FORBEARANCE AND WAIVER AGREEMENT
EXHIBIT
10.8
This FORBEARANCE AND WAIVER AGREEMENT (this “Agreement”), dated as of October 14,
2009, is made by and between CONCORD REAL ESTATE CDO 2006-1, LTD., an exempted company with limited
liability under the laws of the Cayman Islands (“Concord CDO”), MORGANS GROUP LLC, a
Delaware limited liability company (and, together with it successors and/or assigns as permitted
hereunder, “Morgans”) and XXXXX XXXXXX SENIOR MEZZ LLC, a Delaware limited liability
company (the “Xxxxxx Borrower”).
WITNESSETH:
WHEREAS, Morgans has requested that Concord CDO waive, or forbear from exercising its rights
under, certain provisions of (ii) that certain Loan and Security Agreement (the “Xxxxxx Loan
Agreement”), dated as of October 6, 2006, between the Xxxxxx Borrower and Wachovia Bank,
National Association, a national banking association (“Wachovia”), and (ii) the related
Promissory Note dated October 6, 2006 (the “Xxxxxx Note,” and together with the Xxxxxx Loan
Agreement, the “Xxxxxx Loan Documents”) in the original principal amount of $32,500,000.00
made by the Xxxxxx Borrower to Wachovia; and
WHEREAS, in connection with such request, Concord CDO, in its capacity as the holder of the
Xxxxxx Note, has agreed to enter into this Agreement with Morgans and the Xxxxxx Borrower on the
terms and conditions set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Xxxxxx Loan Documents. As used in this Agreement, the
following terms shall have the following meanings:
“111 Debt” means 111 Debt Acquisition-Key LLC, a Delaware limited liability company.
“Concord CDO” shall have the meaning set forth in the preamble above.
“Forbearance Period” shall mean the period from (x) the date hereof through (y) the
earliest to occur of (1) October 12, 2013, (2) an Event of Default (other than any Event of Default
deemed to be waived pursuant to this Agreement), or (3) the date on which the Xxxxxx Borrower fails
to have a Rate Cap Agreement in effect on the outstanding principal balance of the Xxxxxx Note (as
reduced by the Xxxxxx Payment or as a result of subsequent principal repayments), which Rate Cap
Agreement shall comply with the terms of Section 2.1(e)(iii)(B) of the Xxxxxx Note as modified by
such terms as have been mutually agreed upon by the parties in connection with transactions
contemplated hereby; provided, however, the Forbearance Period shall terminate if:
(i) Morgans shall not have exercised its right to acquire the Scottsdale Bonds
by December 31, 2011 and 111 Debt shall not have exercised its right to sell the
Scottsdale Bonds by January 30, 2012 and the acquisition of the Scottsdale Bonds
shall not have occurred in accordance with such terms as have been mutually agreed
upon by the parties in connection with transactions contemplated hereby; or
(ii) Morgans shall not have exercised its right to acquire the LA Bond by
October 11, 2011 and the acquisition of the LA Bond shall not have occurred in
accordance with such terms as have been mutually agreed upon by the parties in
connection with transactions contemplated hereby; or
(iii) Morgans or the Xxxxxx Borrower fails to pay to the holder of the Xxxxxx
Note, in lieu of interest thereon at the stated rate, on the 9th day of
each month (or if such day is not a Business Day the next succeeding Business Day),
and such failure continues for a period of 5 days after receipt of notice of such
nonpayment from the holder of the Xxxxxx Note to Morgans, during the period from
October 12, 2011 to, but excluding October 12, 2013, an amount equal to the interest
payment that would be required to be paid on a loan with an outstanding principal
balance equal to the average daily outstanding principal amount owing on the Xxxxxx
Loan (as reduced by the Xxxxxx Payment or as a result of subsequent principal
repayments) during each such month and bearing interest at the Forbearance Rate
computed on the basis of a year of 360 days and paid for the actual number of days
elapsed.
“Forbearance Rate” shall mean, (i) for the period from, and including, October 12,
2011 to, but excluding, October 12, 2012, the greater of (x) the LIBOR Rate plus 600 basis points
or (y) 9% per annum, and (ii) for the period from, and including, October 12, 2012 to, but
excluding, October 12, 2013, the greater of (x) the LIBOR Rate plus 900 basis points or (y) 12% per
annum.
“Xxxxxx Borrower” shall have the meaning set forth in the preamble above.
“Xxxxxx Loan” shall that certain mezzanine loan made to the Xxxxxx Borrower in the
original principal amount of $32,500,000 pursuant to the Xxxxxx Loan Agreement.
“Xxxxxx Loan Agreement” shall have the meaning set forth in the recitals above.
“Xxxxxx Loan Documents” shall have the meaning set forth in the recitals above.
“Xxxxxx Note” shall have the meaning set forth in the recitals above.
“Xxxxxx Payment” shall mean $6,000,000.
“LA Bond” shall mean the Series 2007-Whale 8 Class MH-2 with a current principal
balance of $3,200,000.
“Morgans” shall have the meaning set forth in the preamble above.
2
“Permitted Refinancing” shall mean an extension, modification, amendment,
restructuring, or refinancing of the Mortgage Loan so long as (i) the principal amount of the new
loan shall in no event exceed the principal balance of the Mortgage Loan on the date such new loan
is advanced, plus the amount of fees incurred in connection with any such extension, modification,
amendment, restructuring, or refinancing (subject to the limitation set forth in clause (ii)), (ii)
the interest rate payable, together with all fees paid in connection with such new loan to the
lender thereof or its affiliate, considered in their totality do not exceed 110% of then market
rates for loans of similar size, maturity, and nature (taking into account, among other things, the
value of and cash flows generated by the collateral and other financial characteristics of the
loan), (iii) the stated maturity date of the new loan is not earlier than October 12, 2013 (other
than in the case of an extension, modification, amendment, or restructuring of the Mortgage Loan),
(iv) the new loan has an amortization schedule and other provisions requiring payment of principal
before maturity that are customary for similar loans based on then existing conditions in the
credit markets, (v) the lender under the new loan agrees to enter into an intercreditor agreement
with the holder of the Xxxxxx Loan on terms that are customary for similar loans (taking into
account, among other things, the value of and cash flows generated by the collateral and other
financial characteristics of the loan) based on then existing conditions in the credit markets, and
(vi) the new loan shall not contain terms that cause any of the following:
(a) increase the monetary obligations of the borrower under the new loan (other than
principal, interest, and fees, which are governed by clauses (i) and (ii) above) in any
material respect;
(b) establish a cash management system for the cash generated by the business of the
borrower under the new loan that is more restrictive as it applies to the holder of the
Xxxxxx Loan than is customary for similar loans (taking into account, among other things,
the value of and cash flows generated by the collateral and other financial characteristics
of the loan) based on then existing conditions in the credit markets;
(c) provide to the lender under the new loan any contingent or additional interest or
similar “equity participation,” unless the payment of any such amounts is subordinated in
right of payment to payment of the Xxxxxx Loan; or
(d) modify the definition of an “Event of Default” under the Mortgage Loan or add any
default provisions unless such modification or addition is customary for similar loans
(taking into account, among other things, the value of and cash flows generated by the
collateral and other financial characteristics of the loan) based on then existing
conditions in the credit markets.
“Scottsdale Bonds” shall mean the Series 2006-FL4 Class N-MON with a current principal
balance of $1,133,143, and the Series 2006-FL4 Class O-MON with a current principal balance of
$1,473,799.
“Wachovia” shall have the meaning set forth in the recitals above.
3
2. Waiver of Certain Requirements for Extension Option. Concord CDO hereby waives the
following requirements set forth in Section 2.1(e) of the Xxxxxx Note in connection with the
exercise from time to time of any Extension Option:
(a) Delivery of the Maturity Date Notice (such notice being deemed to have been given
hereby);
(b) payment of a fee of $100,000, as set forth in Section 2.1(e)(i) of the Xxxxxx Note;
(c) payment of the Extension Fee set forth in Section 2.1(e) of the Xxxxxx Note; and
(d) delivery of proof of a specified debt service coverage, as set forth in Section
2.1(e)(iii)(A) of the Xxxxxx Note.
3. Forbearance and Waiver. Concord CDO hereby agrees:
(a) during the Forbearance Period, to (i) forbear from exercising any remedies it may
have in connection with the Xxxxxx Loan as a result of the Xxxxxx Borrower’s failure to
satisfy the Xxxxxx Note in full on the Maturity Date or Extended Maturity Date including,
without limitation, charging default interest or late fees and (ii) permit the Xxxxxx
Borrower to exercise all rights that it is entitled to exercise in the absence of an Event
of Default; and
(b) that any Event of Default that would otherwise be deemed to have occurred and be
continuing under the Xxxxxx Note and Xxxxxx Loan Agreement by reason of (i) Xxxxxx
Borrower’s failure to satisfy the Xxxxxx Note in full on the Maturity Date or Extended
Maturity Date or in connection with the consummation of any Permitted Refinancing or (ii) an
event described in Section 3.01(e) of the Xxxxxx Loan Agreement occurring from and after
July 12, 2010 shall, in each case, automatically and without further action by any Person be
deemed to be waived; provided that the waiver of any Event of Default described in clause
(ii) shall automatically be deemed to be withdrawn upon the commencement of foreclosure
proceedings or other exercise of collateral remedies under the Mortgage Loan against the
Premises and such waiver shall automatically be deemed to be reinstated if such foreclosure
or other exercise of collateral remedies is subsequently withdrawn or cured.
4. Notices. Any notice pursuant to the terms and conditions of this Agreement shall
be in writing and either (a) delivered personally; (b) sent by certified mail, return receipt
requested; (c) sent by a recognized overnight mail or courier service with delivery receipt
required; or (d) sent by facsimile transfer and acknowledged by recipient, and will be deemed to
have been given when received by the party to whom addressed. Notices shall be directed as
follows:
| If to Concord CDO: | 0 Xxxxxxxx Xxxxx, Xxxxx 000, P.O. Box 9507 | |||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attention: Xxx Xxxxxx FAX Number: (000) 000-0000 |
4
| with copies by regular mail or such hand delivery or facsimile transmission to: | ||||
| Post Xxxxxxx & Xxxxxxx LLP | ||||
| Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000 | ||||
| Xxxxxxx, Xxx Xxxx 00000 | ||||
| Attention: Xxxxx X. Xxxxxxx, Esquire | ||||
| FAX Number: (000) 000-0000 | ||||
| If to Morgans | ||||
| or Xxxxxx Borrower: | 000 Xxxxx Xxxxxx | |||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attention: Xxxxx Xxxxx, Executive Vice President and | ||||
| Chief Legal Officer | ||||
| FAX Number: (000) 000-0000 | ||||
| with copies by regular mail or such hand delivery or facsimile transmission to: | ||||
| Xxxxx & Xxxxxxx LLP | ||||
| 000 00xx Xxxxxx XX | ||||
| Xxxxxxxxxx, XX 00000 | ||||
| Attention: Xxxxx X. Xxxxxxxxx | ||||
| FAX Number: (000) 000-0000 | ||||
Any party may change its address or the person to notify by a notice delivered in accordance
with this Section 4.
5. Amendments. The provisions of this Agreement may be amended and each of the
parties may take any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the other parties hereto have consented in writing to such amendment,
action or omission.
6. Assignment. Morgans and the Xxxxxx Borrower shall be entitled to assign, transfer,
or otherwise dispose of their respective rights under this Agreement to any other Person, provided
that no such assignment of the rights or Morgans or the Xxxxxx Borrower hereunder shall relieve
Morgans or the Xxxxxx Borrower, as applicable, of its obligations hereunder. Concord CDO shall not
be entitled to assign, transfer, or otherwise dispose of its rights or obligations under this
Agreement to any other Person without the prior written consent of Morgans, which consent shall be
in the sole and absolute discretion of such party; provided that the foregoing shall not be deemed
to prohibit Concord CDO from pledging its interest in the Xxxxxx Loan, or from transferring its
interests in the Xxxxxx Loan pursuant to an option agreement in accordance with and to the extent
permitted by such terms as have been mutually agreed upon by the parties in connection with
transactions contemplated hereby. Any assignment or transfer in violation of this Section 6 shall
be void and of no force and effect.
5
7. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopy
or electronic format (including .pdf) shall be effective as delivery of a manually executed
original counterpart of this Agreement.
8. Governing Law. This Agreement and the rights and duties of the parties to this
Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without regard to its conflicts of law principles.
9. Enforceability. Should any one or more of the provisions of this Agreement be
determined to be illegal or unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the parties hereto.
[Signature Page Follows]
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first
above written.
| MORGANS GROUP LLC |
||||
| By: | Morgans Hotel Group Co., its Managing Member | |||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Chief Investment Officer and Executive Vice President of Capital Markets | |||
| XXXXX XXXXXX SENIOR MEZZ LLC |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Authorized Signatory | |||
| CONCORD REAL ESTATE CDO 2006-1, LTD. |
||||
| By: | WRP Management LLC, Collateral Manager | |||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | President | |||
[Signature Page to Forbearance and Waiver Agreement]
