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SECOND AMENDMENT
TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "SECOND
AMENDMENT") is dated as of September 30, 1998 and entered into by and among
PRIME HOSPITALITY CORP., a Delaware corporation ("COMPANY"), the financial
institutions listed on the signature pages hereof ("LENDERS"), SOCIITI GINIRALE,
SOUTHWEST AGENCY, as Documentation Agent, CRIDIT LYONNAIS NEW YORK BANK, as
Syndication Agent and BANKERS TRUST COMPANY, as agent for Lenders ("AGENT"),
and, for purposes of Section 4 hereof, the Credit Support Parties listed on the
signature pages hereof, and is made with reference to that certain Amended and
Restated Senior Secured Credit Agreement dated as of December 17, 1997, by and
among Company, Lenders, Documentation Agent, Syndication Agent and Agent, as
amended by that certain First Amendment to Credit Agreement dated as of February
23, 1998 (collectively, the "CREDIT AGREEMENT"). Capitalized terms used herein
without definition shall have the same meanings herein as set forth in the
Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit
Agreement in the manner set forth below,
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO
DEFINED TERMS
Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the definition of "Market Equity Capitalization" therefrom in its
entirety and adding thereto the following definition, which shall be inserted in
proper alphabetical order:
"BASE AMOUNT" means in connection with the Development Plan,
$225,000,000 in the aggregate.
"DEVELOPMENT PLAN" means the development plan delivered by
Company to Agent, setting forth (a) the Capital Items to be expended and (b) the
Investments to be made by Company in Joint Ventures during the period September
1, 1998 through December 31, 1999, with such changes as are acceptable to Agent
(approval of such changes not to be unreasonably withheld or delayed), a copy of
which is annexed hereto as Exhibit XVI.
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"NET EQUITY PROCEEDS" means, the aggregate cash proceeds
(including any cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) received by Company or any of its Subsidiaries from any sale of Equity
Interests in Company less the sum, without duplication, of the direct costs
relating to such sale (including, without limitation, legal and accounting fees,
expenses and similar costs).
"NEW SOURCES" means, as of any date of determination, the sum,
without duplication, of (a) Net Equity Proceeds and (b) Net Cash Proceeds
derived from any Asset Sale, less (i) any and all Supplemental Amounts expended
from New Sources pursuant to subsection 5.19 and (ii) any and all amounts
expended from New Sources pursuant to subsection 6.5 in connection with any
Stock Repurchase, provided that Net Cash Proceeds shall exclude any and all
amounts procured through an Asset Sale with respect to (x) any beneficial
interests in MeriStar Hospitality Operating Partnership L.P., (y) any beneficial
interests in Equity Inns Partnership L.P. and (z) any Property listed on Exhibit
XVII annexed hereto.
"SECOND AMENDMENT EFFECTIVE DATE" shall have the meaning
assigned to such term in the Second Amendment to Credit Agreement dated as of
September 30, 1998.
"STOCK REPURCHASE" means the purchase, redemption,
acquisition, cancellation or otherwise retiring for value shares of Capital
Stock of Company and/or options on any such shares or related stock appreciation
rights or similar securities held by officers and employees or former officers
and employees (or their estates or beneficiaries under their estates), upon
death, disability, retirement, severance or termination of employment.
"SUPPLEMENTAL AMOUNTS" shall have the meaning assigned to such
term in subsection 5.19.
1.2 AMENDMENTS TO SECTION 3: CONDITIONS PRECEDENT
A. CONDITIONS TO ALL LOANS. Subsection 3.2C(viii) of the
Credit Agreement is hereby amended by deleting it in its entirety and
substituting the following therefor:
"(viii) after giving effect to the proposed borrowing, Company
will be in compliance, on a pro forma basis, with the provisions of
subsection 6.6E."
1.3 AMENDMENTS TO SECTION 5: COMPANY'S AFFIRMATIVE COVENANTS
A. Section 5 of the Credit Agreement is hereby amended by
adding a new subsection 5.19 at the end thereof as follows:
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"5.19 DEVELOPMENT PLAN.
On or before the Second Amendment Effective Date (as
hereinafter defined), Company shall deliver to Agent the Development Plan, which
plan shall include Capital Items to be expended in respect of the HomeGate and
AmeriSuites Properties. Company agrees that during the period September 1, 1998
through December 31, 1999, it shall expend all Capital Items and make
Investments in Joint Ventures (to the extent permitted under subsection 6.3)
subject to the monetary limits specified in the Development Plan and in an
aggregate amount not to exceed the Base Amount; provided that Company may make
capital expenditures, Renovations, Restorations, acquisitions and Investments,
to the extent otherwise permitted in the Credit Agreement, in amounts over and
above the Base Amount (collectively, "SUPPLEMENTAL AMOUNTS") so long as such
Supplemental Amounts do not in the aggregate exceed the correlative amount
indicated for each period below (inclusive of all amounts expended during any
prior period pursuant to this proviso); provided further that each of the
amounts referenced below may be increased by the amount of available New
Sources, but in no event shall the aggregate of all Supplemental Amounts exceed
$50,000,000:
MAXIMUM PERMITTED
SUPPLEMENTAL AMOUNTS
PERIOD (IN AGGREGATE)
9/1/98 - 3/31/99 $15,000,000
4/1/99 - 6/30/99 $30,000,000
7/1/99 - 12/31/99 $50,000,000
"
1.4 AMENDMENTS TO SECTION 6: FINANCIAL COVENANTS
A. RESTRICTED PAYMENTS. Subsection 6.5 of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting the following
therefor:
"6.5 RESTRICTED PAYMENTS.
The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, declare, order, pay, make
give, or publish notice or fix a date in respect of or set apart any sum for any
Restricted Payment, enter into an agreement or make any commitment to effect any
of the foregoing or take any other similar action in furtherance of or otherwise
in connection with the foregoing; provided that, (i) if no Potential Event of
Default or Event of Default exists and Company would be able to incur $1 of
additional Indebtedness pursuant to the Mortgage Note Indenture (as in effect on
the Closing Date), Company may elect to make one or more Stock Repurchases and
pay dividends or make other distributions on shares or purchase share
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of Capital Stock of Company in an aggregate amount not to exceed $25,000,000,
except that subject to the terms and conditions set forth in that certain Prime
Hospitality Corp. Limited Waiver to Credit Agreement dated as of August 5, 1998
by and among Company and Agent, Company may at any time during the 1999 calendar
year elect to make one or more Stock Repurchases in an aggregate amount not to
exceed $50,000,000 over and above the $25,000,000 amount otherwise permitted
herein, provided that (a) no additional Stock Repurchases shall occur on or
before December 31, 1998, (b) each such Stock Repurchase shall be effected only
through the use of New Sources and (c) the Minimum Interest Coverage Ratio as
calculated pursuant to subsection 6.6B(2) hereof shall be the greater of (1)
2.20 to 1.00 or (2) the correlative ratio otherwise set forth in the Credit
Agreement for the applicable period; (ii) Company and its Subsidiaries may make
Restricted Payments (but not any voluntary prepayments) in respect of
Indebtedness permitted pursuant to subsection 6.1 in accordance with, and to the
extent required by, the terms and provisions of the applicable Indebtedness;
(iii) Company may prepay Indebtedness permitted pursuant to subsection 6.1 with
the proceeds of refinancing indebtedness permitted pursuant to subsection
6.1(c); (iv) Company may prepay Indebtedness permitted pursuant to subsection
6.1(d), provided that the aggregate amount of principal payments prior to the
Maturity Date in respect of such Indebtedness shall not exceed $20,000,000; and
(v) Company may prepay Indebtedness referred to in clause (i) of the definition
of the term "Net Cash Proceeds" contained in Section 1.1."
B. FINANCIAL COVENANTS. Subsection 6.6D of the Credit
Agreement is hereby amended by deleting it in its entirety.
1.5 AMENDMENTS TO SECTION 7: EVENTS OF DEFAULT; REMEDIES
A. EVENTS OF DEFAULT. Subsection 7.1O of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting the following
therefor:
"O. EMPLOYMENT OF ▇▇▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇ ceases to be employed in a senior
position by Company for any reason (including the voluntary termination of such
employment by ▇▇▇▇ ▇▇▇▇▇▇) and Company shall fail to replace ▇▇▇▇ ▇▇▇▇▇▇, within
one hundred twenty (120) days after such cessation, with any person acceptable
to Agent and any one Co-Agent, in their sole and absolute discretion; or"
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Second Amendment shall become effective only
upon the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "SECOND
AMENDMENT EFFECTIVE DATE"):
A. On or before the Second Amendment Effective Date, Company
shall deliver to Agent executed copies of this Second Amendment (with sufficient
originally executed copies for each Lender and its counsel) dated the Second
Amendment Effective Date.
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B. On or before the Second Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such counsel,
and Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agent may reasonably request.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Second Amendment
and to amend the Credit Agreement in the manner provided herein, Company
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. Each of Company and the
Subsidiary Guarantors that are a party thereto have all requisite corporate
power and authority to enter into this Second Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Second Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Second Amendment and the performance of the Amended Agreement have been
duly authorized by all necessary corporate action on the part of Company and the
Subsidiary Guarantors, as the case may be.
C. NO CONFLICT. The execution and delivery by each of Company
and the Subsidiary Guarantors that are a party thereto of this Second Amendment
and the performance by Company and the Subsidiary Guarantors of the Amended
Agreement by Company do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than Liens created under any of the Loan Documents in favor of Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries, except for such approvals or consents which have been obtained
on or before the Second Amendment Effective Date and disclosed in writing to
Lenders.
D. GOVERNMENTAL CONSENTS. The execution and delivery by each
of Company and the Subsidiary Guarantors that are a party thereto of this Second
Amendment and all other operative documents being delivered pursuant to the
Second Amendment and the performance by
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Company of the Amended Agreement by Company do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
E. BINDING OBLIGATION. This Second Amendment and the Amended
Agreement have been duly executed and delivered by each of Company and the
Subsidiary Guarantors that are a party thereto, and will be legally valid and
binding obligations of Company and the Subsidiary Guarantors that are a party
thereto, enforceable against Company and the Subsidiary Guarantors that are a
party thereto, in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
F. GOVERNMENTAL REGULATION; SECURITIES ACTIVITIES. Neither the
making of the Loans pursuant to the Amended Agreement nor the granting of a
Security Interest in any Collateral (as defined in the Security Agreement)
pursuant to the Security Documents violates Regulations T, U or X of the Board
of Governors of the Federal Reserve System. It is not necessary in connection
with the execution and delivery of the Amended Agreement to register the Loans
under the Securities Act or to qualify any indenture under the Trust Indenture
Act of 1939, as amended.
G. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Second Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
H. ABSENCE OF DEFAULT. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Second Amendment that would constitute an Event of Default or a Potential Event
of Default.
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SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement and this Second
Amendment and consents to the amendment of the Credit Agreement effected
pursuant to this Second Amendment. Each Credit Support Party hereby confirms
that each Credit Support Document to which it is a party or otherwise bound and
all Collateral encumbered thereby will continue to guaranty or secure, as the
case may be, to the fullest extent possible the payment and performance of all
"Guarantied Obligations" and "Secured Obligations," as the case may be (in each
case as such terms are defined in the applicable Credit Support Document),
including without limitation the payment and performance of all such "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Second Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Second Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges
and agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Second Amendment, such Credit Support Party is not required by the terms of
the Credit Agreement or any other Loan Document to consent to the amendments to
the Credit Agreement effected pursuant to this Second Amendment and (ii) nothing
in the Credit Agreement, this Second Amendment or any other Loan Document shall
be deemed to require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
(i) On and after the Second Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the
"Credit Agreement", "thereunder", "thereof" or words of like import
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referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.
(ii) Except as specifically amended by this Second Amendment,
the Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Second
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power
or remedy of Agent or any Lender under, the Credit Agreement or any of
the other Loan Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs,
fees and expenses as described in subsection 8.2 of the Credit Agreement
incurred by Agent and its counsel with respect to this Second Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. EXHIBITS. The Credit Agreement is hereby amended by
annexing thereto a new Exhibit XVI and a new Exhibit XVII in the forms of
Exhibit XVI and Exhibit XVII, respectively, attached to this Second Amendment.
D. HEADINGS. Section and subsection headings in this Second
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Second Amendment for any other purpose or be given any
substantive effect.
E. APPLICABLE LAW. THIS SECOND AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
F. COUNTERPARTS; EFFECTIVENESS. This Second Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Second Amendment shall become
effective upon the execution of a counterpart hereof by Company, and Lenders and
each of the Credit Support Parties and receipt by Company and Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PRIME HOSPITALITY CORP.
By: __________________
Name:
Title:
HOMEGATE AUSTIN, INC., (for purposes of
Section 4 only) as a Credit Support Party
By: __________________
Name:
Title:
HOMEGATE HOSPITALITY, INC., (for
purposes of Section 4 only) as a Credit Support
Party
By: __________________
Name:
Title:
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BANKERS TRUST COMPANY,
as Agent and as a Lender
By: __________________
Name:
Title:
S-2
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CRIDIT LYONNAIS NEW YORK
BRANCH,
as Syndication Agent and as a Lender
By: __________________
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
AGENCY,
as Documentation Agent and as a Lender
By: __________________
Name:
Title:
S-4
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BANK LEUMI USA,
as a Lender
By: __________________
Name:
Title:
S-5
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BANKBOSTON, N.A.,
as a Lender
By: __________________
Name:
Title:
S-6
▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇ NATIONAL
ASSOCIATION,
as a Lender
By: __________________
Name:
Title:
S-7
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CIBC, INC.,
as a Lender
By: __________________
Name:
Title:
S-8
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FIRST NATIONAL BANK OF
COMMERCE,
as Lender
By: __________________
Name:
Title:
S-9
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IMPERIAL BANK,
as Lender
By: __________________
Name:
Title:
S-10
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NATIONSBANK, N.A.,
as Lender
By: __________________
Name:
Title:
S-11
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ORIX USA CORPORATION,
as Lender
By: __________________
Name:
Title:
S-12
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PNC BANK, N.A.,
as Lender
By: __________________
Name:
Title:
▇-▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
as Lender
By: __________________
Name:
Title:
S-14
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EXHIBIT XVI
DEVELOPMENT PLAN
[See Attached Page(s)]
Exh. XVI-1
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EXHIBIT XVII
WESTAR PROPERTIES
[See Attached Page(s)]
Exh. XVII-1