SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT
Exhibit
10.1
SECOND
AMENDED AND RESTATED FORBEARANCE AGREEMENT
This SECOND AMENDED AND RESTATED
FORBEARANCE AGREEMENT is dated as of April 19, 2010 (the “Effective Date”), by
and among DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP and FORTRESS CREDIT
OPPORTUNITIES I LP (collectively, “Fortress”) and ETON
PARK FUND, L.P., and ETON PARK CLO MANAGEMENT 2 (collectively “Eton Park” and
together with Fortress, collectively “Lender”), and SUMMIT
HOTEL PROPERTIES, LLC a South Dakota limited liability company, as borrower
(“Borrower”),
each SHP Subsidiary signatory hereto, and The Summit Group, Inc. (“Guarantor” together
with Borrower and each SHP Subsidiary, collectively, the “Borrower Parties” and
each a “Borrower
Party”).
RECITALS
A. Borrower
and Fortress Credit Corp. (“Initial Lender”)
entered into that certain Loan Agreement, dated as of March 5, 2007 (the “Loan Agreement”),
pursuant to which Initial Lender made a loan (the “Loan”) to Borrower in
the principal amount of up to Ninety-Nine Million, Seven Hundred Thousand and
00/100 Dollars ($99,700,000), following which, Initial Lender assigned its
interest as lender to Lender
B. The
Debt is due and payable in full as of the Scheduled Maturity Date of March 5,
2010 (the “Maturity
Event”).
C. Borrower,
the SHP Subsidiaries, The Summit Group, Inc. and Lender have executed a
non-binding letter dated February 24, 2010 outlining the proposed terms and
conditions for the potential modification and extension of the Loan and are
negotiating definitive documents evidencing such potential modification and
extension.
D. Borrower
and Fortress entered into, and Eton Park accepted and agreed to, that certain
Forbearance Agreement dated March 4, 2010, as amended by the Amended and Restate
Forbearance Agreement dated as of April 2, 2010, which is being further amended
and restated by this Second Amended and Restated Forbearance
Agreement.
E. Lender
is willing to temporarily forbear from the exercise of Lender rights and
remedies under its Loan arising as a result of the Maturity Event for a period
of time, and on such terms and conditions, as set forth in this
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender and Borrower (collectively, the “Parties”)
hereby agree as follows:
ARTICLE
1
RECITALS
AND DEFINITIONS
SECTION
1.1 Definitions; Controlling
Document. The following terms shall have the following
meanings in this Agreement (such meanings to be equally applicable to both the
singular and plural forms of the terms defined). Capitalized terms
not otherwise defined in this Agreement shall have the meaning ascribed to such
terms in the Loan Agreement applicable to the Loan with respect to which such
term is used. In the event of an inconsistency or conflict between
the provisions of any Loan Agreement and this Agreement, this Agreement shall
control.
“Agreement”
means this Amended and Restated Forbearance Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.
“Enforcement
Action” means any action or the exercise by a Lender of any right or
remedy, at law or in equity, as provided by contract or otherwise, to declare an
Event of Default related to the Maturity Event or realize upon the Collateral
(including, without limitation, an assignment in lieu of foreclosure or other
final negotiated settlement in lieu of any such enforcement action) or to
collect the Debt secured by the Collateral (including without limitation any
acceleration thereof).
“Forbearance
Termination Time” shall mean the time when the earliest of the following
occurs:
a. 12:01
am on May 3, 2010;
b. the
occurrence of any Event of Default other than the Maturity Event;
c. the
commencement of any Bankruptcy Proceeding with respect to any Borrower
Party;
d. any
representation or warranty made by any Borrower Party in this Agreement shall
prove to have been untrue, inaccurate or incomplete in any material respect on
or as of the date made or deemed made;
e. any
Borrower Party shall fail in any material respect to perform, as and when
required, any of its covenants or other obligations set forth in this
Agreement;
f. any
Borrower Party shall take any action to challenge (including, without
limitation, asserting in writing any challenge to) the validity or
enforceability of this Agreement or any provision hereof; or
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g. the
commencement of a suit or the assertion of a counterclaim, defense or right of
set off by any Borrower or any Affiliate of any Borrower against
Lender.
ARTICLE
2
ACKNOWLEDGMENT
OF DEBT, STATUS OF LOAN, RELEASE OF CLAIMS,
SECTION
2.1 Reaffirmation of Loan
Documents. Each Borrower Party hereby acknowledges and agrees
that all terms, conditions and provisions of each Loan Document continues in
full force and effect and remain unaffected and unchanged, and Borrower hereby
reaffirms the Debt and all other obligations of Borrower under each Loan
Document. This Agreement is not intended to, and shall not be
construed to, create or constitute a modification or waiver of any Loan or any
Default, Event of Default, or breach under the Loan Agreement or any other Loan
Document or a release or relinquishment of, and shall not affect, the liens,
security interests and, except as expressly provided in this Agreement, any of
the rights under any Loan Document, all of which are hereby ratified, confirmed,
renewed and extended in all respects.
SECTION
2.2 Acknowledgments of
Borrower.
(a) Aggregate Amount of Loan and
Interest Payment. Each Borrower Party hereby acknowledges that, as of May
5, 2010, the aggregate outstanding amount of the Loan, including all principal,
accrued and unpaid interest will be $85,184,552.71 and on May 5, 2010 an
interest payment in the amount of $548,778.29 is due and payable by wire
transfer of immediately available funds.
(b) Collateral. Borrower
acknowledges and agrees that all of the Collateral under the Loan, all reserve
funds and escrowed funds pursuant to the Loan Documents (whether currently
existing or deposited in the future), secures and shall continue to secure the
Loan with valid first priority liens and security interests, to the extent
granted in the Loan Documents, and that Borrower has not taken any action that
would cause the interruption, cessation or other lapse of the aforesaid lien and
security interests in such Collateral or loss of priority of the Lender's lien
or security interest in such Collateral.
(c) This Agreement Not to
Supersede Loan Documents. This Agreement does not amend or
modify in any way any of the Loan Documents. The Loan Documents shall
continue to govern the Loan until such time as Lender and Borrower agree (if at
all) to enter into other agreements governing the Loan. This
Agreement does not waive, alter or modify Lender’s rights under any Loan
Document or otherwise waive or excuse any Default or Events of Default under any
Loan Document. Borrower acknowledges and agrees that, notwithstanding
the agreement of Lender to forbear from taking any Enforcement Action during the
Forbearance Period in respect of the Maturity Event, such forbearance shall not
constitute a waiver of the occurrence or the continuance of any Default or Event
of Default, and any such Default or Event of Default which has occurred shall
continue to exist after the Effective Date unless and until cured by Borrower or
waived by Lender. This Agreement does not modify, alter or amend any
Loan or any relationship between or among Borrower and Lender.
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ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
To induce
Lender to enter into this Agreement, Borrower makes the following
representations and warranties:
SECTION
3.1 Formation.
(a) Borrower
is a limited liability company, duly organized, validly existing, and in good
standing under the State of South Dakota, is qualified to do business in each
State in which it is required to be authorized to do business, and has all
requisite organizational power and authority to execute, deliver and perform its
obligations under this Agreement. Borrower has delivered to Lender
all formation and organizational documents of such Borrower, and all such
formation and organizational documents remain in full force and effect and have
not been amended or modified since they were delivered to Lender. No
consent of any Person is required under any contract, license, permit, approval
or law binding on Borrower in connection with the execution, delivery or
performance of this Agreement.
(b) Each
SHP Subsidiary is a limited liability company, duly organized, validly existing,
and in good standing under the State of Delaware or the State of South Dakota,
as applicable, is qualified to do business in each State in which it is required
to be authorized to do business, and has all requisite organizational power and
authority to execute, deliver and perform its obligations under this
Agreement. Each SHP Subsidiary has delivered to Lender all formation
and organizational documents of such SHP Subsidiary, and all such formation and
organizational documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender. No consent
of any Person is required under any contract, license, permit, approval or law
binding on any SHP Subsidiary in connection with the execution, delivery or
performance of this Agreement.
(c) Guarantor
is a corporation, duly organized, validly existing, and in good standing under
the State of South Dakota, is qualified to do business in each State in which it
is required to be authorized to do business, and has all requisite
organizational power and authority to execute, deliver and perform its
obligations under this Agreement. Guarantor has delivered to Lender
all formation and organizational documents of Guarantor, and all such formation
and organizational documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender. No consent
of any Person is required under any contract, license, permit, approval or law
binding on Guarantor in connection with the execution, delivery or performance
of this Agreement.
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SECTION
3.2 Power
and Authority. The execution, delivery and performance of this
Agreement by each Borrower Party is not in contravention of law, or any
indenture, agreement or undertaking to which any Borrower Party is a party or by
which any Borrower Party is bound.
SECTION
3.3 Valid
and Binding Obligations. The execution and delivery by each
Borrower Party of this Agreement and any other documents required hereunder have
been duly and properly made and authorized, and when executed and delivered by
each Borrower Party will constitute the legal, valid, and binding obligations of
each Borrower Party enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and similar laws affecting rights
of creditors generally, and subject to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in
equity.)
SECTION
3.4 No
Defenses. Each Borrower Party’s obligations to Lender under
the Loan Documents to which it is a party are valid and
enforceable.
SECTION
3.5 No
Default Caused by Entry Into Agreement. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated will not violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on any Borrower Party, or conflict with or
constitute a default under or result in the creation or imposition of any lien
pursuant to the terms of any indenture, instrument or agreement to which any
Borrower is a signatory or by which any Borrower Party is otherwise
bound.
SECTION
3.6 No
Litigation. There are no material actions, suits or
proceedings at law or in equity by or before any Governmental Authority or
Person now pending, affecting or, to the knowledge of any Borrower Party,
threatened against any Collateral, any Borrower Party, except as previously
disclosed in writing to Lender.
SECTION
3.7 No
Bankruptcy Filing. No Borrower Party (a) is a debtor in any
outstanding action or proceeding pursuant to any bankruptcy law or has, upon the
Effective Date, any current intent either to file a petition under any
bankruptcy law or to liquidate any or all or any portion of its assets or
property or (b) is aware that any other person has any current intent to file
against any Borrower Party a petition under any bankruptcy law.
SECTION
3.8 No
Further Commitment for Additional Accommodations. Each
Borrower Party expressly agrees and stipulates that, except as expressly
provided in this Agreement, no Lender has any obligation under any Loan Document
or any other agreement or by law, by equity or by any oral representation or
communication of any sort from Lender to refrain from exercising its rights
under any Loan Document, and each Borrower Party expressly agrees and stipulates
that Lender has no obligation under any Loan Document, this Agreement or any
other agreement or by law, by equity or by any oral representation or
communication of any sort to refrain from exercising its rights under this
Agreement, or to agree to any further forbearances or extensions of time to pay
the Debt, or provide any further accommodation to any Borrower Party under any
circumstances whatsoever.
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SECTION
3.9 Environmental
Matters. No Borrower Party knows of any Hazardous Materials
affecting any of the Properties in any material way, and, to each Borrower
Party’s knowledge, each of the Properties is in material compliance with all
Environmental Laws.
SECTION
3.10 Actions by Governmental
Authorities. To the knowledge of each Borrower Party, there
have been no actions taken by any Governmental Authority which may materially
impair any Borrower Party’s ability to hold, operate or develop
any individual Property.
SECTION
3.11 Representations and
Warranties. The representations and warranties of each
Borrower Party in each Loan Document to which it is a party are true and correct
in all material respects as if made on the Effective Date.
ARTICLE
4
CONDITIONS
TO TEMPORARY FORBEARANCE
This
Agreement and the obligations of Lender to forbear as set forth in Article 5 shall be
subject to the satisfaction of the following conditions precedent:
SECTION
4.1 Execution, Acknowledgment
and Reaffirmation. Each Borrower Party shall execute and
deliver this Agreement to Lender and Lender shall execute and deliver this
Agreement to Borrower.
SECTION
4.2 Correctness of
Warranties. All representations and warranties contained
herein or otherwise made by a Borrower Party in connection herewith shall be
true, correct and complete in all material respects.
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ARTICLE
5
FORBEARANCE
SECTION
5.1 Forbearance
Period. Lender will forbear from taking any Enforcement Action
in connection with the Maturity Event from the date hereof until the Forbearance
Termination Time (the “Forbearance
Period”).
SECTION
5.2 Fees
and Expenses. All fees, costs, expenses, distributions and
advances incurred by Lender in connection with or furtherance of the
transactions contemplated under this Agreement, including, without limitation,
attorneys’ fees, expenses and distributions shall be paid promptly Borrower to
Lender.
SECTION
5.3 Enforcement Actions After
Forbearance Period. Each Borrower Party acknowledges and
agrees that the provisions of this Agreement shall be effective solely for the
purposes set forth herein, shall be limited precisely as written and shall not
be deemed to waive any Default or Event of Default (including the Maturity
Event) or otherwise prejudice any right or remedy which Lender may now have or
has in the future under or in connection with any Loan Document. Each
Borrower Party further acknowledges and agrees that, upon the occurrence of the
Forbearance Termination Time, the agreement of Lender to forbear from taking any
Enforcement Action in respect of the Maturity Event shall cease and be of no
further force or effect, and Lender shall be entitled to immediately take such
Enforcement Actions under the Loan Agreement, the other Loan Documents or
applicable law in respect of the Maturity Event or any other Event of Default
then existing as such Lender may determine in its sole and absolute discretion,
all without further notice or demand.
ARTICLE
6
COVENANTS
SECTION
6.1 Covenants.
(a) Delivery of Information;
Reporting. Borrower Parties shall use best efforts to deliver
to the Lender any materials and information reasonably requested by the Lender
within a reasonable time after receipt by Borrower Parties of such request to
the extent such materials or information are in the actual possession of, or
readily available to, Borrower Parties.
(b) Interest
Rate. Notwithstanding the agreement of Lender under this
Agreement to forebear from the exercise of the other rights and remedies such
Lender may have, interest on the outstanding principal amount of the Loan and
any unpaid interest thereon shall accrue at the rate of LIBOR plus 8.75% but
during the Forbearance Period, Lender shall accept payment of interest at the
rate of LIBOR plus 5.75%, and the difference between such amounts shall accrue
and be added to the outstanding principal balance of the Loan. LIBOR
as used herein shall be the greater of (a) 2% or (b) the meaning given to LIBOR
in the Loan Agreement. Notwithstanding the Interest Period and
Payment Date, each as defined in the Note, (i) interest has accrued and shall
continue to accrue at the above described rate for the interest period
commencing on March 6th, 2010 and ending on (and including) April 5, 2010, and
each interest period thereafter commencing on the 6th of each month and ending
on (and including) the 5th of each following month, and (ii) the next Payment
Date shall be May 5, 2010. Interest shall be calculated on the basis
of a 360 day year.
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(c) Operate in Ordinary
Course. Each Borrower Party shall operate its business in the
ordinary course consistent with prudent business practices for a company
similarly situated in the industry in which such Borrower Party conducts its
business.
ARTICLE
7
MISCELLANEOUS
SECTION
7.1 Addresses for Notices,
Etc. All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered in the
manner required by each Loan Agreement.
SECTION
7.2 Survival of Representations
and Warranties. All representations, warranties, covenants and
agreements contained herein or made in writing by any Borrower Party in
connection herewith shall survive the execution and delivery of this Agreement
and be true and correct until all of the obligations hereunder and under all
Loan Documents have been satisfied in full pursuant to this
Agreement.
SECTION
7.3 Headings. The
headings in this Agreement are intended to be for convenience of reference only,
and shall not define or limit the scope, extent or intent or otherwise affect
the meaning of any portion hereof.
SECTION
7.4 Further
Assurances. Each Borrower Party and Lender shall, from time to
time, execute such additional documents as may reasonably be requested by Lender
or any Borrower Party or its respective counsel and take such other actions, to
carry out and fulfill the intent and purpose of this Agreement. Each
Borrower Party and Lender hereby agrees to execute, acknowledge and deliver such
documents as reasonably requested by Lender or any Borrower Party for such
purposes and otherwise to cooperate in Borrower’s or Lender’s efforts in this
regard.
SECTION
7.5 Construction. Regardless
of which Party drafted this Agreement or any particular clause of this
Agreement, any construction of this Agreement or of any Loan Document shall be
made without any reference whatsoever as to which Party drafted, or insisted
upon a clause in, this Agreement.
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SECTION
7.6 Choice
of Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York without giving
effect to its conflict of laws principles.
SECTION
7.7 Entire
Agreement. The Loan Documents, this Agreement and the
documents executed pursuant hereto, embody the entire agreement and
understanding between Lender and each Borrower Party and supersede all prior
agreements and understandings between said parties relating to the subject
matter thereof.
SECTION
7.8 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original document enforceable against the Party signatory thereto, but all of
which shall constitute a single document.
SECTION
7.9 No
Waiver of Remedies. No delay or failure of Lender to exercise
any right under any Loan Document or this Agreement shall impair such right or
be construed to be a waiver of such right or of any default or an acquiescence
therein, and any single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other
right. No waiver, amendment or other variation of the terms,
conditions or provisions of any Loan Document or this Agreement shall be valid
unless made in writing and signed the parties hereto, and then only to the
extent specifically set forth in such writing. All remedies contained
in any Loan Document or in this Agreement or afforded by law or by equity shall
be cumulative and all shall be available to each applicable Lender until each
Loan has been paid in full.
SECTION
7.10 Counsel; Voluntary
Agreement. Counsel for each Party hereto have reviewed and
advised their clients with respect to the terms and conditions of this Agreement
and such Party’s respective rights and remedies. Counsel for each
Borrower Party have thoroughly and carefully read this Agreement and each Party
has entered into this Agreement freely and voluntarily, without duress or
coercion of any kind, and as a well reasoned exercise of their respective
business judgments.
SECTION
7.11 Effectiveness. This
Agreement, together with all of its provisions, stipulations and representations
(a) shall be effective, with respect to each Party, as of the date it is
executed and delivered by each Party, (b) shall only apply to the Maturity Event
and (c) shall not apply to any other Default or Event of Default that currently
exists or that may hereinafter exist.
SECTION
7.12 No
Third Party Beneficiaries. This Agreement is solely between
the Parties hereto and no person not a party to this Agreement shall have any
rights or privileges hereunder.
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SECTION
7.13 WAIVER
OF JURY TRIAL. LENDER AND EACH BORROWER PARTY HEREBY AGREE NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY LENDER
AND EACH BORROWER PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER AND EACH BORROWER PARTY ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY THE OTHER. THIS PROVISION SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT.
[SIGNATURES
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IN
WITNESS WHEREOF, each of the Parties signing below has caused this Second
Amended and Restated Forbearance Agreement to be executed, sealed and delivered,
as applicable, on the day and year first above written.
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LENDER:
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FORTRESS
CREDIT OPPORTUNITIES I
LP
(as assignee of Fortress Credit Corp.)
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By:
Fortress Credit Opportunities GP LLC,
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its
general partner
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By:
/s/ Xxxxxxxxxxx X.
Xxxxxxxx
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Name:
Xxxxxxxxxxx X. Xxxxxxxx
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Title:
President
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DRAWBRIDGE
SPECIAL
OPPORTUNITIES
FUND LP, as Assignor
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By:
Drawbridge Special Opportunities GP
LLC,
its general partner
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By:
/s/ Xxxxxxxxxxx X.
Xxxxxxxx
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Name:
Xxxxxxxxxxx X. Xxxxxxxx
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Title:
President
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[SIGNATURE
PAGES CONTINUE]
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LENDER:
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ETON
PARK FUND, L.P.
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By:
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Eton
Park Capital Management, L.P.
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its
investment manager
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By:
/s/ Xxxxx Xxxxx
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Name:
Xxxxx Xxxxx
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Title: Chief Operating Officer and General
Counsel
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ETON
PARK CLO MANAGEMENT 2
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By:
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Eton
Park Asset Management,
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L.L.C,
as collateral manager
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By:
/s/ Xxxxx Xxxxx
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Name:
Xxxxx Xxxxx
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Title:
Managing Partner
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[SIGNATURE
PAGES CONTINUE]
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BORROWER
PARTIES:
a
South Dakota limited liability company
By:
/s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title:
Chief Executive Officer
SUMMIT
HOSPITALITY I, LLC
By:
/s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title:
Chief Manager
SUMMIT
HOSPITALITY II, LLC
By:
/s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title:
Chief Manager
SUMMIT
HOSPITALITY III, LLC
By: /s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title: Chief
Manager
SUMMIT
HOSPITALITY IV, LLC
By: /s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title: Chief
Manager
SUMMIT
HOSPITALITY V, LLC
By: /s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title: Chief
Manager
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[SIGNATURE
PAGES CONTINUE]
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GUARANTOR:
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The
Summit Group, Inc., a South Dakota
corporation
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By: /s/ Xxxxx X.
Xxxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxxx
Title: Chairman
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