EXHIBIT 4.9
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT No. 2 dated as of November 30, 1999 to the Credit
Agreement dated as of October 18, 1996 (as heretofore amended, the "CREDIT
AGREEMENT") among HILTON HOTELS CORPORATION (the "BORROWER"), the BANKS party
thereto (the "BANKS"), ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent (the "DOCUMENTATION AGENT") and THE BANK OF NEW YORK, as
Administrative Agent (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower proposes to enter into a Five Year Credit
Agreement and a Short Term Credit Agreement of even date herewith with two
syndicates of lenders for which Bank of America, N.A. will act as
Administrative Agent providing for an aggregate $1,850,000,000 in new
revolving credit facilities (the "New Senior Credit Facilities"); and
WHEREAS, substantially concurrently herewith, the Borrower proposes
to consummate an acquisition of Promus Hotels Corporation; and
WHEREAS, the Borrower intends to use certain funds available under
the Credit Agreement and the New Senior Credit Facilities to finance a
portion of the exchange consideration payable to the former shareholders of
Promus Hotels Corporation; and
WHEREAS, in connection therewith, the parties hereto desire to make
certain modifications to the Credit Agreement;
NOW, THEREFORE, the Borrower and the Required Banks under Section
9.04 of the Credit Agreement hereby amend the Credit Agreement as follows:
1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit
Agreement shall have the meaning assigned to such term in the Credit
Agreement. Each reference to "hereof", "hereunder," "herein" and "hereby" and
each similar reference and each reference to this "agreement" and each other
similar reference contained in the Credit Agreement shall, after this
Amendment becomes effective, refer to the Credit Agreement as amended hereby.
2. DESIGNATION OF BANC OF AMERICA SECURITIES LLC AND ▇.▇.
▇▇▇▇▇▇. Banc of America Securities LLC and ▇.▇. ▇▇▇▇▇▇ are hereby designated
as co-lead arrangers and co-book managers of the Credit Agreement.
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3. AMENDMENTS TO CERTAIN EXISTING DEFINED TERMS. The
following terms defined in the Credit Agreement are hereby amended to read in
full as follows:
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period before (i) income taxes, (ii) interest expense, (iii)
depreciation and amortization, (iv) minority interest, (v)
extraordinary losses or gains, (vi) Pre-Opening Expenses, (vii)
transactional expenses associated with the Spin-Off and the Promus
Acquisition, (viii) discontinued operations and (ix) nonrecurring
non-cash charges; PROVIDED that:
(a) Consolidated EBITDA for any period shall be
adjusted on a pro forma basis (i) to include (or exclude)
amounts attributable to hotel operations acquired (or sold or
otherwise discontinued) during such period as if such
acquisition (or disposition) had occurred on the first day of
such period and (ii) to include amounts (annualized on a
simple arithmetic basis) attributable to hotel projects which
commenced operations during such period and were in operation
for at least one full fiscal quarter during such period;
(b) for purposes of determining Consolidated EBITDA
for any period, Consolidated Net Income shall exclude any
interest income attributable to the assumption or payment by
Park Place of the PPE Assumed Notes;
(c) in calculating "Consolidated EBITDA" for that
portion of any period occurring prior to the Effective Date,
"Consolidated EBITDA" shall be computed on the basis of the
combined operating results of the Borrower, Promus and their
respective Subsidiaries for such periods reflected in the Pro
Forma Combined Financial Statements; and
(d) the operating results of each New Project which
commences operations and records not less than one full fiscal
quarter's operations during the relevant period shall be
annualized on a simple arithmetic basis.
"Consolidated Net Income" means, for any period, the consolidated net
income of the Borrower and its Subsidiaries for such period determined
in accordance with generally accepted accounting principles, PROVIDED
that for that portion of any period occurring prior to the Effective
Date, such consolidated net income shall be the pro forma combined net
income of the Borrower, Promus and their respective Subsidiaries for
such periods reflected in the Pro Forma Combined Financial Statements
PLUS the Pro Forma Adjustments applicable to that portion of such
period.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business and obligations in the
nature of deferred employee compensation to the extent that such
deferred employee compensation obligations do not exceed $250,000,000,
in the aggregate, (iv) all obligations of such Person as lessee under
leases which are capitalized in accordance with generally accepted
accounting principles, (v) all other obligations secured by a Lien on
any
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asset of such Person, whether or not such obligations are otherwise
an obligation of such Person, in an amount equal to the lesser of the
amount of the obligation so secured or the fair value of the assets
subject to such Lien, and (vi) all obligations of others constituting
"Debt" under the foregoing clauses of this paragraph which are
Guaranteed by such Person; it being understood that "Debt" does not
include contingent obligations of such Person to reimburse any other
Person in respect of surety bonds or letters of credit.
"Investment Grade" means (i) with respect to S&P, a rating of BBB- or
higher and (ii) with respect to ▇▇▇▇▇'▇, a rating of Baa3 or higher.
"Rating Agencies" means S&P or ▇▇▇▇▇'▇.
4. ADDITIONAL DEFINED TERMS. Section 1.01 of the
Credit Agreement is hereby amended to add thereto the following terms:
"Consolidated Interest Expense" means, for any period, net interest
expense of the Borrower and its Subsidiaries for such period,
determined in accordance with generally accepted accounting principles,
PROVIDED that for that portion of any period occurring prior to the
Effective Date, "Consolidated Interest Expense" shall be computed on
the basis of the net interest expense allocated to the Borrower and its
Subsidiaries and shown on the Pro Forma Combined Financial Statements.
"New Project" means each new hotel or resort project (as opposed to any
project which consists of an extension or redevelopment of an operating
hotel or resort) having a development and construction budget in excess
of $50,000,000 which receives a certificate of completion or occupancy
and all relevant operational licenses, and in fact commences operations
after November 30, 1999.
"Pre-Opening Expenses" means, with respect to any fiscal period, the
amount of expenses (other than Consolidated Interest Expense) incurred
with respect to capital projects which are classified as "pre-opening
expenses" on the applicable financial statements of Borrower and its
Subsidiaries for such period (or, with respect to that portion of any
period occurring prior to September 30, 1999, the Pro Forma Combined
Financial Statements), prepared in accordance with generally accepted
accounting principles.
"Pricing Certificate" means a Pricing Certificate, substantially in the
form of Exhibit B to Amendment No. 2 to this Agreement, properly
completed and signed by an Authorized Officer.
"Pro Forma Adjustment" means an adjustment to the amount of
Consolidated Net Income set forth in the Pro Forma Combined Financial
Statements for the period prior to the Effective Date reflecting
anticipated synergies from the Merger (on a pro forma combined basis)
equal in each fiscal period set forth below to the amount set forth
opposite that fiscal period:
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FISCAL PERIOD PRO FORMA ADJUSTMENT
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January 1 through March 31, 1999 $10,000,000
April 1 through June 30, 1999 $10,000,000
July 1 through September 30, 1999 $10,000,000
October 1 through December 31, 1999 $9,500,000.
"Pro Forma Combined Financial Statements" means (a) from November 30,
1999 until the Borrower delivers the pro forma combined financial
statements described in Section 5.01(l), the pro forma combined
financial statements of the Borrower and its Subsidiaries (exclusive of
its former Gaming Segment) and Promus and its Subsidiaries for the
twelve month period ended September 30, 1999 heretofore delivered by
the Borrower to the Administrative Agent and each Bank, and (b)
thereafter, the pro forma combined financial statements for the twelve
month period ended December 31, 1999, so delivered.
"Promus" means Promus Hotel Corporation, Inc., a Delaware corporation.
"Promus Acquisition" means the merger of Promus Hotels Corporation with
a Subsidiary of the Borrower on the effective date hereof, as a result
of which the Borrower will own, directly or indirectly, all of the
issued and outstanding capital stock of the corporation surviving such
merger.
5. "STATUS" ELECTION. Section 5.01(c) of the Credit Agreement
is hereby amended to delete clause (iii) thereof, it being understood that the
Borrower shall not be required to notify the Administrative Agent or the Banks
of whether interest rates and fees shall be determined on the basis of its
Ratings or the Leverage Ratio (with the Borrower to automatically receive the
benefits of the more favorable basis of computation).
6. PRICING CERTIFICATE AND COMBINED PRO FORMAS. Section 5.01
of the Credit Agreement is further amended to add thereto new clause (k) and
(l), to read in full as follows:
"(k) as soon as available and in any event not later than the
last day of February of each year, a completed Pricing Certificate as
of December 31 of the prior year; and
"(l) as soon as available and in any event no later than March
31, 2000, a pro forma combined statement of income of the Borrower,
Promus and their respective Subsidiaries for the period commencing
January 1, 1999 and ending on December 31, 1999, and a pro forma
combined balance sheet of the Borrower, Promus and their respective
Subsidiaries as at December 31, 1999, in each case prepared in a manner
consistent with the Pro Forma Combined Financial Statements delivered
to the Administrative Agent and the Banks prior to the date hereof."
7. MAXIMUM LEVERAGE RATIO. Section 5.09 of the Credit
Agreement is hereby amended to read in full as follows:
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"5.09 LEVERAGE RATIO. The Leverage Ratio will not, as of the last day
of any fiscal quarter of Borrower described in the matrix below, exceed
the ratio set forth opposite that fiscal quarter:
FISCAL QUARTERS ENDING MAXIMUM RATIO
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September 30, 1999 through and
including December 31, 2000 5.00:1.00
March 31, 2001 through and including
March 31, 2002 4.75:1.00
Thereafter 4.50:1.00."
8. PRICING REVISIONS. The Pricing Schedule attached to the
Credit Agreement is hereby amended and restated in its entirety as set forth
on Exhibit A hereto.
9. AMENDMENT FEE. Concurrently with the effectiveness of
this Amendment, the Borrower shall pay to the Administrative Agent, for the
ratable account of each of the Banks, an amendment fee equal to 0.10% of the
aggregate Commitments of the Banks.
10. REPRESENTATIONS OF BORROWER. The Borrower represents
and warrants that (i) the representations and warranties of the Borrower set
forth in Article 4 of the Credit Agreement will be true on and as of the
Amendment Effective Date and (ii) no Default will have occurred and be
continuing on such date.
11. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
12. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
13. EFFECTIVENESS. This Amendment shall become effective as
of the date hereof on the date (the "AMENDMENT EFFECTIVE DATE") when the
Administrative Agent shall have received the signatures hereto from the
Required Banks and an executed counterpart hereof signed by Borrower.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
HILTON HOTELS CORPORATION
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
and Assistant Treasurer
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THE BANK OF NEW YORK, as Administrative Agent and
as a Bank
By:
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[Printed or Typed Name and Title]
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