EXHIBIT 10.2
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED SECURED REVOLVING CREDIT
AGREEMENT ("Amendment") is made as of March __, 2004 by and among the following:
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership having
its principal place of business at c/o Equity Inns, Inc., 0000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 ("Operating Partnership"), the sole
general partner of which is Equity Inns Trust;
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P., a Tennessee limited
partnership having its principal place of business c/o Equity Inns, Inc., 0000
Xxxx Xxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 ("EIP/WV"), the sole general
partner of which is Equity Inns Services, Inc., a Tennessee corporation which is
wholly-owned by Equity Inns, Inc.;
EQUITY INNS PARTNERSHIP II, L.P., a Tennessee limited partnership
having its principal place of business c/o Equity Inns, Inc., 0000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 ("Equity II"), the sole general partner
of which is Equity Inns Trust and the sole limited partner of which is the
Operating Partnership (the Operating Partnership, EIP/WV and Equity II being
referred to herein collectively as the "Borrower");
BANK ONE, NA ("Bank One"), a national bank organized under the laws of
the United States of America having an office at 0 Xxxx Xxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, as Administrative Agent ("Administrative Agent") and as a
Lender; and
Each of the remaining Lenders that are signatories hereto.
RECITALS
A. Borrower is primarily engaged in the business of the acquisition and
development of premium limited service, premium extended stay and premium
all-suite and full-service hotel properties.
B. The parties hereto have entered into an Amended and Restated Secured
Revolving Credit Agreement dated as of June 11, 2003, as amended by that First
Amendment to Credit Agreement dated as of January 21, 2004 (the "Credit
Agreement") to make loans available to the Borrower pursuant to the terms
thereof ("Facility"). All capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the Agreement.
C. Borrower has requested a change in certain terms contained in the
Credit Agreement and the Lenders have agreed to such a change on the terms
contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AMENDMENTS
1. The foregoing recitals to this Amendment are incorporated into and made part
of this Amendment.
2. The definition of "Cash Available for Distribution" is added to Article I of
the Credit Agreement to read as follows:
"Cash Available for Distribution" for any period, means Funds
From Operations adjusted by (i) subtracting the normalized
recurring capitalized expenditures at a minimum amount equal
to the Agreed FF&E Reserve (e.g. new floor covering,
carpeting, drapes, paint, and exterior preparation), (ii)
adjusted for all non-cash items, and (iii) adjusted for any
non-recurring expenditures and extraordinary items.
3. Section 9.4 (b) is hereby amended and restated to read as follows:
(b) For each fiscal quarter, the aggregate amount of
dividends paid by Equity Inns (excluding Preferred Stock
Expense) for the most recent four fiscal quarters for which
financial reports are available to exceed the lesser of: (i)
an amount equal to 1.05 times the Cash Available for
Distribution for such period and (ii) an amount equal to $0.52
per share of common stock for such period; provided however,
if Equity Inns increases dividends to greater than $0.52 per
share of common stock, provided that the ratio of such
dividends paid for the most recent four (4) fiscal quarters to
Cash Available for Distribution for such period is less than
or equal to 0.90, then, the maximum amount of such dividends
payable for such fiscal quarter and each fiscal quarter
thereafter shall not cause the ratio of such dividends for the
most recent four (4) fiscal quarters to Cash Available for
Distribution for such period to exceed 0.90. Such amount of
$0.52 per share of common stock shall be adjusted
appropriately in the case of any stock split or other such
change in common stock structure. Cash Available for
Distribution shall be determined on a consistent basis with
the prior financial statements of Equity Inns, as approved by
the Administrative Agent, provided that Equity Inns may, so
long as an Event of Default does not exist, pays the minimum
amount of dividends required to maintain its tax status as a
real estate investment trust under the Code.
4. Section 9.4 (d) is hereby deleted in its entirety.
5. Exhibit I to the Credit Agreement is hereby deleted in its entirety and
replaced by Exhibit I attached hereto.
6. Borrower hereby represents and warrants that:
(a) no Default or Unmatured Default exists under the Loan
Documents;
(b) the Loan Documents are in full force and effect and
Borrower has no defenses or offsets to, or claims or
counterclaims relating to, its obligations under the
Loan Documents;
(c) there has been no material adverse change in the
financial condition of Borrower as shown in its
December 31, 2003 financial statements;
(d) Borrower has full corporate power and authority to
execute this Amendment and no consents are required
for such execution other than any consents which have
already been obtained; and
(e) all representations and warranties contained in
Article 6 of the Credit Agreement are true and
correct as of the date hereof and all references
therein to "the date of this Agreement" shall refer
to "the date of this Amendment."
7. Except as specifically modified hereby, the Credit Agreement is and remains
unmodified and in full force and effect and is hereby ratified and
confirmed. All references in the Loan Documents to the "Credit Agreement"
henceforth shall be deemed to refer to the Credit Agreement as amended by
this Amendment.
8. This Amendment may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto
may execute this Amendment by signing any such counterpart. This Amendment
shall be construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois, but giving effect to federal laws
applicable to national banks.
9. This Amendment shall become effective when it has been executed by Borrower,
Administrative Agent, and the Lenders.
IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent have executed this Amendment as of the date first above
written.
BORROWER: EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST, its General
Partner
By:
-----------------------------------
Title:
-----------------------------------
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.
By: EQUITY INNS SERVICES, INC., its
General Partner
By:
-----------------------------------
Title:
-----------------------------------
EQUITY INNS PARTNERSHIP II, L.P.
By: EQUITY INNS TRUST, its General
Partner
By:
-----------------------------------
Title:
-----------------------------------
LENDERS: BANK ONE, NA
Individually and as Administrative Agent
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
Corporate Real Estate Division
0 Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx Xxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
CREDIT LYONNAIS NEW YORK BRANCH
Individually and as Syndication Agent and
Co-Lead Arranger
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
Lodging Group
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telephone: 212/000-0000
Telecopy: 212/261-7532
FLEET NATIONAL BANK
Individually and as Documentation Agent
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
000 Xxxxxxxxx Xxxxxx Xxxxx X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Telecopy: 770-391-9811
NATIONAL BANK OF COMMERCE
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: 901/000-0000
Telecopy: 901/757-4883
AMSOUTH BANK
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
0000 Xxxxx Xxxxxx Xxxxx
XxXxxxx-Xxxxx Tower, 9th Floor
Birmingham, Alabama 35203
Attention: Xxxxxxxx Xxxxx
Telephone: 205/000-0000
Telecopy: 205/326-4075
UNION PLANTERS BANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
0000 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: 901/000-0000
Telecopy: 901/580-5451
The undersigned, Equity Inns, Inc. and Equity Inns Trust, are parties
to the Credit Agreement for purposes of making the representations and
warranties contained in Article VII thereof and agreeing to perform certain of
the covenants described in Article VIII thereof and hereby confirm that the
Credit Agreement remains in full force and effect and hereby consent to the
terms of this Amendment.
EQUITY INNS, INC.
By:
-----------------------------------
Title:
-----------------------------------
EQUITY INNS TRUST
By:
-----------------------------------
Title:
-----------------------------------
EXHIBIT I
FORM OF COMPLIANCE CERTIFICATE
EXHIBIT I
FORM OF COMPLIANCE CERTIFICATE
Under that certain Amended and Restated Secured Revolving Credit Agreement dated
as of June 11, 2003, as amended by that certain First Amendment to Credit
Agreement dated as of January 21, 2004, and that certain Second Amendment to
Credit Agreement dated as of March __, 2004 (the "Credit Agreement"), between
Equity Inns Partnership, L.P., Equity Inns / West Virginia Partnership, L.P. and
Equity Inns Partnership II, L.P., as Borrower and Bank One, NA ("Bank One") as
Administrative agent, Credit Lyonnais New York Branch as Syndication Agent and
Co-Lead Arranger, Fleet Bank, as Documentation Agent, and the Lenders defined
therein (the "Credit Agreement").
The undersigned, as _________________ of Equity Inns Partnership L.P., and as
_________________ of Equity Inn / West Virginia Partnership L.P., pursuant to
Section 8.2 of the Credit Agreement, hereby certify to Bank One as
Administrative Agent as follows:
1. A review of the activities of Borrower during the most recent ended
fiscal quarter (which quarter ended _______) of the Borrower has been
made under my supervision.
2. As of the date hereof, all of the representations and warranties of
Borrower contained in the Credit Agreement and each of the Loan
Documents (as defined in the Credit Agreement) are true and correct in
all material respects (except to the extent that they speak to a
specific date or are based on facts which have changed by transactions
expressly contemplated or permitted by the Credit Agreement).
3. No event has occurred and is continuing which constitutes an Event of
Default or a potential Event of Default.
4. The following Borrowing Base computation for the most recent ended
fiscal quarter, together with the supporting schedule attached hereto is
true and correct:
A. Total Collateral Pool Asset Values
$----------------------
B. 55% of A
$----------------------
C. The principal amount which would
produce an Included Collateral
Pool Debt Service Coverage Ratio
of 1.75 (from 1L of Schedule I)
$----------------------
D. 55% of the total Collateral Pool
Asset Values of the Excluded
Properties and Properties Under
Development
$----------------------
E. C plus D
$----------------------
F. The lesser of B and E
$----------------------
OR
G. Total Collateral Pool Asset Values
$----------------------
H. 60% of G
$----------------------
I. The principal amount which would
produce an Included Collateral
Pool Debt Service Coverage Ratio
of 1.75 (from 1L of Schedule I)
$----------------------
J. 60% of the total Collateral Pool
Asset Values of the Excluded
Properties and Properties Under
Development
$----------------------
K. I plus J
$----------------------
L. Six (6) times the aggregate Adjusted
Net Operating Income of all Included
Collateral Pool Assets for the most
recent four (4) consecutive fiscal
quarters
$----------------------
M. The lowest of H and K and L
$----------------------
N. Allocated Facility Amount
$----------------------
The Greater of F or M
5. The following covenant computations, for the most recent ended fiscal
quarter, together with the supporting schedule attached hereto, are true
and correct:
8.3 Limitations on Properties Under Development
$---------------------
A. Aggregate Total Cost of all Properties
Under Development
$---------------------
B. 10% of Total Cost of all Properties owned
by the Consolidated Group
$---------------------
A must be less than or
equal to B
9.3 Leverage.
A. Total Indebtedness
$---------------------
B. EBITDA
$---------------------
C. A divided by B
$---------------------
D. 5.50
E. 5.25 C must be less than or
F. 5.00 equal to: D through
12/31/04; E from
1/1/05 through
12/31/06; F from
1/1/06 through
12/31/07; and G
thereafter
9.3 Additional Recourse Indebtedness
A. Recourse Indebtedness of the
Consolidated Group
$---------------------
B. Allocated Facility Amount
$---------------------
C. $50,000,000 D. B plus C
$---------------------
A must be less than or
equal to D
9.4 Dividends
9.4(a) A. Total dividends for the past four
quarters (excluding Preferred Stock
Expense)
$---------------------
B. 90% of the Funds From Operations for
the past four quarters
$---------------------
A must be less than or
equal to B
9.4(b) A. Total dividends for the past four quarters
(excl. Preferred Stock Expense)
$---------------------
B. Cash Available for Distribution
$---------------------
C. Ratio of A to B
$---------------------
See 9.4(b)for compliance
9.4(c) A. Amount of Dividends preceding quarter
(excluding Preferred Stock Expense)
$---------------------
B. Amount of Dividends This Quarter
$---------------------
B must beless than or
equal to A if the ratio
of Total Indebtedness
to BITDA exceeds 5.25x
9.5 Floating Rate Debt
A. Floating Rate Debt
$---------------------
Must be less than $150mm
9.7 FF&E Expenditures.
A. Total actual expenditures of the
Consolidated Group for FF&E replacement
and approved capital improvements for the
Properties for the past four quarters.
$---------------------
B. Amount of reserves maintained on the
balance sheet on the last day of the
period by the Consolidated Group for
FF&E replacement and approved capital
improvements less the amount of such
reserves maintained as of the first day
of the period.
$---------------------
C. Sum of A plus B
$---------------------
D. 4% of gross room revenues for the past
four quarters for the Properties
$---------------------
C must be greater than
or equal to D
9.8(a) Minimum Tangible Net Worth.
A. Tangible Net Worth of the Consolidated
Group
$---------------------
B. 80% of Tangible Net Worth at 12/31/02
$---------------------
C. 75% of equity interest issued after
12/31/02
$---------------------
D. Sum of B and C
$---------------------
A must be greater than
or equal to D
9.8(b) Minimum Fixed Charge Coverage
A. Adjusted EBITDA for the most recent
12 calendar months
$---------------------
B. Ground Lease Expense for the most
recent 12 calendar months
$---------------------
C. Sum of A plus B
$---------------------
D. Fixed Charges for the most recent
12 calendar months
$---------------------
E. C divided by D
---------------------
E must be greater than
or equal to the amount
specified in Section
9.8(b) for the
applicable time period
9.8(c) Minimum Interest Coverage
A. Adjusted EBITDA for the most recent
12 calendar months
$---------------------
B. Interest Expense for the most recent
12 calendar months
$---------------------
C. A divided by B
---------------------
C must be greater than
or equal to the amount
specified in Section
9.8(c) for the
applicable time period
9.11 Share Repurchase
A. Total amount paid by Equity Inns for
stock repurchase during the most
recently completed quarter
$---------------------
B. Amount Available for dividend payments
during such quarter
$---------------------
C. Amount of Dividends paid during such
quarter
$---------------------
A must be less than
B-C
The following computation of the limits imbedded in the definitions, together
with the supporting schedule attached hereto, is true and correct.
Limitations in Borrowing Base (See definition of "Eligible Property")
Borrower Properties
A. Borrowing Base
$---------------------
B. Total Collateral Pool Asset Values
of Properties which are, directly or
indirectly, wholly owned and controlled
by Borrower
$---------------------
C. B divided by A
---------------------%
C must be greater than
or equal to 90%
Fee Simple Properties
D. Total Collateral Pool Asset Values
of Properties which are, directly or
indirectly, held in fee simple by Borrower
or a Wholly-Owned Subsidiary
$---------------------
E. D divided by A
---------------------%
E must be greater than
or equal to 90%
State Concentration
F. Total Collateral Pool Asset Values of
all Collateral Pool Assets located in the
state containing the Properties which makes
up the greatest percentage of the Borrowing
Base
$---------------------
G. F divided by A
---------------------%
G must be less than or
equal to 25%
Individual Asset Concentration
H. Collateral Pool Asset Value of the
Collateral Pool Asset which makes up
the greatest percentage of the Borrowing
Base
$---------------------
I. H divided by A
---------------------%
I must be less than or
equal to 20%
Properties Under Development
J. Total amount of the Borrowing Base
attributable to Properties Under
Development
$---------------------
J must be less than
$25,000,000
K. Total Amount of Borrowing Base
attributable to Excluded Properties
$---------------------
J plus K must be less
than $35,000,000
Limitation on Excluded Investment Affiliates (see definition)
Ownership Percentage
A. The largest Consolidated Group
Pro Rata Share of any Investment
Affiliate
$---------------------
A must be less than
20%
Book Value
B. The aggregate book value of the
Consolidated Group's investment in all
Excluded Investment Affiliates
$---------------------
C. $20,000,000
D. $25,000,000
E. The amount of the Borrowing Base
attributable to Properties Under Development
$---------------------
F. D minus E
$---------------------
G. The lesser of C and F
$---------------------
B must be less than or
equal to G
In addition, the Consolidated Group does not have voting control of, or the
ability to otherwise direct the actions of any Investment Affiliate, and no
Investment Affiliate has Indebtedness which is recourse to, or guaranteed by,
any member of the Consolidated Group.
Date:
------------------------------------
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
SCHEDULE I
CALCULATION OF COVENANTS
1. Included Collateral Pool Debt Service Coverage Ratio
A. Net Operating Income of all Included
Collateral Pool Assets for the past
four quarters
$---------------------
B. Agreed FF&E Reserve for the past four
quarters
$---------------------
C. A minus B
$---------------------
D. C divided by 1.75 = annual debt service
payment amount resulting in 1.75 Included
Collateral Pool Debt Service Coverage Ratio
$---------------------
E. Average Interest Rate for the Facility for
the past 4 quarters
---------------------%
F. D divided by E
$---------------------
G. Yield on 10-year Treasuries as of the
last Business Day of the most recently
completed quarter.
---------------------%
H. 2.50%
I. G plus H
---------------------%
J. 6.75%
---------------------%
K. Higher of I or J
---------------------%
L. Debt Service Constant for loan with equal
monthly payments and an interest rate equal
to K above and a 25 year amortization
Schedule.
---------------------%
M. D divided by L
$---------------------
N. The lesser of F and M (The principal amount
which would produce an Included Collateral
Pool Debt Service Coverage Ratio of 1.75)
$---------------------
2. Total Cost
A. Book Value of all Properties owned by the
Consolidated Group
$---------------------
B. Accumulated Depreciation on such Properties
$---------------------
C. Consolidated Group Pro Rata Share of the
book value of all properties owned by
Investment Affiliates
$---------------------
D. Consolidated Group Pro Rata Share of the
depreciation associated with such
Properties owned by Investment Affiliates
$---------------------
E. Sum of A, B, C, and D
$=====================
3. Total Indebtedness
A. Indebtedness of the Consolidated Group
1. indebtedness for borrowed money
$---------------------
2. obligations under financing and
capital leases
$---------------------
3. Guarantee Obligations
$---------------------
4. Letters of credit
$---------------------
5. Other items which constitute Indebtedness
not included in the above
$---------------------
B. Consolidated Group Pro Rata Share of all Indebtedness of any
Investment Affiliate other than Excluded Investment Affiliates (to the extent
not included in A)
1. Indebtedness for borrowed money
$---------------------
2. Obligations under financing and
capital leases
$---------------------
3. Guarantee Obligations
$---------------------
4. Letters of Credit
$---------------------
5. Other items which constitute Indebtedness
not included in the above
$---------------------
C. Sum of A and B equals Total Indebtedness
$---------------------
4. EBITDA for the most recent four quarters
A. EBITDA of the Consolidated Group excluding
income from Investment Affiliates
$---------------------
B. Consolidated Group Pro Rata Share of EBITDA
of Investment Affiliates other than Excluded
Investment Affiliates
$---------------------
C. All extraordinary items included in A or B
$---------------------
D. All gains or losses from sale of assets
$---------------------
E. Adjustment for Properties not owned during
whole period
$---------------------
F. Sum of A plus B less sum of C plus D plus
or minus E equals EBITDA
$---------------------
5. Adjusted EBITDA for the most recent four quarters
A. EBITDA for the most recent four quarters
$---------------------
B. 4% of gross room revenues for the past
four quarters on all Properties
$---------------------
C. A minus B equals Adjusted EBITDA
$---------------------
6. Interest Expense for the most recent four quarters
A. Interest Expense of the Consolidated Group
$---------------------
B. Consolidated Group Pro Rata Share of any
accrued or paid interest of an Investment
Affiliate other than Excluded Investment
Affiliates)
$---------------------
C. Sum of A plus B equals Interest Expense
$---------------------
7. Fixed Charges for the most recent four quarters
A. Interest Expense
$---------------------
B. Regularly scheduled principal payments of
Indebtedness of the Consolidated Group
$---------------------
C. Consolidated Group Pro Rata Share of any
regularly scheduled principal payments of
an Investment Affiliate (other than Excluded
Investment Affiliates)
$---------------------
D. Preferred Stock Expense
$---------------------
E. Ground Lease Expense
$---------------------
F. Sum of A, B, C, D, and E equals Fixed
Charges
$---------------------
8. Cash Available for Distribution ("CAD") for the past four Quarters
A. Funds From Operations for the past
four quarters
$---------------------
B. Normalized recurring cash expenditures
$---------------------
C. All non-cash items
$---------------------
D. Non recurring expenditures and extraordinary
items
$---------------------
E. A minus B adjusted for C and D equals CAD
$---------------------
