FIRST AMENDMENT
FIRST AMENDMENT (the "First Amendment"), dated as of November 6, 2001,
among FELCOR LODGING TRUST INCORPORATED (f/k/a FelCor Suite Hotels, Inc.), a
Maryland corporation ("FelCor"), FELCOR LODGING LIMITED PARTNERSHIP (f/k/a
FelCor Suites Limited Partnership), a Delaware limited partnership ("FelCor LP"
and collectively with FelCor, the "US Borrower"), FELCOR CANADA CO., a Nova
Scotia unlimited liability company (the "Canadian Borrower" and collectively
with the US Borrower, the "Borrower"), the Lenders from time to time party
thereto, Bankers Trust Company, as Syndication Agent (the "Syndication Agent")
and THE CHASE MANHATTAN BANK ("Chase") and The Chase Manhattan Bank of Canada
("Chase Canada") as Administrative Agent for the Lenders. Unless otherwise
defined herein, capitalized terms used herein and defined in the Credit
Agreement referred to below are used herein as so defined.
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Syndication Agent and the
Administrative Agent are party to the Seventh Amended and Restated Credit
Agreement, dated as of July 26, 2001 (as the same has been amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement");
and
WHEREAS, subject to the terms and conditions set forth below, the
parties hereto wish to amend and waive certain provisions the Credit Agreement
as provided herein;
NOW, THEREFORE, it is agreed;
I. Amendments
1. Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions of "Applicable Margin" and "Status" and inserting the following
new definitions in lieu thereof:
"Applicable Margin" means, with respect to each Revolving
Credit Loan, the applicable percentage per annum set forth below based
upon (i) with respect to Level I through IV Status, the Status then in
effect and (ii) with respect to Level V THROUGH XII Status, the Status
in effect on the most recent Applicable Margin Reset Date, it being
understood that the Applicable Margin for (i) Base Rate Loans, Swing
Advances and Canadian Prime Rate Loans shall be the percentage set
forth under the column "Base Rate/Canadian Prime Rate Loans", (ii)
Eurodollar Rate Loans shall be the percentage set forth under the
column "Eurodollar Rate Loans", and (iii) the Commitment Fee shall be
the percentage set forth under the column "Commitment Fee":
Base Rate/Canadian
Prime Rate Eurodollar Rate Commitment
Loans Loans Fee
------------------- --------------- ----------
Level I Status 0.0% .875% 0.125%
Level II Status 0.0% 1.000% 0.150%
Level III Status 0.0% 1.125% 0.150%
Level IV Status 0.0% 1.250% 0.200%
Level V Status 0.0% 1.375% 0.200%
Level VI Status 0.250% 1.750% 0.250%
Level VII Status 0.375% 1.875% 0.250%
Level VIII Status 0.500% 2.000% 0.300%
Level IX Status 0.625% 2.125% 0.375%
Level X Status 1.000% 2.500% 0.500%
LEVEL XI STATUS 1.375% 2.875% 0.500%
LEVEL XII STATUS 1.750% 3.250% 0.500%
"Status" means the existence of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status, Level VI Status,
Level VII Status, Level VIII Status, Level IX Status, Level X Status, LEVEL XI
STATUS OR LEVEL XII Status, as the case may be.
As used in this definition:
"Level I Status" exists on any date if, on such date, either
US Borrower has a long-term senior unsecured actual debt rating of A-
or better by S&P and A3 or better by Xxxxx'x Investor Service, Inc.
("Moody's");
"Level II Status" exists on any date if, on such date, either
US Borrower has a long-term senior unsecured actual debt rating of BBB+
by S&P and Baa1 by Moody's;
"Level III Status" exists on any date if, on such date, either
US Borrower has a long-term senior unsecured actual debt rating of BBB
by S&P and Baa2 by Moody's;
"Level IV Status" exists on any date if, on such date, either
US Borrower has a long-term senior unsecured debt rating of BBB- by S&P
and Baa3 by Moody's;
"Level V Status" exists on any date if, on such date (y) none
of Level I Status through Level IV Status exists and (z) the Leverage
Ratio is less than 25%;
"Level VI Status" exists on any date if, on such date (y) none
of Level I Status through Level IV Status exists and (z) the Leverage
Ratio is equal to or greater than 25% but less than 35%;
"Level VII Status" exists on any date if, on such date (y)
none of Level I Status through Level IV Status exists and (z) the
Leverage Ratio is equal to or greater than 35% but less than 40%;
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"Level VIII Status" exists on any date if, on such date (y)
none of Level I Status through Level IV Status exists and (z) the
Leverage Ratio is equal to or greater than 40% but less than 45%;
"Level IX Status" exists on any date if, on such date (y) none
of the Level I Status through Level IV Status exists and (z) the
Leverage Ratio is equal to or greater than 45% but less than 50%;
"Level X Status" exists on any date if, on such date (y) none
of Level I Status through Level IV Status exists and (z) the Leverage
Ratio is equal to or greater than 50% but less than 55%;
"Level XI Status" exists on any date if, on such date (y) none
of Level I Status through Level IV Status exists and (Z) the Leverage
Ratio is equal to or greater than 55% but less than 60%.
"Level XII Status" exists on any date if, on such date (y)
none of Level I Status through Level IV Status exists and (Z) the
Leverage Ratio is equal to or greater than 60%.
If S&P and/or Moody's shall cease to issue ratings of debt
securities of real estate investment trusts generally, then the Administrative
Agent and the US Borrower shall negotiate in good faith to agree upon a
substitute rating agency or agencies (and to correlate the system of ratings of
each substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency or agencies are agreed
upon, Status shall be determined on the basis of the rating assigned by the
other rating agency (or, if both S&P and Moody's shall have so ceased to issue
such ratings, on the basis of the Status in effect immediately prior thereto)
and (b) after such substitute rating agency or agencies are agreed upon, Status
shall be determined on the basis of the rating assigned by the other rating
agency and such substitute rating agency or the two substitute rating agencies,
as the case may be. If the long term senior unsecured actual debt ratings of
either US Borrower by S&P and Moody's are not equivalent, the higher rating will
apply for the purposes of determining Status. If the long term senior unsecured
actual debt ratings of either US Borrower by S&P and Moody's are two or more
Levels apart, the rating one Level below the higher rating will apply for the
purposes of determining Status."
2. Section 1.1 of the
Credit Agreement is hereby further amended by
inserting in the appropriate alphabetical order the following new definitions:
"Discretionary Capital Expenditures" shall mean and refer to
Capital Expenditures (including Capital Expenditures to expand existing
Hotels) in excess of (A) those required under applicable law, rule or
regulation and (B) those funded from the FF&E Reserve.
"First Amendment" shall mean the First Amendment, dated as of
November 6, 2001, among the Borrowers, the Lenders party thereto, the
Syndication Agent and the Administrative Agent.
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"First Amendment Effective Date" shall have the meaning
provided in the First Amendment.
"Specified Acquisition Amount" shall mean (A) the sum of (i)
$50,000,000, (ii) the aggregate amount of net cash proceeds received
from any Asset Sale consummated during the period from the First
Amendment Effective Date to September 30, 2002, in an aggregate amount
up to $20,000,000, less the aggregate amount of net cash proceeds
received from any such Asset Sale consummated during such period that
have been added to either the Specified Investment Amount or the
Specified Discretionary Capital Expenditure Amount by the US Borrower
pursuant to Section 6.12(l) and (iii) the aggregate amount of the net
cash proceeds received from the sale or issuance of equity by FelCor LP
during the period from the First Amendment Effective Date to September
30, 2002, less the aggregate amount of net cash proceeds received from
such sale or issuance of equity during such period that have been added
by the US Borrower pursuant to Section 6.12(m) to either the Specified
Investment Amount or the Specified Discretionary Capital Expenditure
Amount less (B) the aggregate amount of any acquisition of existing
Hotel properties during the period from January 1, 2002 through
September 30, 2002.
"Specified Discretionary Capital Expenditure Amount" shall
mean the sum of (A) $20,000,000, (B) the aggregate amount of net cash
proceeds received from any Asset Sale consummated during the period
from the First Amendment Effective Date to September 30, 2002, up to an
aggregate amount not to exceed $20,000,000 less the aggregate amount of
net cash proceeds received from any such asset sale consummated during
such period that have been added by the US Borrower pursuant to Section
6.12(l) to either the Specified Acquisition Amount or the Specified
Investment Amount and (C) the aggregate amount of the net cash proceeds
received from the sale or issuance of equity by FelCor LP during the
period from the First Amendment Effective Date to September 30, 2002,
less the aggregate amount of net cash proceeds from such sale or
issuance of equity during such period that have been added by the US
Borrower pursuant to Section 6.12(m) to either the Specified
Acquisition Amount or the Specified Investment Amount.
"Specified Investment Amount" shall mean (A) the sum of (i)
$20,000,000, (ii) the aggregate amount of net cash proceeds received
from any Asset Sale consummated during the period from the First
Amendment Effective Date to September 30, 2002, up to an aggregate
amount not to exceed $20,000,000 less the aggregate amount of net cash
proceeds received from any such Asset Sale consummated during such
period that have been added by the US Borrower pursuant to Section
6.12(l) to either the Specified Acquisition Amount or the Specified
Discretionary Capital Expenditure Amount and (iii) the aggregate amount
of the net cash proceeds received from the sale or issuance of equity
by FelCor LP during the period from the First Amendment Effective Date
to September 30, 2002 less the aggregate amount of net cash proceeds
from such sale or issuance of equity during such period that have been
added by the US Borrower pursuant to Section 6.12(m) to either the
Specified Acquisition Amount or the Specified Discretionary Capital
Expenditure Amount, less (B) the aggregate amount of any investment in
any Joint Enterprise during the period from January 1, 2002 through
September 30, 2002.
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3. Section 5.1 of the
Credit Agreement is hereby amended to read in its
entirety as follows:
"5.1. Unsecured Interest Expense Coverage. The US Borrower
shall maintain at the end of each Fiscal Quarter, commencing with the
Fiscal Quarter ending on June 30, 2000, a ratio of (a) Unencumbered NOI
to (b) Unsecured Interest Expense, in each case determined on the basis
of the four (4) Fiscal Quarters ending on the date of determination, of
not less than 2.25:1.0, provided that, the minimum ratio set forth
above shall be (i) 1.65:1.0 for the Fiscal Quarters ending December 31,
2001 through September 30, 2002 and (ii) 2.0:1.0 for the Fiscal Quarter
ending on December 31, 2002."
4. Section 5.2 of the
Credit Agreement is hereby amended to read in its
entirety as follows:
"5.2. Fixed Charge Coverage Ratio. The US Borrower shall
maintain at the end of each Fiscal Quarter, commencing with the Fiscal
Quarter ending on June 30, 2000, a ratio of (a) Adjusted EDITDA to (b)
Fixed Charges, in each case determined on the basis of the four (4)
Fiscal Quarters ending on the date of determination, of not less than
1.75:1.0, provided that, the minimum ratio set forth above shall be (i)
1.35:1.0 for the Fiscal Quarters ending December 31, 2001 through
September 30, 2002 and (ii) 1.65:1.0 for the Fiscal Quarter ending on
December 31, 2002."
5. Section 5.4 of the
Credit Agreement is hereby amended to read in its
entirety as follows:
"5.4. Limitations on Total Indebtedness. The US Borrower shall
not, during each Fiscal Quarter on a consolidated basis, permit the
Total Indebtedness (including, without limitation, the Obligations and
all Capitalized Lease Obligations) of the US Borrower for borrowed
money to exceed (i) 65% of Total Value from and including the First
Amendment Effective Date through September 30, 2002 and (ii) 55% of
Total Value at all other times."
6. Section 5.5 of the
Credit Agreement is hereby amended to read in its
entirety as follows:
"5.5. Limitations on Total Secured Indebtedness. The US
Borrower shall not, during each Fiscal Quarter on a consolidated basis,
permit the Total Secured Indebtedness (including, without limitation,
secured Obligations and Capitalized Lease Obligations) of the US
Borrower, to exceed 25% of Total Value, provided that, Total Secured
Indebtedness shall not exceed (i) 30% of Total Value from January 1,
2002 through September 30, 2002 and (B) 27.5% of Total Value from
October 1, 2002 through December 31, 2002."
7. Section 6.12 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (j) thereof, (ii) deleting the
period at the end of clause (k) thereof and inserting a semicolon in lieu
thereof and (iii) inserting the following clauses (l) and (m) immediately
following the end of clause (k) thereof.
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"(l) promptly, and in any event within ten days, after the
designation by the US Borrower (which such designation shall be in the
US Borrower's sole discretion), written notice to the Administrative
Agent of the designation of the amount of net cash proceeds received
from any Asset Sales during the period from the First Amendment
Effective Date to September 30, 2002, as a Specified Acquisition
Amount, a Specified Discretionary Capital Expenditure Amount or a
Specified Investment Amount; and
(m) promptly, and in any event within ten days, after the
designation by the US Borrower (which such designation shall be in the
US Borrower's sole discretion), written notice to the Administrative
Agent of the designation of the amount of net cash proceeds received
from any equity issuances during the period from the First Amendment
Effective Date to September 30, 2002, as a Specified Acquisition
Amount, a Specified Discretionary Capital Expenditure Amount or a
Specified Investment Amount."
8. Section 7.4 of the Credit Agreement is hereby amended by (i)
inserting the reference "(a)" at the beginning of said section and (ii)
inserting the following new clause (b) immediately following the period at the
end of clause (a):
"(b) Notwithstanding anything to the contrary contained in
clause (a) of this Section 7.4, other than Restricted Payments made in
accordance with clauses (a)(i) and (a)(ii) of this Section 7.4, the US
Borrower shall not make Restricted Payments under such clause (a)
during the Fiscal Quarters ending from and including December 31, 2001
through December 31, 2002 that exceed: (A) for the Fiscal Quarter ended
December 31, 2001, an amount equal to the lesser of 85% of the
consolidated Adjusted Funds From Operations and 100% of the Free Cash
Flow of the US Borrower for such Fiscal Quarter, plus an amount equal
to $5,000,000; provided, however, that notwithstanding the foregoing
limitation on Restricted Payments, the US Borrower shall be permitted
to declare or authorize the payment of (I) current dividends on its
preferred stock during such Fiscal Quarter in an aggregate amount not
to exceed $6,150,000 and (II) current dividends on its common stock and
units during such Fiscal Quarter in an amount equal to $0.01 multiplied
by the number of shares and units of the US Borrower's common stock
and/or units outstanding as of the record date declared by the US
Borrower's Board of Directors for such fiscal quarter; (B) for the
Fiscal Quarter ended March 31, 2002, an amount equal to the lesser of
(I) 85% of the consolidated Adjusted Funds From Operations and (II) (i)
100% of the Free Cash Flow of the US Borrower for such Fiscal Quarter
or (ii) 85% of the Free Cash Flow of the US Borrower for such Fiscal
Quarter to the extent that the US Borrower's Total Indebtedness for
borrowed money is equal to or exceeds 55% of Total Value at the time of
and after giving effect to such Restricted Payments, plus an amount
equal to $5,000,000; (C) for the Fiscal Quarter ended June 30, 2002, an
amount equal to the lesser of (I) 85% of the consolidated Adjusted
Funds From Operations and (II) (i) 100% of the Free Cash Flow of the US
Borrower or (ii) 85% of the Free Cash Flow of the US Borrower for such
Fiscal Quarter to the extent that the US Borrower's Total Indebtedness
for borrowed money is equal to or exceeds 55% of Total Value at the
time of and after giving effect to such Restricted Payments, for the
two consecutive Fiscal Quarters ended June 30, 2002 minus the
Restricted Payments made by it during the Fiscal Quarter ended March
31, 2002; (D) for the Fiscal Quarter ended September 30, 2002, an
amount equal to the lesser of (I) 85% of the consolidated
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Adjusted Funds From Operations and (II) (i) 100% of the Free Cash Flow
of the US Borrower or (ii) 85% of the Free Cash Flow of the US Borrower
for such Fiscal Quarter to the extent that the US Borrower's Total
Indebtedness for borrowed money is equal to or exceeds 55% of Total
Value at the time of and after giving effect to such Restricted
Payments, for the three consecutive Fiscal Quarters ended September 30,
2002 minus the Restricted Payments made by it during the two
consecutive Fiscal Quarters ended June 30, 2002; and (E) for the Fiscal
Quarter ended December 31, 2002, an amount equal to the lesser of 85%
of the consolidated Adjusted Funds From Operations and 100% of the Free
Cash Flow of the US Borrower for the four consecutive Fiscal Quarters
ended December 31, 2002 minus the Restricted Payments made by it during
the three consecutive Fiscal Quarters ended September 30, 2002."
9. Section 7.5 of the Credit Agreement is hereby amended by inserting
the following new clause (d), immediately following the end of clause (c)
thereof:
"(d) Notwithstanding anything to the contrary contained in
this Agreement, (i) the US Borrower shall not and shall not permit any
of its Subsidiaries or Eligible Joint Ventures to acquire any existing
Hotel properties during the period from the First Amendment Effective
Date through December 31, 2001 and (ii) for the period from January 1,
2002 through September 30, 2002, the US Borrower may acquire existing
Hotel properties, so long as (I) the Total Indebtedness for borrowed
money of the US Borrower does not exceed 60% of Total Value both before
and after giving effect to such acquisition and (II) at least 10
Business Days prior to the consummation of any such acquisition the US
Borrower shall deliver to the Administrative Agent a certificate of the
US Borrower's chief financial officer or treasurer certifying (and
showing calculations in reasonable detail) that the US Borrower would
have been in compliance with the financial covenants set forth in
Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, and 5.7, as amended hereby, for
the most recently ended four (4) Fiscal Quarters prior to the date of
such acquisition, in each case with such financial covenants to be
determined on a pro forma basis as if such acquisition had been
consummated on the first day of such four (4) Fiscal Quarter period
(and assuming that any Indebtedness incurred, issued or assumed in
connection therewith had been incurred, issued or assumed on the first
day of such four (4) Fiscal Quarter period); provided that to the
extent that the US Borrower's Total Indebtedness for borrowed money
exceeds 60% of Total Value either at the time of or after giving effect
to such acquisition, the US Borrower may only acquire existing Hotel
properties in an aggregate amount not to exceed the Specified
Acquisition Amount at the time of such acquisition.
10. Section 7.6 of the Credit Agreement is hereby amended by inserting
the following new clause (c), immediately following the end of clause (b)
thereof:
"(c) Notwithstanding anything to the contrary contained in
this Agreement, during the period from the First Amendment Effective
Date to December 31, 2002, the US Borrower shall not, and shall not
permit any of its Subsidiaries or Eligible Joint Ventures to engage in
the construction of new hotels, enter into any commitments or
agreements to purchase any Hotels under or to be under, original
construction or to acquire any additional budget hotels, limited
service hotels or extended stay hotels other
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than (A) to engage in or continue the construction of the Margate
complex and (B) to invest an aggregate amount not to exceed $10,000,000
in a Holiday Inn prototype to be located in Denver, Colorado."
11. Section 7.13 of the Credit Agreement is hereby amended by (i)
inserting the reference "(a)" at the beginning of said section and (ii)
inserting the following new clause (b) immediately following the period at the
end of clause (a):
"(b) Notwithstanding anything to the contrary contained in
this Agreement, (i) the US Borrower shall not, and shall not permit any
of its Subsidiaries or Eligible Joint Ventures to invest in any Joint
Enterprises for the period from and including the First Amendment
Effective Date through December 31, 2001 and (ii) for the period from
January 1, 2002 until September 30, 2002, the US Borrower may invest in
Joint Enterprises, so long as (I) the Total Indebtedness for borrowed
money of the US Borrower does not exceed 60% of Total Value both before
and after giving effect to such investment and (II) at least 10
Business Days prior to the consummation of any such investment the US
Borrower shall deliver to the Administrative Agent a certificate of the
US Borrower's chief financial officer or treasurer certifying (and
showing calculations in reasonable detail) that the US Borrower would
have been in compliance with the financial covenants set forth in
Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, and 5.7, as amended hereby, for
the most recently ended four (4) Fiscal Quarters prior to the date of
such investment, in each case with such financial covenants to be
determined on a pro forma basis as if such investment had been
consummated on the first day of such four (4) Fiscal Quarter period
(and assuming that any Indebtedness incurred, issued or assumed in
connection therewith had been incurred, issued or assumed on the first
day of such four (4) Fiscal Quarter period); provided that to the
extent that the US Borrower's Total Indebtedness for borrowed money
exceeds 60% of Total Value either at the time of or after giving effect
to such investment, the US Borrower may only invest in a Joint
Enterprise in an aggregate amount not to exceed the Specified
Investment Amount at the time of such investment.
12. The Credit Agreement is hereby amended by inserting the following
new Section 7.17, immediately following the end of Section 7.16:
"7.17. Limitation on Capital Expenditures. The US Borrower
shall not, and shall not permit any of its Subsidiaries or Eligible
Joint Ventures to, incur any Discretionary Capital Expenditures during
the period from the First Amendment Effective Date until September 30,
2002, other than Discretionary Capital Expenditures for the expansion
or renovation of Hotels in an aggregate amount not to exceed the
Specified Discretionary Capital Expenditure Amount at the time of such
Discretionary Capital Expenditure.
II. Miscellaneous Provisions
1. In order to induce the Lenders to enter into this First Amendment,
each Borrower hereby represents and warrants on behalf of itself and its
respective Subsidiaries that (i) the representations and warranties of contained
in Article IV of the Credit Agreement are true and correct in all material
respects on and as of the First Amendment Effective Date (as defined
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below) (except with respect to any representations and warranties limited by
their terms to a specific date, which shall be true and correct in all material
respects as of such date), and (ii) there exists no Default or Event of Default
under the Credit Agreement on the First Amendment Effective Date, in each case
after giving effect to this First Amendment.
2. All of the parties hereby acknowledge and agree that since the
Meristar Merger has not been consummated, Dresdner Bank AG,
New York Branch and
Grand Cayman Branch and Societe General are each hereby released as parties
under the Credit Agreement and each hereby released of any and all obligations
thereunder.
3. The US Borrower hereby agrees to pay each Lender which delivers an
executed copy of this First Amendment (by hard copy or facsimile) to the
Administrative Agent by no later than 12:00 (Noon) (
New York time) on November
8, 2001, a fee (the "Amendment Fee") in an amount equal to 0.075% of such
Lender's Revolving Credit Commitment, which Amendment Fee shall be due and
payable on the first Business Day following the date on which the Super Majority
Lenders shall have executed and delivered this First Amendment.
4. This First Amendment is limited as specified and shall not
constitute an amendment, modification, acceptance or waiver of any other
provision of the Credit Agreement or any other Loan Document.
5. THIS FIRST 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.
6. This First Amendment shall become effective on the date (the "First
Amendment Effective Date") when each Borrower and the Super Majority Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of telecopier) the same
to the Administrative Agent.
7. From and after the First Amendment Effective Date, all references in
the Credit Agreement and in the other Loan Documents shall be deemed to be
referenced to the Credit Agreement as modified hereby.
* * *
[Signatures Omitted]
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