EXHIBIT 10.2
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
Dated as of July 24, 1996
between
HFS INCORPORATED
and
NATIONAL LODGING CORP.
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions............................................... 1
ARTICLE 2
GUARANTEES AND LOANS
Section 2.1 Guarantees................................................ 3
Section 2.2 Credit Exposure........................................... 4
ARTICLE 3
FEES; INDEMNIFICATION
Section 3.1 Fees...................................................... 5
Section 3.2 Indemnification........................................... 5
ARTICLE 4
TERM; TERMINATION
Section 4.1 Term of Agreement; Survival............................... 5
Section 4.2 Termination by HFS........................................ 6
ARTICLE 5
SPECIAL COVENANTS
Section 5.1 Information............................................... 6
ARTICLE 6
MISCELLANEOUS
Section 6.1 Complete Agreement........................................ 6
Section 6.2 Governing Law............................................. 6
Section 6.3 Notices................................................... 7
Section 6.4 Amendment and Modification................................ 7
Section 6.5 Successors and Assigns.................................... 7
Section 6.6 No Third Party Beneficiaries.............................. 8
Section 6.7 Counterparts.............................................. 8
Section 6.8 Interpretation............................................ 8
Section 6.9 Legal Enforceability...................................... 8
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
SECOND AMENDED AND RESTATED FINANCING AGREEMENT (this "Agreement"), dated
as of July 24, 1996, by and between HFS INCORPORATED, a Delaware corporation
("HFS"), and NATIONAL LODGING CORP., a Delaware corporation ("NLC").
WHEREAS, HFS and NLC have entered into the Amended and Restated Interim
Financing Agreement dated as of January 23, 1996 (the "Existing Agreement"),
pursuant to which HFS has gu aranteed a revolving credit facility provided to
NLC by Bankers Trust Company, Chemical Bank and certain other banks and
financial institutions (the "Existing Credit Facility"); and
WHEREAS, NLC has entered into an Amended and Restated Stock Purchase
Agreement dated as of March 14, 1996 (as the same may be further amended from
time to time, the "Stock Purchase Agreement") with Chartwell Leisure Associates
L.P. II, a Delaware limited partnership ("Chartwell") and FSNL LLC, a
Connecticut limited liability company ("FSNL" and, together with Chartwell, the
"Purchasers"), pursuant to which NLC has agreed to sell to the Purchasers shares
of the Common Stock of NLC, subject to all of the terms and conditions set forth
in the Stock Purchase Agreement (the "Stock Sale"); and
WHEREAS, NLC expects that it will refinance the Existing Credit Facility
prior to its maturity date; and
WHEREAS, HFS and NLC desire to amend the Agreement to provide that, if the
closing of the Stock Sale (the "Closing") occurs, then upon request by NLC HFS
will provide replacement credit enhancements to NLC in connection with the
refinancing of the Existing Credit Facility or other credit arrangements, upon
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and intending to be legally bound hereby, HFS
and NLC hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, capitalized terms
defined immediately after their use shall have the respective meanings thereby
provided and the following terms shall have the meanings set forth below (in
each case, such meaning to be equally applicable to both the singular and plural
forms of the term defined).
Affiliate: shall mean, with respect to any specified person, a person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
BT Bank Facility: shall mean the six-year revolving credit facility
provided to NLC by the BT Banks pursuant to the Credit Agreement dated as of
January 23, 1996 in the principal amount of up to $125,000,000.
BT Banks: shall mean the banks or other financial institutions providing
the BT Bank Facility.
BT Guaranty: shall mean the guaranty given by HFS in favor of the BT Banks
pursuant to the BT Bank Facility.
Change in Control: during any period of not more than 24 months,
individuals who at the beginning of such period constituted NLC's Board of
Directors, together with any new directors (other than directors designated by
any third party (other than either of the Purchasers or their Affiliates) who
has entered into an agreement to effect a transaction of the type described in
clause (ii) or (iii) below) whose election by the Board of Directors or
nomination for such election was approved by a vote of at least a majority of
the directors then still in office who were directors at the beginning of such
period or whose election or nomination for election was previously so approved
(other than approval given in connection with an actual or threatened proxy or
election contest), cease for any reason to constitute at least a majority of
NLC's Board of Directors; beneficial ownership of 50% or more of NLC's common
stock (or other securities generally having the right to vote for the election
of directors of NLC) shall be acquired by, or sold, assigned or otherwise
transferred to, directly or indirectly (other than pursuant to a public
offering), any third party or Group (other than the Purchasers or their
Affiliates), whether by sale or issuance of common stock or otherwise; NLC or
any subsidiary of NLC shall sell, assign or otherwise transfer to any third
party or Group (other than the Purchasers or their Affiliates), directly or
indirectly, assets (including stock or other securities of subsidiaries) having
a fair market value, book value or earning power of 50% or more of the assets of
NLC and its subsidiaries taken as a whole.
Credit Exposure: shall mean at any time the sum of the then outstanding
Guaranty Exposure and the then outstanding amount of Unpaid Drawings.
Credit Facilities: shall mean the BT Bank Facility and any Future
Facilities in effect at any time.
Eligible Assignee: shall mean any bank or other financial institution whose
senior unsecured debt (or the senior unsecured debt of the parent company of
such bank or other financial institution) is rated by Standard & Poor's or
Moody's Investors Service at least as high as the senior unsecured debt of HFS.
Future Facility: shall mean any loan agreement, credit agreement or similar
credit facility, other than the BT Bank Facility, pursuant to which NLC has
incurred indebtedness for any reason and in any amount.
Future Guaranty: shall mean any and all guarantees, security and other
credit enhancements advanced or provided by HFS to secure indebtedness incurred
by NLC pursuant to any Future Facility.
Group: two or more persons who agree to act together for purposes of
holding or acquiring securities, assets or control of NLC; provided, however,
that the shareholders of a publicly-held company that is merged with or into NLC
(or a subsidiary thereof) in a transaction approved by NLC's Board of Directors
shall not be a Group with respect to any NLC securities received by such
shareholders in connection with such transaction.
Guaranteed Amount: shall mean at any time the then aggregate outstanding
principal amount of indebtedness of NLC, together with interest and any other
amounts for which NLC is liable, under any Credit Facility to the extent
supported by one or more Guarantees.
Guaranty: shall mean the BT Guaranty or any Future Guarantee.
Guaranty Exposure: shall mean at any time the then maximum Guaranteed
Amount (assuming for this purpose that the NLC Bank Facility, if then in effect,
and any Future Facilities then in effect are fully utilized).
Guaranty Termination Date: shall mean December 31, 2001.
NLC Creditor: shall mean any creditor of NLC under a Credit Facility.
Unpaid Drawings: shall have the meaning provided in Section 2.1(c) hereof.
ARTICLE 2
GUARANTEES AND LOANS
Section 2.1 Guarantees.
(a) Effective upon the Closing, and subject to the terms and conditions of
this Agreement, HFS shall, upon the written request of NLC, issue one or more
Future Guarantees; provided, however, that the maximum Credit Exposure shall not
at any time exceed $75,000,000. The terms and conditions of each Future Facility
and each Future Guaranty shall be reasonably satisfactory to HFS. The terms of
each Future Guaranty shall be those typical and customary for similar
guarantees; provided, further, that in any event such terms and conditions shall
include: (i) that HFS shall have no liability for payment demands made on the
Future Guaranty after the Guaranty Termination Date, except with respect to (A)
interest on any amounts for which such a payment demand is made on or prior to
the Guaranty Termination Date, (B) costs and expenses in connection with the
enforcement of the Future Guaranty and (C) amounts received by the beneficiary
of the Future Guaranty on or prior to the Guaranty Termination Date, but which
are required to be repaid by that beneficiary after the Guaranty Termination
Date; (ii) that HFS shall have reasonable rights to cure any defaults or events
of default under the Future Facilities on or prior to the Guaranty Termination
Date; and (iii) HFS shall have the right to approve any and all amendments,
modifications or supplements to the Future Facilities on or prior to the
Guaranty Termination Date. HFS shall not be required to issue any Future
Guarantees at any time if, at such time: (x) NLC is in material breach of its
obligations hereunder or under the Amended and Restated Corporate Services
Agreement dated as of January 24, 1996, as the same may be amended from time to
time, between HFS and NLC; (y) NLC, any of its subsidiaries or any joint venture
in which NLC is a participant is in material breach of any franchise or license
agreement with HFS or any of its subsidiaries; or (z) there shall have been any
material adverse change in the consolidated financial condition of NLC and its
subsidiaries from that reflected in NLC's audited financial statements as at
December 31, 1995 or any event which could reasonably be expected to result in
such a material adverse change.
(b) In the event that NLC wishes HFS to issue a Future Guaranty hereunder,
it shall provide HFS with 10 days' prior written notice thereof, which notice
shall: (i) specify the date of issuance of such Future Guaranty; (ii) include,
if available, copies of any and all documentation related to the Future Facility
and in any event a reasonably detailed description of the terms of such Future
Facility; and (iii) include a copy of the proposed form of Future Guaranty.
Prior to the issuance of such Future Guaranty and as a condition thereto, HFS
shall have approved the form and substance of the Future Facility and all
documentation relating thereto, including, without limitation, the applicable
Future Guaranty, which approval shall not unreasonably be withheld, and shall
have received an opinion of counsel to NLC reasonably acceptable to HFS with
respect to the authorization, execution and enforceability against NLC of the
documents evidencing the Future Facility. HFS agrees that the form of the BT
Guaranty is generally a reasonably acceptable form for Future Guarantees,
provided that if HFS is able to obtain more favorable terms under its principal
bank credit arrangements than those in effect at the time it gave the BT
Guaranty, the BT Guaranty would serve as a model of a reasonably acceptable form
for Future Guarantees only to the extent that the Future Guarantee reflected
those more favorable terms.
(c) NLC hereby agrees to reimburse HFS for any payment made by HFS under a
Guaranty (each such amount so paid by HFS until reimbursed an "Unpaid Drawing")
immediately after the making by HFS of such payment together with interest
thereon from and including the date paid by HFS (unless HFS is reimbursed on
such day) to but excluding the date HFS is reimbursed by NLC, at a rate per
annum equal to either: (i) 2.0% in excess of the prime or base rate of Chemical
Bank, or any successor to Chemical Bank, from time to time in effect at its
principal office in New York, New York; or (ii) if at any time during the term
hereof Chemical Bank or any of its successors is no longer HFS's principal bank
lender, then 2.0% in excess of the prime or base rate of the bank that is HFS's
principal bank lender at that time. The obligation of NLC to reimburse HFS with
respect to Unpaid Drawings (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which NLC may have or have had
against HFS or any NLC Creditor. Notwithstanding the foregoing provisions of
this Section 2.1(c), HFS acknowledges that the terms of the applicable Guaranty
may delay the obligation of NLC to reimburse HFS until all Guaranteed Amounts
relating to such Guaranty have been received by the NLC Creditors. In addition
to any right of HFS to be reimbursed by NLC for Unpaid Drawings, the parties
acknowledge and agree that HFS shall be subrogated to all rights of the NLC
Creditors with respect to any such Unpaid Drawings.
Section 2.2 Credit Exposure. Anything in this Agreement to the contrary
notwithstanding, the aggregate Credit Exposure shall not at any time exceed
$75,000,000. If at any time the Credit Exposure shall exceed $75,000,000 and
such excess shall be attributable to Unpaid Drawings, NLC shall immediately pay
such Unpaid Drawings in an amount at least equal to such excess. Upon any
termination of this Agreement pursuant to Section 4.2 hereof, NLC shall
immediately (x) pay all Unpaid Drawings and (y) provide cash collateral pursuant
to such arrangements as are satisfactory to HFS in an amount not less than the
Guaranty Exposure at such time.
ARTICLE 3
FEES; INDEMNIFICATION
Section 3.1 Fees.
(a) NLC shall pay a Guaranty fee to HFS at a rate of $1,500,000 per annum,
such fee to be paid quarterly in arrears on the last day of March, June,
September and December of each year (each a "Payment Date").
(b) All fees payable hereunder shall be computed on the basis of a 360 day
year and the actual number of days elapsed.
(c) All payments hereunder shall be made prior to 12:00 noon (New York
time) on the Payment Date and shall be made in U.S. dollars and immediately
available funds by wire transfer to such account as HFS may from time to time
designate in writing to NLC.
Section 3.2 Indemnification. NLC agrees to: (i)whether or not the
transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of HFS in connection with the negotiation,
preparation, execution and delivery of any Future Guaranty and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating thereto and in connection with the enforcement hereof or thereof
(including, without limitation, the reasonable fees and disbursements of
counsel); (ii) pay and hold HFS harmless from and against any and all present
and future stamp and other similar taxes with respect to the foregoing matters
and save HFS harmless from and against any and all liabilities with respect to
or resulting from any delay or omission to pay such taxes; and (iii) indemnify
HFS, its officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not HFS is a party thereto) related to the entering
into and/or performance of this Agreement or any Guaranty or the consummation of
any transactions contemplated in this Agreement or any Guaranty, including,
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeds (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or wilful misconduct of the
person to be indemnified).
ARTICLE 4
TERM; TERMINATION
Section 4.1 Term of Agreement; Survival. Subject to earlier termination
pursuant to Section 4.2 below, this Agreement shall continue in full force and
effect until the Guaranty Termination Date, at which time HFS shall have no
further obligations hereunder. The provisions of Section 3.2 of this Agreement
shall survive the expiration or termination of this Agreement in perpetuity.
Section 4.2 Termination by HFS. HFS shall have the right to terminate this
Agreement at any time, without penalty or further obligation to NLC hereunder
and without prejudice to any accrued rights of HFS hereunder:
(a) immediately upon a Change in Control;
(b) immediately if an event of default shall have occurred under any Credit
Facility as a result of which any indebtedness under that Credit Facility shall
have become or shall be declared due and payable prior to its scheduled
maturity;
(c) immediately if NLC becomes bankrupt or insolvent or files a petition
concerning itself or seeks the protection of any bankruptcy, insolvency or
similar law or makes an assignment for the benefit of creditors, or if a
receiver is appointed to take charge of NLC's business; or
(d) immediately if NLC engages in any business, other than its gaming
related investments in effect on the date hereof and the ownership, operation
and development of hotels and motels and related activities.
(e) immediately, upon a breach by NLC of any of its obligations under this
Agreement.
ARTICLE 5
SPECIAL COVENANTS
Section 5.1 Information. NLC shall furnish HFS with such information,
financial or otherwise, as HFS shall reasonably request relating to NLC, any of
its Affiliates, or any Credit Facility. Such information shall include, in any
event, all notices received by NLC from the NLC Creditors or any agents therefor
under any Credit Facility. HFS agrees to preserve the confidentiality of any
such information provided by NLC, subject to any requirements of law applicable
to HFS.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Complete Agreement. This Agreement constitutes the entire
agreement between HFS and NLC with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments, writings and
understandings with respect thereto, including the Existing Agreement.
Section 6.2 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable principles
of conflicts law) as to all matters, including, without limitation, matters of
validity, construction, effect, performance and remedies.
Section 6.3 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and, unless otherwise
provided herein, shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is given, (ii) on the
day of transmission if sent via facsimile transmission to the facsimile number
given below, provided telephonic confirmation of receipt is obtained promptly
after completion of transmission, (iii) on the business day after delivery to an
overnight courier service, provided that receipt of delivery to the party to
whom notice is to be given has been confirmed, or (iv) on the fifth day after
mailing, provided receipt of delivery is confirmed, if mailed to the party to
whom notice is to be given by first class mail, registered or certified, postage
prepaid, properly addressed and return-receipt requested, to HFS or NLC, as the
case may be, as follows:
If to HFS:
HFS Incorporated
339 Jefferson Road
Parsippany, NJ 07054
Attn: General Counsel
Fax No.: (201) 428-5269
If to NLC:
National Lodging Corp.
605 Third Avenue
23rd Floor
New York, NY 10158
Attn: General Counsel
Fax No.: (212) 867-4644
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attn: Martin L. Edelman, Esq.
Fax No.: (212) 856-7808
Any party may change its address or fax number by giving the other party
written notice of its new address in the manner set forth below.
Section 6.4 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the parties.
Section 6.5 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns, provided, however, that
no party may assign its rights or obligations hereunder without the written
consent of the other party hereto, except that HFS may assign all or any part of
its rights hereunder, without obtaining such consent, to any direct or indirect
subsidiary of HFS or any Eligible Assignee.
Section 6.6 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and is not intended to confer any rights or
remedies upon any person other than the parties hereto.
Section 6.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.8 Interpretation. The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
Section 6.9 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision or any other provision hereof in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first written above.
HFS INCORPORATED
By: ___________________________________
Stephen P. Holmes
Executive Vice President
NATIONAL LODGING CORP.
By: ___________________________________
Richard L. Fisher
Chief Executive Officer