1
EXHIBIT 10.15
WAIVER, SECOND AMENDMENT AND
MODIFICATION AGREEMENT
THIS WAIVER, SECOND AMENDMENT AND MODIFICATION AGREEMENT is dated as of
the 30th day of September, 1997 by and among GREAT AMERICAN LIFE INSURANCE
COMPANY (the "Lender") and MERITAGE HOSPITALITY GROUP INC. ("MHG"), ST. CLAIR
INN, INC. ("SCI"), GRAND HARBOR RESORT INC. ("GH Resort"), XXXXXX XXXXXX INN,
INCORPORATED ("TEI"), MHG FOOD SERVICE INC. ("Food Service"), GRAND HARBOR YACHT
CLUB INC. ("GH Yacht Club") (MHG, SCI, GH Resort, TEI, Food Service and GH Yacht
Club are collectively referred to as the "Obligors").
WITNESSETH:
WHEREAS, the Lender and the Obligors are parties to a Loan Agreement dated
November 26, 1996, as amended by Amendment No. 1 dated as of May 23, 1997
(collectively the "Loan Agreement") pursuant to which the Lender has made Three
(3) loans to the Obligors in the original principal amounts of Fourteen Million
and 00/100 Dollars ($14,000,000.00), Five Million Two Hundred Fifty Thousand and
00/100 Dollars ($5,250,000.00) and Eight Hundred Seventy-Five Thousand and
00/100 Dollars ($875,000.00); and
WHEREAS, the Obligors have requested and the Lender has agreed to amend
the Loan Agreement and Promissory Notes pursuant to which the above-referenced
loans were made.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:
1. Waiver of Financial Covenants. As of August 31, 1997, Lender hereby
waives compliance with the covenants set forth in Sections 4.2(d) and 4.2(e)(i)
and (ii) of the Loan Agreement until December 31, 1998. MHG hereby covenants
that it shall comply with Sections 4.2(d) and 4.2(e)(i) and (ii) commencing
February 28, 1999. This waiver applies only to Sections 4.2(d) and 4.2(e)(i) and
(ii) of the Loan Agreement for the periods referenced above and does not
otherwise modify or waive any other covenant or agreement contained in the Loan
Agreement.
2. Amendment to Loan Agreement. Section 2.6 is hereby amended in its
entirety to read as follows:
a) The initial Release Price for the Xxxxxx Xxxxxx Inn will be Nine
Million Four Hundred Eight Thousand and 00/100 Dollars ($9,408,000), the
initial Release Price for the St. Clair Inn will be Four Million
Thirty-Two Thousand and 00/100 Dollars ($4,032,000) and the initial
Release Price for the Grand Harbor Resort (formerly Grand Haven Holiday
Inn) will be Three Million Three Hundred Sixty Thousand and 00/100 Dollars
($3,360,000). The Lender shall have the right to adjust the Release Prices
between the Hotel Properties on an annual basis so long as the aggregate
Release Prices do not exceed One Hundred Twenty Percent (120%) of the
2
- 2 -
unpaid principal balance of Loan I, and in the Lender's sole and
reasonable discretion, the Release Price for each Hotel Property is based
upon the estimated fair market value of each property compared to the
total estimated fair market value of all of the Hotel Properties.
b) In the event the Lender, in its sole and absolute discretion, agrees
to the sale and release of any Hotel Property for less than the Release
Price set forth above, thereafter, any amounts received by Lender as
prepayments to the Loans shall be applied first to pay the difference
between the actual sales price and Release Price for such property (the
"Shortfall") until such Shortfall is paid in full. Any proceeds remaining,
after payment in full of the Shortfall, shall be applied in accordance
with the terms of the Loan Agreement.
3. Amendment to $14,000,000 Note. Effective as of the date hereof, the
third paragraph of the Promissory Note relating to the Fourteen Million and
00/100 Dollars ($14,000,000.00) Loan is hereby amended and restated, in its
entirety, as follows:
FOR VALUE RECEIVED, the undersigned, jointly and severally, hereby
promises to pay to the order of Lender the principal sum of Fourteen
Million and 00/100 Dollars ($14,000,000.00), together with interest at the
annual rate of Eleven and One-Quarter Percent (11.25%) effective as of
November 1, 1997; provided, however, in the event and during the
continuation of a violation by the Borrowers of certain financial
covenants contained in the Loan Agreement such interest rate shall be
increased as provided in Section 2.5 of the Loan Agreement. Commencing on
January 1, 1997, the undersigned shall pay the Lender principal and
interest payments of One Hundred Thirty-Seven Thousand Eight Hundred
Ninety-Seven and 42/100 Dollars ($137,897.42) and shall continue to pay
such amount on the first day of each month thereafter through and
including September 1, 1997. No payments shall be required to be made on
October 1, 1997, November 1, 1997 or December 1, 1997 and accrued interest
which would otherwise have been due and payable on such dates shall be
capitalized and added to the outstanding principal due hereunder as of
October 1, 1997, November 1, 1997 or December 1, 1997, as the case may be
when such accrued interest was otherwise due and payable. Commencing on
January 1, 1998, the undersigned shall pay to the Lender principal and
interest payments of One Hundred Fifty-One Thousand One Hundred
Eighty-Five and 22/100 Dollars ($151,185.22) and shall continue to pay
such amount on the first day of each month thereafter until December 1,
2003 when the entire remaining unpaid principal balance and all accrued
and unpaid interest shall be due and payable.
4. Amendment to $5,250,000 Note. Effective as of the date hereof, the
third paragraph of the Promissory Note relating to the Five Million Two Hundred
Fifty Thousand and 00/100 Dollars ($5,250,000.00) Loan is hereby amended and
restated, in its entirety, as follows:
3
- 3 -
FOR VALUE RECEIVED, the undersigned, jointly and severally, hereby
promises to pay to the order of Lender the principal sum of Five Million
Two Hundred Fifty Thousand and 00/100 Dollars ($5,250,000.00), together
with interest at the annual rate equal to Eight Percent (8%) in excess of
the rate of interest announced from time to time by The Provident Bank,
Cincinnati, Ohio, as its prime rate ("Prime Rate"); provided, however, in
the event and during the continuation of a violation by the Borrowers of
certain financial covenants contained in the Loan Agreement, such interest
rate shall be increased as provided in Section 2.5 of the Loan Agreement.
A rate based on the Prime Rate will change each time and as of the date
the Prime Rate changes. Interest only shall be due and payable monthly in
arrears on the first day of each month commencing on January 1, 1997 and
continuing on the first day of each month thereafter through and including
September 1, 1997. No payments will be required on October 1, 1997,
November 1, 1997 or December 1, 1997 and accrued interest which would
otherwise have been due and payable on such dates shall be capitalized and
added to the outstanding principal due hereunder as of October 1, 1997,
November 1, 1997 or December 1, 1997, as the case may be when such accrued
interest was otherwise due and payable. Payments of accrued interest plus
principal payments of Fifty Thousand and 00/100 Dollars ($50,000.00) shall
be due and payable on the first day of each month commencing on January 1,
1998 and continuing on the same day of each month thereafter through and
including March 1, 1998 and thereafter payments of accrued interest plus
principal payments of One Hundred Thousand and 00/100 Dollars
($100,000.00) shall be due and payable on the first day of each month
commencing on April 1, 1998 until June 1, 2002 ("Maturity Date") when the
entire remaining unpaid principal balance and all accrued and unpaid
interest shall be due and payable.
5. Amendment to $875,000 Note. Effective as of the date hereof, the third
paragraph of the Promissory Note relating to the Eight Hundred Seventy-Five
Thousand and 00/100 Dollars ($875,000.00) Loan is hereby amended and restated,
in its entirety, as follows:
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order
of Lender the principal sum of Eight Hundred Seventy-Five Thousand and
00/100 Dollars ($875,000.00), together with interest at the annual rate
equal to Eleven and One-Quarter Percent (11.25%) effective November 1,
1997; provided, however, in the event and during the continuation of a
violation by the Obligors of certain financial covenants contained in the
Loan Agreement, such interest rate shall be increased as provided in
Section 2.3 of the Loan Agreement. Interest only shall be due and payable
monthly in arrears on the first day of each month commencing on July 1,
1997 and continuing on the first day of each month thereafter (excepting
October 1, 1997, November 1, 1997 and December 1, 1997 when no payments
will be required and accrued interest which would otherwise have been due
and payable on such dates shall be capitalized and added to the
outstanding principal due hereunder as of October 1, 1997, November 1,
1997 or December 1, 1997, as the
4
- 4 -
case may be when such accrued interest was otherwise due and payable)
through and including September 1, 2000. The entire outstanding principal
balance due hereunder, unless earlier prepaid in accordance with the terms
hereof, shall be due and payable, together with all accrued and unpaid
interest, on September 30, 2000 (the "Maturity Date").
6. Ratification. Except as amended and modified hereby, the terms of the
Loan Agreement and the Promissory Notes referred to above are hereby ratified
and confirmed as of this date.
IN WITNESS WHEREOF, the parties hereto have executed this Waiver, Second
Amendment and Modification Agreement as of the day and year first above written.
WITNESSES: GREAT AMERICAN LIFE INSURANCE
COMPANY
/s/ Xxxx X. Xxxx BY: /s/ Xxxx X. Xxxxxxxx
---------------------------------- -------------------------------------
/s/ Xxxxxxx X. Xxxxx
----------------------------------
/s/ Xxxxx X. Xxxxxxxx MERITAGE HOSPITALITY GROUP INC.
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
/s/ Xxxxx X. Xxxxxxxx St. CLAIR INN, INC.
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
/s/ Xxxxx X. Xxxxxxxx GRAND HARBOR RESORT INC.
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
/s/ Xxxxx X. Xxxxxxxx XXXXXX XXXXXX INN, INCORPORATED
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
/s/ Xxxxx X. Xxxxxxxx MHG FOOD SERVICE INC.
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
/s/ Xxxxx X. Xxxxxxxx GRAND HARBOR YACHT CLUB INC.
----------------------------------
/s/ Xxxx Xxx Xxxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx, President
---------------------------------- -------------------------------------
