Exhibit 10.31
FIRST AMENDMENT TO LOAN AGREEMENT
AND OMNIBUS LOAN
MODIFICATION
AGREEMENT
Dated as of August 14,
2009
Between
COLONY RESORTS LVH ACQUISITIONS,
LLC,
as Borrower,
and
GOLDMAN SACHS MORTGAGE
COMPANY,
as Lender
Secured by;
The Las Vegas Hilton
Las Vegas, Nevada
FIRST AMENDMENT TO LOAN AGREEMENT
AND OMNIBUS LOAN
MODIFICATION
AGREEMENT
THIS FIRST AMENDMENT TO LOAN
AGREEMENT AND OMNIBUS LOAN MODIFICATION AGREEMENT
(this “ Amendment
”), dated as of August 14, 2009 (the “
Effective Date ”), between COLONY RESORTS LVH
ACQUISITIONS, LLC , a Nevada limited liability company, as
borrower (“ Borrower ”) and GOLDMAN SACHS
MORTGAGE COMPANY , a New York limited partnership, as lender
(“ Lender ”).
W I T N E S
S E T H :
WHEREAS, Borrower and Goldman Sachs
Commercial Mortgage Capital, L.P. (“ Original Lender
”) entered into that certain Loan Agreement dated as of
May 11, 2006 (the “ Original Loan Agreement
” and as modified by the Letter Agreements (as hereinafter
defined), the “ Loan Agreement ”) pursuant to
which Original Lender made, and Borrower accepted, a mortgage loan
in the original principal amount of $250,000,000.00 (the “
Loan ”);
WHEREAS, the Loan is
(i) evidenced by, among other things, that certain Promissory
Note dated as of May 11, 2006 and made by Borrower to the
order of Original Lender, its successor and assigns, in the
original principal amount of the Loan (the “ Note
”) and (ii) secured by, among other things, that certain
Deed of Trust, Security Agreement, Assignment of Leases, Rents and
Revenues and Fixture Filing dated as of May 11, 2006 and made
by Borrower to Original Lender, is successors and assigns (the
“ Mortgage ”);
WHEREAS, the Loan, the Original Loan
Agreement, the Note, the Mortgage and all of the other Loan
Documents were assigned by Original Lender to Lender;
WHEREAS, the maturity date of the
Loan was June 2, 2009, and Borrower and Lender entered into
those certain Letter Agreements dated as of June 1,
2009, June 29, 2009 and July 30, 2009 respectively,
(collectively, the “ Letter Agreements ”)
pursuant to which the maturity date of the Loan has been extended
until August 14, 2009;
WHEREAS, Borrower and Lender have
agreed to further extend the term of the Loan and amend the Loan,
the Loan Agreement and the other Loan Documents as hereinafter set
forth, effective as of the Effective Date.
NOW, THEREFORE, in consideration of
the foregoing and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, Lender and
Borrower hereby covenant, agree, represent and warrant as
follows:
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1.
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Definitions
Added .
Section 1.1 of the Loan Agreement is hereby amended by
adding the following defined terms thereto:
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“ Additional Principal
Repayment ” shall mean Five Million Dollars
($5,000,000.00).
“ Additional Principal
Repayment Date ” shall mean October 30,
2009.
“ Applicable Gaming Reserve
Amount ” shall have the meaning set forth in
Section 9.1.1 .
“ Corporate Expenses
” shall mean (i) the applicable allocation of corporate
expenses set forth on Schedule 6.1.1.1 attached hereto under
the categories of “Payroll”, “Expenses”,
“Rent” and “Misc”, (ii) amounts
payable by Borrower under any Property Management Agreement entered
into in accordance with the provisions of this Agreement,
(iii) the salary of Nick Ribis set forth in the Annual Budget
and (iv) travel expenses for other investment management
professionals involved in the management of the Property and not
included in clause (i) hereof; it being understood and agreed
that (x) corporate expenses set forth on Schedule
6.1.1.1 attached hereto under the categories of
“Payroll”, “Expenses”, “Rent”
and “Misc” shall be allocated among the Property and
the other properties listed on Schedule 6.1.1.1 in
accordance with Schedule 6.1.1.1 , (y) the aggregate
amount of expenses related to Board members and travel expenses for
investment management professionals involved in the management of
the Property shall not exceed $75,000 per annum and (z) in no
event shall the aggregate amount of Corporate Expenses exceed an
amount per annum equal to the lesser of (1) 1.25% of the line
item entitled “Net Revenues” reported in
Borrower’s Statement of Operations (which reflects “Net
Revenues” for a twelve (12) month period) or
(2) $2,725,000 per annum.
“ First Amendment
” shall mean the First Amendment to Loan Agreement and
Omnibus Loan Modification Agreement dated as of August 14,
2009 among Borrower, Guarantor and Lender.
“ Gaming Reserve
Account ” shall have the meaning set forth in
Section 9.1.4 .
“ Initial Seasonality
Reserve Funding Period ” shall mean the period commencing
on November 1, 2009 and ending on the Payment Date occurring
in March, 2010.
“ Initial Sweep Period
” shall mean the period commencing on November 1, 2009
and ending on the Payment Date occurring in June, 2010.
“ LIBOR Floor ”
shall mean one and fifty one hundredths of one percent
(1.50%) per annum.
“ License Agreement
” shall mean that certain license agreement dated as of
January 1, 2009 by and between Hilton Inns, Inc. and Borrower
pursuant to which Borrower licenses the use of the Hilton flag and
reservation system.
“ Monthly Corporate
Expenses ” shall have the meaning set forth in
Section 9.2.3 .
“ Monthly Expenses
” shall have the meaning set forth in
Section 9.2.3 .
“ Operating Expense Reserve
Account ” shall have the meaning set forth in
Section 9.2.1 .
“ Required Gaming
Reserves ” shall have the meaning set forth in
Section 9.1.4 .
“ Required Prepayment
Reserve Account ” shall have the meaning set forth in
Section 9.2.1 .
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“ Seasonality Reserve
Account ” shall have the meaning set forth in
Section 9.2.1 .
“ Subsequent Seasonality
Reserve Funding Period ” shall mean, collectively,
(i) the period commencing on August 1, 2010 and ending on
September 30, 2010 and (ii) the period commencing on
January 1, 2011 and ending on May 31, 2011.
“ Subsequent Sweep
Period ” shall mean the period commencing on the day
after the Payment Date occurring in June, 2010 and ending on the
Payment Date occurring in June, 2011.
“ Surplus Cash ”
shall mean amounts deposited into the Surplus Cash Account in
accordance with Section 9.4.1 of this
Agreement.
“ Surplus Cash Account
” shall have the meaning set forth in
Section 9.4.1 .
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2.
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Definitions
Amended . The following
terms defined in Section 1.1 of the Loan Agreement are
hereby amended and restated in their entirety to read as
follows:
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“ Alteration ”
shall mean any demolition, alteration, installation, improvement or
decoration of or to the Property or any part thereof or the
Improvements (including FF&E) thereon (other than any of the
foregoing that (i) is contemplated to be done by the Plans and
Specifications or (ii) is paid for out of the Reserve Account
described in Section 9.2.1(f)) .
“ Annual Budget ”
shall mean the annual operating and capital budget for the Property
for any Fiscal Year setting forth, in reasonable detail, the
Borrower’s good faith estimates of (i) all Operating
Income, (ii) all Operating Expenses, (iii) Management
Fees and License Fees, and (iv) Capital Expenditures, which is
approved by Lender pursuant to Section 5.1.17
hereof.
“ Borrower Hotel
Account ” shall have the meaning set forth in
Section 9.2.3 of this Agreement.
“ Debt Service Reserve
Account ” shall have the meaning set forth in
Section 9.2.1 .
“ Debt Yield ”
shall mean the percentage obtained by dividing Net Operating Income
by the Principal Indebtedness outstanding at the time of
calculation.
“ Exit Fee Percentage
” shall mean fifty one hundredths of one percent
(0.50%).
“ Extension Interest Rate
Cap Agreement ” shall mean an interest rate cap agreement
or agreements (together with the confirmations and schedules
relating thereto), each from an Acceptable Counterparty and in
substantially the form set forth on Exhibit A
hereto.
“ FF&E Reserve
Account ” has the meaning set forth in
Section 9.2.1 hereof.
“ Gross Casino Revenues
” shall mean (x) all Casino Revenues plus (y) any
non-gaming revenues generated by casino operations from whatever
source to the extent not otherwise included in Casino Revenues or
Gross Hotel Revenues; provided , however , that Gross
Casino Revenues shall in all instances be calculated net of
promotional allowances in accordance with the NRS.
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“ Joint Services
Agreement ” means that certain Amended and Restated Joint
Services Agreement dated as of April 26, 2005 by and among
Borrower, Resorts International Hotel, Inc. and Resorts
International Holdings, LLC, as modified by Amendment to Amended
and Restated Joint Services Agreement dated as of May 11,
2006, as further amended by Amendment to Amended and Restated Joint
Services Agreement dated as of September 18, 2007 and as same
may be amended by that certain Second Amendment Joint Services
Agreement in the form attached hereto as Schedule 6.1.1.2 in
accordance with Section 6.1.1 hereof
“ knowledge ” or
words of similar import shall mean the actual knowledge of Robert
Schaffhauser, Executive Vice President, Finance, of Borrower,
Rodolfo Prieto, the Chief Executive Officer and General Manager of
Borrower and Eric Matejevich after making reasonable inquiry and
the knowledge of the officers and directors of Borrower.
“ Maturity Date ”
shall mean June 1, 2011.
“ Monthly FF&E Reserve
Amount ” shall mean commencing with the Payment Date
occurring in August, 2009 and for each Payment Date thereafter,
2.0% of Gross Hotel Revenues of the Property for the calendar month
then most recently ended plus 1.0% of the Gross Casino Revenues for
the calendar month then most recently ended.
“ Required Repairs Reserve
Account ” shall have the meaning set forth in
Section 9.2.1 hereof.
“ Spread ” shall
mean:
(i) initially,
(a) with respect to each Interest
Accrual Period occurring prior to the Interest Accrual Period
commencing in July 2009, two and ninety one hundredths of one
percent (2.90%) per annum,
(b) with respect to the Interest
Accrual Period commencing in July 2009 and each Interest Accrual
Period occurring thereafter through and including the Interest
Accrual Period commencing in May 2010, three and fifty one
hundredths of one percent (3.50%) per annum, and
(c) with respect to the Interest
Accrual Period commencing in June 2010 and each Interest Accrual
Period occurring thereafter through and including the Interest
Accrual Period commencing in May 2011, four percent
(4.00%) per annum,
and
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(ii) following the bifurcation of
the Note into multiple Note Components pursuant to
Section 2.3.8 , the weighted average of the Component
Spreads at the time of determination, weighted on the basis of the
corresponding Component Balances.
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3.
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Definitions
deleted .
Section 1.1 of the Loan Agreement is hereby amended by
deleting the following defined terms from such Section:
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“ Casino Shortfalls
”.
“ Excess Cash
Flow” .
“ Casino Working Capital
and Operations Amount ”.
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4.
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Net Operating
Income . Lender and
Borrower hereby acknowledge and agree that the term “Net
Operating Income” shall continue to have the meaning set
forth in the Loan Agreement except that the reference in such
definition to “or any payments into the Debt Service Reserve
Account” shall be deleted and replaced with “or any
payments into the Debt Service Reserve Account, the Seasonality
Reserve Account or the Required Prepayment Reserve Account”.
Furthermore, and in amplification of the foregoing, Borrower and
Lender acknowledge and agree that the calculation of Net Operating
Income, (i) shall include all payments made by Borrower to the
FF&E Reserve Account and the Tax and Insurance Escrow Account
as required under the Loan Agreement for the applicable trailing
twelve (12) month period, (ii) shall not include any
disbursements made to the Borrower from the FF&E Reserve
Account or the Tax and Insurance Escrow Account for the applicable
trailing twelve (12) month period, (iii) shall not
include a reduction in the amount deposited in the FF&E Reserve
Account or the Tax and Insurance Escrow Account for disbursements
to the Borrower from such Reserve Accounts, provided, however, that
any funds expended by Borrower for capital expenditures relating to
FF&E at the Property in excess of the required payments to the
FF&E Reserve Account will not be included as Operating
Expenses, (iv) shall not include Corporate Expenses in excess
of an amount per annum equal to the lesser of (X) 1.25% of the
line item entitled “Net Revenues” reported in
Borrower’s Statement of Operations (which reflects “Net
Revenues” for a twelve (12) month period) or
(Y) $2,725,000 per annum and (v) Operating Expenses and
Operating Income shall be determined in accordance with GAAP and
any adjustments for non-recurring or extraordinary expenses will be
subject to Lender’s approval in its reasonable discretion. A
copy of Borrower’s Statement of Operations for the twelve
(12) month period ending on May 31, 2009 is attached
hereto as Schedule I (the “ Sample Statement of
Operations ”); it being hereby acknowledged and agreed
that the Sample Statement of Operations shall serve solely as an
example of how Debt Yield, Net Operating Income, Operating Income
and Operating Expenses should be calculated by the parties from and
after the date of this Amendment for the purposes of establishing
the Debt Yield, and the Sample Statement of Operations shall not in
any way be, or be deemed to be, an acknowledgement or agreement as
to how Debt Yield, Net Operating Income, Operating Income and/or
Operating Expenses were
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and/or should have been calculated
prior to the date of this Amendment. All future statements and
calculations of Debt Yield, Net Operating Income, Operating Income
and Operating Expenses to be delivered by Borrower after the date
of this Amendment pursuant to the terms of the Loan Agreement, as
modified by this Amendment, shall be in the form of Schedule
I.
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5.
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Extension
Fee . It is hereby
acknowledged and agreed that, on the date hereof, Borrower shall
pay to Lender an extension fee in the amount of One Million One
Hundred Seventy Five Thousand Dollars ($1,175,000.00) in order to
induce Lender to execute and deliver this Amendment.
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6.
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Initial
Principal Repayment; Release of Amounts From the FF&E Reserve
Account . It is hereby
acknowledged and agreed that on the date hereof and simultaneously
herewith, Borrower is (i) repaying a portion of the Principal
Indebtedness in an amount equal to Fifteen Million Dollars
($15,000,000.00) (the “ Initial Principal Repayment
”) and (ii) paying the Exit Fee due in connection with
the payment of the Initial Principal Repayment in the amount of
Seventy Five Thousand Dollars ($75,000.00). Borrower and Lender
acknowledge and agree that Borrower has requested and Lender has
agreed, notwithstanding the provisions of Section 9.2.8
of the Loan Agreement, to release a portion of the funds on deposit
in the FF&E Reserve Account in the amount of Two Million Seven
Hundred Thousand Dollars ($2,700,000.00) (the “ FF&E
Disbursement Amount ”) on the date hereof and apply the
same to repayment of the Principal Indebtedness as a portion of the
Initial Principal Repayment. On the Payment Date next occurring
after the date of this Amendment (unless the date of this Amendment
is a Payment Date, in which case, on such Payment Date), Borrower
shall pay, in addition to other amounts due to Lender on that
Payment Date, all interest on the Initial Principal Repayment from
and including the first day of the related Interest Accrual Period
through and including the date hereof.
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7.
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Section 2.2.2(a) Amended
. Section 2.2.2(a) of
the Loan Agreement is amended and restated in its entirety to read
as follows:
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(a) The rate or rates at which the
Principal Indebtedness bears interest from time to time shall be
referred to as the “ Applicable Interest Rate ”.
The Applicable Interest Rate with respect to the Loan shall be,
with respect to each applicable Interest Accrual Period, the Spread
for such Interest Accrual Period plus LIBOR, provided ,
however , that in the event that LIBOR for the Interest
Accrual Period commencing in July 2009 or any Interest Accrual
Period occurring thereafter through and including the Interest
Accrual Period commencing in May 2011 shall be less than the LIBOR
Floor, then the Applicable Interest Rate for such Interest Accrual
Period shall be, the Spread for such Interest Accrual Period plus
the LIBOR Floor.
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8.
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Section 2.3.4(b) Amended
. Section 2.3.4(b) of
the Loan Agreement is amended and restated in its entirety to read
as follows:
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(b) On each Payment Date occurring
after the transfer of any monies in accordance with
Section 9.4 hereof from the Deposit Account into the
Required Prepayment Reserve Account, the amounts on deposit in the
Required Prepayment Reserve Account shall be applied to
(i) repay the Principal Indebtedness and (ii) pay the
portion of the Exit Fee that is payable in accordance with
Section 2.6 hereof with respect to such repayment of
the Principal Indebtedness.
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9.
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Section 2.4.5 Added . Article II of the Loan Agreement is
amended by adding the following thereto as
Section 2.4.5 :
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2.4.5 Additional Principal
Repayment . Borrower shall repay the Principal Indebtedness in
an amount equal to the Additional Principal Repayment, and pay the
Twenty Five Thousand Dollars ($25,000.00) Exit Fee due in
connection therewith, on the Additional Principal Repayment Date,
it being acknowledged and agreed that interest accrued on the
Additional Principal Repayment through the date of payment of the
Additional Principal Repayment shall be paid on the Payment Date
following the Additional Principal Repayment Date. Borrower shall
not be required to give Lender a Prepayment Notice with respect to
the Additional Principal Repayment. Provided no Event of Default
shall have occurred and be continuing on the Additional Principal
Repayment Date Lender shall, at Borrower’s request, release
from the FF&E Reserve Account to extent of available funds up
to Two Million Dollars ($2,000,000.00) and apply same towards the
payment of a portion of the Additional Principal
Repayment.
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10.
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Section 2.7(e) Amended
. Section 2.7(e) of the
Loan Agreement is amended and restated in its entirety to read as
follows:
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(e) Borrower has obtained or has in
place an Extension Interest Rate Cap Agreement (i) having a
term through the end of the Interest Accrual Period commencing in
May 2010, (ii) in a notional amount at least equal to Two
Hundred Thirty Five Million Dollars ($235,000,000.00), and
(iii) having a strike rate equal to the Strike Rate, and such
Extension Interest Rate Cap Agreement has been collaterally
assigned to Lender in accordance with subsection 2.7(c)
above; it being understood that the notional amount may be
decreased to Two Hundred Thirty Million Dollars ($230,000,000.00)
following payment to Lender of the Additional Principal Repayment
and the applicable Exit Fee. On or before May 31, 2010,
Borrower shall obtain an Extension Interest Rate Cap Agreement
(i) having a term through the end of the Interest Accrual
Period commencing in May 2011, (ii) in a notional amount at
least equal to the outstanding balance of the Principal
Indebtedness as of May 31, 2010, and (iii) having a
strike rate equal to the Strike Rate, and shall cause such
Extension Interest Rate Cap Agreement to be collaterally assigned
to Lender in accordance with subsection 2.7(c)
above.
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11.
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Section 5.1.10.(d) Amended
. Section 5.1.10(d) of
the Loan Agreement is amended and restated in its entirety to read
as follows:
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(d) Borrower shall furnish to
Lender, the items described in clause (c) above on a monthly
basis within twenty-five days after the end of each calendar month,
together with unaudited financial statements, aged accounts
receivable reports, occupancy, ADR reports, the minimum bankroll
numbers and copies of monthly revenue reports filed with the
Gaming
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Authorities, in each case, for the Property
covering the month just ended and a reconciliation of the corporate
expenses set forth on Schedule 6.1.1.1 as of end of such
calendar month and the year to date. Borrower shall also furnish to
Lender copies of the Hilton Lead Reports and Hilton Booking Reports
promptly after receipt thereof from Licensor.
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12.
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Section
5.1.17 Amended . The first sentence of
Section 5.1.17 of the Loan Agreement is amended and
restated in its entirety to read as follows:
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For each Fiscal Year, Borrower shall
prepare or cause to be prepared and delivered to Lender for its
approval, which approval shall not be unreasonably withheld, at
least forty five (45) days prior to the beginning of the
applicable Fiscal Year, a proposed Annual Budget (including all
drafts of such Annual Budget and including all amendments and
drafts of such amendments) as it is prepared in respect of the
Property for such Fiscal Year.
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13.
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Section
6.1.1 Amended . The last sentence of
Section 6.1.1 of the Loan Agreement is amended and
restated in its entirety to read as follows:
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Borrower shall be permitted to enter
into the Second Amendment to Joint Services Agreement and the
Second Amendment to Joint Marketing Agreement attached hereto as
Schedule 6.1.1.2 , provided, no Event of Default shall have
occurred and be continuing and Borrower delivers a Confirmation of
Subordination Agreement with respect to each of the Joint Services
Agreement and the Joint Marketing Agreement in form and substance
reasonably acceptable to Lender.
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14.
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New
Section 6.1.14 Added . Article VI of the Loan Agreement is
amended by adding the following thereto as new
Section 6.1.14 :
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6.1.14 Dividend Stopper .
Borrower acknowledges and agrees that the Debt Yield for the
trailing twelve (12) month period ending on May 31, 2009
is 7.1% (the “ May 2009 Debt Yield ”); it being
hereby acknowledged and agreed that the calculation of the May 2009
Debt Yield shall serve solely as an example of how Debt Yield
should be calculated by the parties from and after the date of the
First Amendment, and the calculation of the May 2009 Debt Yield
shall not in any way be, or be deemed to be, an acknowledgement or
agreement as to how Debt Yield was and/or should have been
calculated prior to the date of the First Amendment.
Notwithstanding anything contained in this Agreement or any of the
other Loan Documents, from and after the date of the First
Amendment, Borrower shall not make any distributions, pay any
dividends or make any loans to its partners, shareholders, members
or affiliates unless the Debt Yield, as measured for the 12 month
period ending as of the calendar quarter occurring immediately
prior to the date of calculation (and calculated using an amount
equal to the Principal Indebtedness at the end of such calendar
quarter as the denominator), is at least fifteen percent (15%),
provided however that, the foregoing shall not limit or restrict
the payment of any Corporate Expenses set forth in the approved
Annual Budget required to be paid to Affiliates of Borrower
provided, that the aggregate amount of all Corporate Expenses does
not exceed an amount per annum equal to the lesser of
(x) 1.25% of the line item entitled “Net Revenues”
reported in Borrower’s Statement of Operations (which
reflects “Net Revenues” for a twelve (12) month
period) or (y) $2,725,000 per
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annum. If the Debt Yield for the trailing twelve
(12) month period ending as of the most recently ended
calendar quarter is at least fifteen percent (15%) and no
Event of Default shall have occurred and be continuing, Borrower
shall be permitted to distribute (i) any Surplus Cash,
(ii) any other amounts held by Borrower to the extent same do
not constitute Rents that are or were at any time required to be
deposited into or otherwise held in the Rent Account, the Deposit
Account, the Borrower Hotel Account or the Gaming Reserve Account
pursuant to the terms of this Agreement, and (iii) equity
contributed to Borrower by Borrower’s direct and indirect
owners to the extent such funds do not constitute Rents (but no
other funds of Borrower) to its partners, shareholders, members or
Affiliates. It is expressly understood and agreed that Borrower
shall not enter into any amendment to the Joint Services Agreement
or any Property Management Agreement that would increase amounts
payable by Borrower under the applicable agreement, extend the term
of such agreement or otherwise increase the financial burden on the
Property.
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15.
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Section 9.1.1 Amended
. Section 9.1.1 of the
Loan Agreement is amended and restated in its entirety to read as
follows:
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9.1.1. On or prior to the Closing
Date, Borrower established with the Hotel Bank an account (the
“ Rent Account ”) for the collection of Rents
paid by credit card and paid by tenants under the Leases. All Rents
collected by or on behalf of Borrower shall be deemed to be
collateral for the Debt and shall be held in trust for the benefit
of, and as the property of, Lender, other than the Required Gaming
Reserves to the extent prohibited by applicable law. From and after
the date of the First Amendment, all Rents paid by credit card and
paid by tenants under the Leases shall continue to be paid directly
into the Rent Account and Borrower shall deposit, or shall cause to
be deposited, all other Rents received by or on behalf of Borrower
less an amount equal to the Applicable Gaming Reserve Amount into
the Rent Account within one (1) Business Day of receipt. On or
before August 31, 2009, Borrower shall cause the Hotel Bank to
execute and deliver an agreement which provides, inter
alia , that (x) for purposes of perfecting its first
priority security interest, Lender shall have sole control and
dominion over the Rent Account and (y) that commencing on
September 1, 2009 and until otherwise directed by Lender
(which direction shall only be given in accordance with the
provisions of this Agreement), all funds deposited into the Rent
Account will be transferred each Business Day to the Deposit
Account. Provided that no Event of Default shall occur and be
continuing, funds on deposit in the Rent Account shall continue to
be transferred to the Borrower Hotel Account during the period
commencing on the date of the F
