AMENDMENT TO
CREDIT FACILITY AGREEMENT
THIS AMENDMENT TO CREDIT FACILITY AGREEMENT (this "Amendment"), dated
as of October 8, 1997, by and between TAD PROPERTIES, L.L.C., a Delaware
limited liability company (the "Borrower"), and CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC, a Delaware limited liability company (as successor-in-
interest to CS First Boston Mortgage Capital Corp., the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender entered into that certain Credit
Facility Agreement dated as of December 20, 1996 (the "Credit Agreement"); and
WHEREAS, the Borrower and the Lender have agreed to amend the Credit
Agreement as set forth herein.
NOW, THEREFORE, in consideration of TEN DOLLARS and other good and
valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the Borrower and the Lender hereby agree as follows:
1. Capitalized terms not defined herein shall have the meanings
ascribed thereto in the Credit Agreement.
2. (a) The definitions of "Earnout", "Earnout Tranche", "Loan",
"Mezzanine Tranche" and "Senior Tranche" set forth in the Credit Agreement are
hereby deleted in the entirety and the following definitions are hereby
substituted in lieu thereof:
(i) "Earnout" shall mean the amount of the Earnout Tranche allocated
to each Loan.
(ii) "Earnout Tranche" shall mean the aggregate balance of the Loans
allocated to the Earnout Note pursuant to Section 2 16(c)(iii)
hereof.
(iii) "Loan" means each portion of the Commitment to be made by the
Lender to the Borrower in connection with the acquisition of each
Approved Motel Facility including any additional funding provided by
the Lender to the Borrower pursuant to Section 2.15 hereof.
(iv) "Mezzanine Tranche" shall mean the aggregate balance of the
Loans allocated to the Mezzanine Note pursuant to Sections 2.
16(b)(ii) or 2.16(c)(ii) hereof, as applicable.
(v) "Senior Tranche' shall mean the aggregate balance of the Loans
allocated to the Senior Note pursuant to Sections 2.16(a), 2.16(b)(i)
or 2.16(c)(i) hereof, as applicable."
(b) The definition of "Proposed Motel Facility Statement" is hereby
amended by deleting clause (f) thereof in the entirety and the
following is substituted in lieu thereof:
"(f) a copy of an Appraisal in respect of the Proposed Motel
Facility evidencing that the fair market value of such proposed
Motel Facility is not greater than $5,000,000
(c) The definition of Operating Lease is hereby amended by deleting
clause (a) thereof in the entirety and the following is hereby
substituted in lieu thereof:
(a) the fixed annual rent payable thereunder (i) with respect to any
Operating Lease in which the Operating Lessee is TAD Leasing, shall
not be less than twelve and nine-tenths percent (12.9%) of the lesser
of the: (x) respective Approved Construction Costs; and (y) fair
market value as set forth in the Appraisal included with the
respective Proposed Motel Facility Statement; and (ii) with respect
to any Operating Lease in which the Operating Lessee is not TAD
Leasing, shall not be less than ten percent (10%) of such Operating
Lessee's option price to purchase the respective Approved Motel
Facility during the fourth (4th) year of the term of the Operating
Lease as set forth in clause (b) of this definition."
3. The fourth sentence of Section 2.1 of the Credit Agreement (which
commences with the words "Each Loan advanced by the Lender . . .") and the
fifth sentence of Section 2.1 of the Credit Agreement (which commences with
the words "Each Loan advanced in connection with an Earnout . . . ") are
hereby deleted in their entirety and the following is hereby substituted in
lieu thereof:
"Except as expressly provided in Section 2.15 below, each Loan
advanced by the Lender in connection with the acquisition of an Approved Motel
Facility shall in no event exceed seventy percent (70%) of the lesser of: (a)
the Approved Construction Costs of the respective Approved Motel Facility; and
(b) the fair market value of the respective Approved Motel Facility as set
forth in the Appraisal included with the respective.Proposed Motel Facility
Statement. The portion of each Loan to be allocated to and evidenced by the
Senior Note, Mezzanine Note and Earnout Note, respectively, shall be as set
forth in Section 2.16 hereof."
4. Section 2.2(a) of the Credit Agreement is hereby amended by
deleting the phrase "or for an Earnout (as applicable)" set forth on the last
line of said Section 2.2(a).
5. The Lender shall have no obligation to fund any Earnouts as
provided in Section 2.3 of the Credit Agreement and therefore said Section 2.3
and Section 4.4 of the Credit Agreement are hereby deleted in the entirety.
Notwithstanding the foregoing, all other provisions in the Credit Agreement
relating to "Earnout", "Earnout Note", Earnout Tranche," "Earnout Tranche
Rate" and "Fixed Earnout Tranche Payment" shall apply to the term "Earnout" as
the definition of such term has been amended pursuant to this Amendment.
6. Section 2.8(a) of the Credit Agreement is hereby amended by
deleting "Senior Notes" and "Earnout Notes" in the second line of clause (a)
thereof and substituting in lieu thereof respectively "Senior Note" and
"Earnout Note" and by deleting "Senior Notes" in the eighteenth (18th) line of
clause (b) thereof and substituting in lieu thereof "Senior Note".
7. The following is hereby added as Section 2.15 of the Credit
Agreement.
"2.15 Lender Option (a) On or prior to the funding of the thirtieth
(30th) Loan, upon written notice to the Borrower, the Lender shall have the
right (but not the obligation) to:
(i) increase the aggregate amount of all Loans (whether previously
funded or to be funded under the Commitment) to an amount such that each Loan
will be equal to eighty percent (80%) of the lesser of: (x) the Approved
Construction Costs of the respective Approval Motel Facility; and (y) the fair
market value of the respective Approved Motel Facility as set forth in the
Appraisal included with the respective Proposed Motel Facility Statement, or
(ii) increase the aggregate amount of all Loans (whether previously
funded or to be funded under the Commitment) to an amount such that each Loan
will be equal to ninety percent (90%) of the lesser of: (x) the Approved
Construction Costs of the respective Approved Motel Facility; and (y) the fair
market value of the respective Approved Motel Facility as set forth in the
Appraisal included with the respective Proposed Motel Facility Statement.
(b) If the Lender elects to increase each Loan to the eighty percent
(80%) level as described in Section 2.15(a)(i) above, then:
(i) Within ten (10) Business Days after the Borrower receives notice
of such election (but not prior to the date the amount of each Loan funded
prior to the date of such election is increased in accordance with Section
2.15(d)(ii) hereof), the brrower shall convey (or cause to be conveyed) to the
Lender a five percent (5%) membership interest in the Borrower, and
(ii) Within twenty (20) Business Days after the Borrower receives
notice of such election the Lender shall have the right to elect, upon written
notice to the Borrower, to purchase an additional seven and one-half percent
(7 1/2%) membership interest in the Borrower for a payment to the Borrower in
the amount of Five Hundred Thousand Dollars ($500,000). Within ten (10)
Business Days after the Borrower receives notice of such election (but not
prior to the date the amount of each Loan funded prior to the date of such
election is increased in accordance with Section 2.15(d)(ii) hereof), and upon
receipt of the aforesaid payment, the Borrower shall convey (or cause to be
conveyed) to the Lender said seven and one-half percent (7 1/2%) membership
interest in the Borrower; and
(iii) The principal amount of each Loan, as increased, shall be
allocated to and evidenced by the Senior Note and the Mezzanine Note as set
forth in Section 2.16(b) hereof.
(c) If the Lender elects to increase each Loan to the ninety percent
(90%) level as described in Section 2.15(a)(ii) above, then:
(i) Within ten (10) Business Days after the Borrower receives notice
of such election (but not prior to the date the amount of each Loan funded
prior to the date of such election is increased in accordance with Section
2.15(d)(ii) hereof), the Borrower shall convey (or cause to be conveyed) to
the Lender an eleven percent (11%) membership interest in the Borrower;
(ii) Within twenty (20) Business Days after the Borrower receives
notice of such election the Lender shall have the right to elect, upon written
notice to the Borrower, to purchase an additional fifteen percent (15%)
membership interest in the Borrower for a payment to the Borrower in the
amount of One Million Dollars ($1,000,000). Within ten (10) Business Days
after the Borrower receives notice of such election (but not prior to the date
the amount of each Loan funded prior to the date of such election is increased
in accordance with Section 2.15(d)(ii) hereof), and upon receipt of the
aforesaid payment, the Borrower shall convey (or cause to be conveyed) to the
Lender said fifteen percent (15%) membership interest in the Borrower; and
(iii) The principal amount of each Loan, as increased, shall be
allocated to and evidenced by the Senior Note, the Mezzanine Note and the
Earnout Note as set forth in Section 2.16(c) hereof.
(d) If the Lender makes either of the elections set forth in Section
2.15(a)(i) or Section 2.15(a)(ii) hereof, then in either case:
(i) The amount of each Loan funded from and after the date of such
election shall be in accordance with said Sections 2.1 5(a)(i) or 2.15(a)(ii),
as applicable;
(ii) Within a reasonable period of time following said election by
the Lender (but in no event more than ten (10) days following the satisfaction
of the conditions precedent set forth below), the Lender shall increase the
amounts of all prior Loans in accordance with said Sections 2.15(a)(i) or
2.15(a)(ii), as applicable, provided, however, that the following conditions
precedent are satisfied:
(1) The Borrower shall have previously complied with the terms and
provisions of Section 4.1, 4.2 and 4.3 hereof;
(2) The Borrower shall have executed and delivered to the Lender
amendments to the Mortgage for each Approved Motel Facility for which each
increase of Loan is funded, in form and substance reasonably satisfactory to
the Lender;
(3) The Borrower shall have executed and delivered to the Lender such
amendments to the other Loan Documents relating to increase in each Loan as
shall be reasonably requested by the Lender;
(4) The Lender shall have received from real estate counsel to the
Borrower an update to the opinions described in Section 4.2(c) in form and
substance reasonably satisfactory to the Lender;
(5) The Lender shall have received an endorsement to the existing
Title Insurance Policy (in form and substance reasonably satisfactory to the
Lender) which amends the existing Title Insurance Policy by increasing that
the amount of insurance in an amount equal to 120% of the increased Loan and
by bringing forward the date of such policy to the date of the increase of
each Loan, and
(6) The Fixed Payment Certificate previously delivered with
respect to the Loan shall have been revised to reflect the increased amount of
each Loan and shall have been properly executed and delivered to the Lender.
(e) The right to purchase membership interests in the Borrower
pursuant to Sections 2.15(b) or 2.15(c) shall not be transferred by the
Lender, in whole or in part, except to: (i) one or more Affiliates of the
Lender; and/or (ii) with respect to the membership interests to be conveyed
pursuant to Section 2.15(b)(ii) or 2.15(c)(ii) hereof, to one or more
responsible Officers of the Lender or members of their immediate families or
trusts for the benefit of such persons ((i) and (ii) collectively, "Permitted
Transferee"). The conveyance of membership interests to the Lender (and any
Permitted Transferee) pursuant to Sections 2.15(b) or 2.15(c) hereof shall
apply to the respective percentage interests in the Borrower at the time of
the conveyance of such interests and any such conveyance shall be on a fully
diluted basis after giving effect to the exercise of any then outstanding
warrants, options or convertible securities, except: (x) the warrant of even
date herewith issued by the Borrower to the Lender (as the same may be
amended, the "Warrant"); and (y) the issuance or sale to officers and
employees of the Borrower of membership interests representing in the
aggregate up to five percent (5%) of the membership interests in the
Borrower. The Lender (and any Permitted Transferee) shall have the same rights
with respect to registration of the membership interests conveyed to the
Lender (and any Permitted Transferee) pursuant to this Section 2.15 as set
forth in the Warrant with respect to the registration of the interests set
forth therein."
8. The following is hereby added as Section 2.16 to the Credit
Agreement:
"2.16 Allocations.
(a) Prior to such time that the Lender elects to increase the amount
of each Loan pursuant to Section 2.15 hereof, one hundred percent (100%) of
each Loan shall be allocated to and evidenced by the Senior Note.
(b) If the Lender elects to increase each Loan to the eighty percent
(80%) level as more particularly described in Section 2.15(a)(i) hereof,
then:
(i) The portion of each Loan to be allocated to and evidenced by the
Senior Note shall be an amount equal to the product of: (x) the amount of the
Loan, and (y) .8875; and
(ii) The portion of each Loan to be allocated to and evidenced by
the Mezzanine Note shall be an amount equal to the product of: (x) the amount
of the Loan; and (y) .1125
(c) If the Lender elects to increase each Loan to the ninety percent
(90%) level as more particularly described in Section 2.15(a)(ii) hereof,
then:
(i) The portion of each Loan to be allocated to and evidenced by the
Senior Note shall be an amount equal to the product of: (X) the amount of the
Loan; and (y) .7888;
(ii) The portion of each Loan to be allocated to and evidenced by the
Mezzanine Note shall be an amount equal to the product of: (x) the amount of
the Loan; and (y) .1; and
(iii) The portion of each Loan to be allocated to and evidenced by
the Earnout Note shall be an amount equal to the product of: (x) the amount of
the Loan; and (y) .1111.
(d) All amounts to be allocated in accordance with the foregoing
shall be rounded up to the nearest dollar amount such that the sum of the
portions of each Loan allocated to the Senior Note, Mezzanine Note and Earnout
Note (as applicable) equals the total amount of each Loan. Solely for the
avoidance of doubt and providing clarification of the allocations set forth in
this Section 2.16, attached hereto on Schedule A is an example of the
foregoing allocations to the Senior Note, Mezzanine Note and Earnout Note.
9. Exhibit F to the Credit Agreement is hereby deleted in the
entirety and Exhibit F and Exhibit F-i attached hereto are hereby substituted
in lieu thereof.
10. Exhibit H to the Credit Agreement is hereby deleted in the
entirety and Exhibit H attached hereto is hereby substituted in lieu thereof
11. Exhibit L to the Credit Agreement is hereby deleted in the
entirety and Exhibit L attached hereto is hereby substituted in lieu thereof.
12. Schedule A attached hereto is hereby added as Schedule A to the
Credit Agreement.
13. The Credit Agreement, as amended hereby, is in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first written above.
LENDER:
CREDIT SUISSE FIRST
BOSTON MORTGAGE
CAPITAL LLC
By:
Name:
Title.
Authorized Signatory
BORROWER
TAD PROPERTIES, L
L.C.
By: Tad Membership Corp.,
Managing Member
By:
Name:
Title:
Motels of America, Inc. hereby executes this Amendment solely for the purpose
of acknowledging its consent thereto.
MOTELS OF AMERICA, INC.
By:
Name:
Title:
SCHEDULE A
Example of Allocations
of Each Loan to the Senior Note,
Mezzanine Note and Earnotit Note
1. INITIAL LOAN
Approved Construction Cost ("ACC"): $ 80
Fair Market Value from Appraisal ("FMV"): $100
Loan Amount (Prior to Any Election by $ 56 (.70 of lesser of ACC and FMV)
Lender under Section 2.15)
2. CIRCUMSTANCE ONE: Lender does not elect to increase Loans pursuant to
Section 2.15
Loan Amount Senior Note Mezzanine Note Earnout Note
$56 $56 $0 $0
3. CIRCUMSTANCE TWO: Lender elects to increase each Loan to the 80% level
pursuant to Section 2.15(a)(i):
Loan Amount Senior Note Mezzanine Note Earnout Note
$64 $56.80 $7.20 $0
(.80 of lesser (.8875 of $64) (.1125 of $64)
of ACC and FMV)
4. CIRCUMSTANCE THREE: Lender elects to increase each Loan to the 90% level
pursuant to Section 2.1 5(a)(i) hereof.
Loan Amount Senior Note Mezzanine Note Earnout Note
$72 $56.80 $7.20 $8
(.90 of lesser (.7888 of $72) (.1 of $72) (.1111 of $72)
of ACC and FMV)
