to reimburse the Agent
for the cost of the updated appraisals upon demand by the Agent. This provision
shall not be
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construed to preclude any reappraisals of other parcels of Eligible Real
Property in accordance with the provisions of the Credit Agreement.
4.4 SALE OF OTHER PROPERTIES
Notwithstanding any provisions of the Credit Agreement to the
contrary, during the time period from the date of this Amendment through
December 30, 2001, the Borrower shall apply or cause to be applied against the
Loans all proceeds from the sale or other disposition (net of ordinary and
necessary costs of sale) of all real property (including improvements thereon)
by the Borrower, WHC and their Subsidiaries. Concurrently with each such sale
and during the period from the date of this Amendment through December 30, 2001,
the amount of the Borrowing Base shall be reduced by an amount equal to the
lesser of (a) 100% of all net proceeds from each such sale or (b) the amount
that the advance basis on the Collateral Pool Value exceeds 60%. This reduction
in the amount of the Borrowing Base is independent of any reductions in the
Commitment that are required by the Credit Agreement in connection with any such
sale or disposition.
ARTICLE V. MISCELLANEOUS WAIVERS AND AMENDMENTS
5.1 WAIVER OF GUARANTIES AND SECURITY AGREEMENTS
Notwithstanding the provisions of Section 7.14(d) of the Credit
Agreement, (a) neither the Tier I LLCs nor Tier II LLCs shall be required to
guarantee the obligations of the Borrower under the Credit Agreement, (b)
neither the Tier I LLCs nor Tier II LLCs shall be required to grant the Lenders
a security interest in their assets to secure the obligations of the Borrower
under the Credit Agreement, (c) the Borrower shall not be required to pledge the
membership interests of the Tier I LLCs to the Lenders, and (d) the Tier I LLCs
shall not be required to pledge the membership interests of the Tier II LLCs to
the Lenders.
5.2 INTEREST RATE PROTECTION
Section 7.16 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
Within 30 days of the date of this Agreement, the Borrower
shall enter into and shall maintain during the term of this Agreement
one or more agreements to provide the Borrower with protection
against fluctuations in interest rates with one or more financial
institutions to cover, during each fiscal quarter of the Borrower, an
amount equal to not less than 50% of the aggregate amount of the
Indebtedness of WHC and its Subsidiaries as of the last day of the
preceding fiscal quarter, excluding the Indebtedness of the Tier II
LLCs under the Xxxxxx Refinancing and the Subsequent Refinancings.
All such agreements shall contain terms and conditions and shall be
in such forms that are approved by the Lenders.
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5.3 LIMITATION ON LIENS
Notwithstanding the provisions of Section 8.1(n) of the Credit
Agreement, the Lenders consent to the Tier II LLCs encumbering the Refinanced
Properties without satisfying the requirement that Net Issuance Proceeds from
the Indebtedness incurred in connection with any such encumbrances be applied to
the Loans in accordance with Section 2.6 of the Credit Agreement.
5.4 CONTINGENT OBLIGATIONS
Notwithstanding the provisions of Section 8.8 of the Credit
Agreement, the Lenders consent to the Borrower executing and delivering to
Xxxxxx Guaranty Trust Company of New York and the lenders under the Subsequent
Refinancings a guaranty of the exceptions to nonrecourse provisions under the
Xxxxxx Refinancing and the Subsequent Refinancings.
5.5 RESTRICTED PAYMENTS
Section 8.10 of the Credit Agreement is hereby amended to allow the
Tier I LLCs to make distributions to the Tier II LLCs and the Tier II LLCs to
make distributions to the Borrower.
ARTICLE VI. 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, duly executed and
delivered by the respective parties thereto;
(b) The Agent shall have received, duly executed and delivered by the
respective parties thereto, amendments to each of the Deeds of Trust that are
not being reconveyed pursuant to the Xxxxxx Refinancing in forms designated by
the Agent, and shall have received commitments for 110.5 endorsements to the
title insurance policies insuring such Deeds of Trust in forms acceptable to the
Agent and shall be provided with the endorsements within 10 days of the date of
this Amendment at the Borrower's cost;
(c) The Agent shall have received authorizing resolutions of Borrower
and WHC in a form acceptable to the Agent;
(d) The Agent shall have received an opinion of counsel to the
Borrower and WHC and each Subsidiary party to any Loan Document, addressed to
the Agent and the Lenders in a form acceptable to the Agent;
(e) There shall not exist any Default or Event of Default under the
Credit Agreement or any other Loan Document;
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(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 Borrower shall have paid to the Agent an amendment fee in
accordance with the provisions of a fee letter agreement between the Borrower
and the Agent of even date herewith.
(h) There shall have been advanced the initial proceeds of the Xxxxxx
Refinancing.
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.
7.4 CONSENT OF GUARANTORS
By execution of this Amendment, each of WHC and the Subsidiaries that
have executed and delivered to the Agent guaranties, security agreements and
other loan documents consents to this Amendment and reaffirms its obligations
under its respective guaranty, security agreement and each of the other Loan
Documents to which it is a party.
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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 Amendment to be duly executed by the respective, duly authorized
signatories as of the date first above written.
WESTCOAST HOSPITALITY LIMITED PARTNERSHIP
By: WestCoast Hospitality Corporation,
General Partner
By
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Title
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U.S. BANK NATIONAL ASSOCIATION,
as Agent
By
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Title
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U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By
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Title
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BANK OF SCOTLAND
By
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Title
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BANK LEUMI USA
By
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Title
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XXXXX FARGO BANK, NATIONAL ASSOCIATION
By
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Title
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COLUMBIA STATE BANK
By
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Title
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STERLING SAVINGS BANK
By
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Title
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COMERICA BANK CALIFORNIA
By
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Title
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PACIFIC NORTHWEST BANK
By
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Title
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Each of the undersigned acknowledges that it has reviewed and
approved this Amendment and reaffirms its obligations under its respective
guaranty and the other Loan Documents to which it is a party.
WESTCOAST HOSPITALITY CORPORATION
By
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Title
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WESTCOAST HOTELS, INC.
By
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Title
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XXXXXXXXXXX.XXX, INC.
By
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Title
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