CUSIP No.   61748W108

SCHEDULE 13D/A

 

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D/A

 

Under the Securities Exchange Act of 1934
(Amendment No. 18)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. o

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1) Includes beneficial ownership of common stock of the issuer through vested restricted stock units for 22,367 shares of the issuer’s common stock.

 

(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(3) Beneficial ownership of common stock of the issuer is through a warrant to purchase 7,535,580 shares of the issuer’s common stock.  Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(4) Beneficial ownership of common stock of the issuer is through a warrant to purchase 4,964,420 shares of the issuer’s common stock.  Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,768,044 shares of the issuer’s common stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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This Amendment No. 18 to Schedule 13D amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) on November 25, 2009 (as amended to date, this “Schedule 13D”) by (i) Ronald W. Burkle, an individual, (ii) Yucaipa American Management, LLC, a Delaware limited liability company (“Yucaipa American”), (iii) Yucaipa American Funds, LLC, a Delaware limited liability company (“Yucaipa American Funds”), (iv) Yucaipa American Alliance Fund II, LLC, a Delaware limited liability company (“YAAF II LLC”), (v) Yucaipa American Alliance Fund II, L.P., a Delaware limited partnership (“YAAF II”), and (vi) Yucaipa American Alliance (Parallel) Fund II, L.P., a Delaware limited partnership (“YAAF II Parallel” and, together with YAAF II, the “Investors”; and the Investors, together with Mr. Burkle, Yucaipa American, Yucaipa American Funds, and YAAF II LLC, are referred to herein as the “Reporting Persons”), with respect to the common stock, par value $0.01 per share (the “Common Stock”), of Morgans Hotel Group Co., a Delaware corporation (the “Company”).  The filing of any amendment to this Schedule 13D (including the filing of this amendment) shall not be construed to be an admission by the Reporting Persons that a material change has occurred in the facts set forth in this Schedule 13D or that such amendment is required under Rule 13d-2 of the Securities Exchange Act of 1934, as amended.

 

Item 3. Source and Amount of Funds or Other Consideration.

 

Item 3 of this Schedule 13D is hereby supplemented as follows:

 

Ronald W. Burkle is the beneficial owner of (i) warrants to purchase 12,500,000 shares of Common Stock at an exercise price of $6.00 per share; (ii) 75,000 shares of the Company’s Series A Preferred Securities; and (iii) vested restricted stock units for 22,367 shares of Common Stock.

 

The aggregate value of the Merger (as defined below) is approximately $794 million, including the proposed rollover of the Reporting Persons’ Series A Preferred Securities of the Company pursuant to the Rollover Commitment Letter (as defined below), and the proposed assumption of debt and capital leases by the surviving company.  SBE (as defined below) has obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement (as defined below), the aggregate proceeds of which, subject to the terms and conditions of the Merger Agreement and together with the proceeds of the equity rollover investment of the Reporting Persons pursuant to the Rollover Commitment Letter (as defined below) and the available cash of the Company, will be used by SBE to pay the aggregate Merger Consideration (as defined below) and pay all related fees and expenses.  Cain Hoy Enterprises LP has committed to capitalize SBE, at or prior to the Effective Time (as defined below), with an equity contribution in an amount up to $75 million, subject to the terms and conditions set forth in an equity commitment letter, dated as of May 9, 2016.  In addition, the Reporting Persons have entered into the Rollover Commitment Letter pursuant to which the Reporting Persons have agreed (subject to the terms and conditions in the Rollover Commitment Letter) to exchange their Series A Preferred Securities of the Company for equity of a newly created holding company of SBE. SBE has also obtained a commitment from Security Benefit Corporation to provide up to $205 million of debt financing in connection with the Merger subject to the terms and conditions of a debt commitment letter between SBE and Security Benefit Corporation, dated as of May 9, 2016.

 

The information set forth in Item 4 of this Schedule 13D is incorporated by reference into this Item 3.

 

Item 4.  Purpose of the Transaction.

 

Item 4 of this Schedule 13D is hereby supplemented as follows:

 

On May 9, 2016, the Company entered into the Agreement and Plan of Merger (the “Merger  Agreement”) with SBEEG Holdings, LLC (“SBE”) and Trousdale Acquisition Sub, Inc. (“Sub-S”).

 

The Merger Agreement provides that, subject to the terms and conditions thereof, Sub-S will be merged with and into the Company with the Company surviving the merger as a wholly owned subsidiary of SBE or a newly created holding company (“Holdco”) of SBE (the “Merger”).  At the effective time of the Merger (the “Effective Time”), each share of Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive $2.25 in cash, without interest (the “Merger Consideration”), other than (i) shares of Common Stock, including any Rollover Shares (as defined below) and any shares of Common Stock owned immediately prior to the Effective Time by the Company, SBE or any other direct or indirect wholly owned subsidiary of the Company or SBE (all of which shall be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor as of the Effective Time), and (ii) shares of Common Stock as to which appraisal rights have been properly exercised and perfected under Delaware law.

 

The purpose of the transactions contemplated by the Merger Agreement is for SBE to directly or indirectly acquire all of the outstanding shares of Common Stock, other than the Rollover Shares.  If the Merger is consummated, the Common Stock will no longer be traded on the NASDAQ and will cease to be registered under Section 12 of the Exchange Act, and the Company will become privately held as a wholly owned subsidiary of SBE or a newly created holding company of SBE.

 

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Consummation of the Merger is conditioned on adoption of the Merger Agreement by the affirmative vote of the holders of at least a majority of all outstanding shares of Common Stock and the holders of at least a majority of all outstanding Series A Preferred Securities.  Consummation of the Merger is also subject to certain other customary conditions, including, among others, the absence of any law, injunction or judgment that prohibits or makes illegal the consummation of the Merger, and the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.  Each party’s obligation to consummate the Merger also is subject to certain additional conditions that include the assumption of the Company’s mortgage agreements or the refinancing thereof, the accuracy of the other party’s representations and warranties contained in the Merger Agreement (subject to certain materiality qualifiers) and the other party’s compliance with its covenants and agreements contained in the Merger Agreement in all material respects.

 

Concurrently with the execution and delivery of the Merger Agreement, Yucaipa Hospitality Investments, LLC  (“Yucaipa”), an affiliate of the Reporting Persons, entered into a rollover commitment letter, dated as of May 9, 2016, with SBE (the “Rollover Commitment Letter”).  Pursuant to the Rollover Commitment Letter, Yucaipa has committed, subject to the conditions therein, to transfer, contribute and deliver to Holdco immediately prior to the Effective Time an aggregate of 75,000 shares of the Company’s Series A Preferred Securities and warrants to purchase 12,500,000 shares of Common Stock owned by them (collectively, the “Rollover Shares”) in exchange for equity of Holdco.

 

Also concurrently with the execution and delivery of the Merger Agreement, Yucaipa entered into a Voting Agreement with SBE, dated as of May 9, 2016 (the “Voting Agreement”), pursuant to which, among other things, Yucaipa has agreed to vote all of the shares of the Common Stock beneficially owned by Yucaipa in favor of the transactions contemplated by the Merger Agreement and consent to the transactions contemplated by the Merger Agreement, unless the Voting Agreement is terminated pursuant to its terms.  The Voting Agreement also restricts Yucaipa from transferring or agreeing to transfer any Rollover Shares during its term (other than in accordance with the Rollover Commitment Letter) and from engaging in discussions or solicitations with respect to alternate transactions involving the Company, unless the Voting Agreement is terminated pursuant to its terms.

 

The foregoing description of the Merger Agreement, the Rollover Commitment Letter, the Voting Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of (i) the Merger Agreement attached hereto as Exhibit 1, which is incorporated herein by reference; (ii) the Rollover Commitment Letter attached hereto as Exhibit 2, which is incorporated herein by reference; and (iii) the Voting Agreement attached hereto as Exhibit 3, which is incorporated herein by reference.

 

Except as set forth herein, no Reporting Person has any present plan or proposal with respect to any action that would result in the occurrence of any of the matters enumerated under Item 4 of Schedule 13D.  The Reporting Persons reserve the right to formulate specific plans or proposals with respect to, or to change each of its intentions regarding, any or all of the foregoing.

 

Item 5. Interest in Securities of the Issuer.

 

Item 5 of this Schedule 13D is hereby amended to delete paragraph (a)(ii) in its entirety and replace it with the following:

 

(ii) Based upon the 34,768,044 shares of Common Stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed with the SEC on May 10, 2016, the number of shares of Common Stock directly beneficially owned by YAAF II, YAAF II Parallel and Mr. Burkle represents approximately 17.8% (1), 12.5% (2) and 0.1% (3) of the Common Stock, respectively, and 26.4% (4) of the Common Stock in the aggregate, in each case on a diluted basis.

 

Item 5 of this Schedule 13D is hereby further supplemented as follows:

 

As a result of the matters described in Item 4 above, the Reporting Persons, SBE and certain of its affiliates may collectively be deemed to constitute a “group” within the meaning of Rule 13d-5(b) under the Exchange Act.  As a member of a group, the Reporting Persons may be deemed to beneficially own any shares of Common Stock that may be beneficially owned by each other member of the group.  The Reporting Persons disclaim beneficial ownership of any shares of Common Stock that may be beneficially owned by SBE or by any of its affiliates. The Reporting Persons do not have affirmative information about any such shares that may be beneficially owned by such persons.

 

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Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer.

 

Item 6 of this Schedule 13D is hereby supplemented as follows:

 

The information regarding the Merger Agreement, the Rollover Commitment Letter and the Voting Agreement set forth in Item 4 above is incorporated herein by reference. Except as described herein and incorporated herein by reference to Item 4 above, there are at present no contracts, arrangements, understandings or relationships (legal or otherwise), between any Reporting Person and any other person with respect to any securities of the Company (including securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities other than standard default and similar provisions contained in loan agreements), including, but not limited to, transfer or voting of any of the shares of Common Stock, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.

 

Item 7.  Material to be Filed as Exhibits.

 

Exhibit		Description
Exhibit 1		Agreement and Plan of Merger, dated as of May 9, 2016, by and among Morgans Hotel Group Co., SBEEG Holdings, LLC and Trousdale Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 to Morgans Hotel Group Co.’s Current Report on Form 8-K filed on May 10, 2016).
Exhibit 2		Rollover Commitment Letter, dated as of May 9, 2016, by and among Yucaipa Hospitality Investments, LLC, SBEEG Holdings, LLC and Trousdale Acquisition Sub, Inc.
Exhibit 3		Voting Agreement, dated as of May 9, 2016, by and between SBEEG Holdings, LLC and Yucaipa Hospitality Investments, LLC.

 

(1)           Beneficial ownership of Common Stock is through warrants to purchase an aggregate of 7,538,580 shares of Common Stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of Common Stock received upon exercise, and the number of shares received will be determined by the fair market value of the Common Stock at the time of such exercise.  The percent of class of the Common Stock beneficially owned is based on 34,768,044 shares of Common Stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

(2)           Beneficial ownership of Common Stock is through warrants to purchase an aggregate of 4,964,420 shares of Common Stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of Common Stock received upon exercise, and the number of shares received will be determined by the fair market value of the Common Stock at the time of such exercise.  The percent of class of the Common Stock beneficially owned is based on 34,768,044 shares of Common Stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

(3)           The percent of class of Common Stock directly beneficially owned is based on restricted stock units for 22,367 shares of Common Stock and 34,768,044 shares of the Common Stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016.

 

(4)           Beneficial ownership of Common Stock is through the aforementioned restricted stock units and warrants to purchase an aggregate of 12,500,000 shares of Common Stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of Common Stock received upon exercise, and the number of shares received will be determined by the fair market value of the Common Stock at the time of such exercise.  The percent of class of the Common Stock beneficially owned is based on 34,768,044 shares of Common Stock outstanding as of May 9, 2016, as reported on the issuer’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed on May 10, 2016, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

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SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Dated:  May 10, 2016

 

	RONALD W. BURKLE
	By:	/s/ Ronald W. Burkle
	YUCAIPA AMERICAN MANAGEMENT, LLC
	By:	/s/ Ronald W. Burkle
		Name: Ronald W. Burkle
		Its: Managing Member
	YUCAIPA AMERICAN FUNDS, LLC
	By: Yucaipa American Management, LLC
	Its: Managing Member
		By:	/s/ Ronald W. Burkle
			Name: Ronald W. Burkle
			Its: Managing Member
	YUCAIPA AMERICAN ALLIANCE FUND II, LLC
	By: Yucaipa American Funds, LLC
	Its: Managing Member
		By: Yucaipa American Management, LLC
		Its: Managing Member
			By:	/s/ Ronald W. Burkle
				Name: Ronald W. Burkle
				Its: Managing Member

 

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	YUCAIPA AMERICAN ALLIANCE FUND II, L.P.
	By: Yucaipa American Alliance Fund II, LLC
	Its: General Partner
		By: Yucaipa American Funds, LLC
		Its: Managing Member
			By: Yucaipa American Management, LLC
			Its: Managing Member
				By:	/s/ Ronald W. Burkle
					Name: Ronald W. Burkle
					Its: Managing Member
	YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, L.P.
	By: Yucaipa American Alliance Fund II, LLC
	Its: General Partner
		By: Yucaipa American Funds, LLC
		Its: Managing Member
			By: Yucaipa American Management, LLC
			Its: Managing Member
				By:	/s/ Ronald W. Burkle
					Name: Ronald W. Burkle
					Its: Managing Member

 

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Exhibit 2

 

EXECUTION COPY

 

May 9, 2016

 

SBEEG Holdings LLC

Trousdale Acquisition Sub, Inc.

2780 Holdings, LLC

Las Vegas, Nevada 89109

 

Ladies and Gentlemen:

 

This letter agreement (this “Agreement”) sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to transfer, contribute and deliver the number of shares of Monroe Series A Preferred Securities and the Monroe Warrants described in Section 1 below to a newly formed Delaware holding company (“New Holdco”) of SBEEG Holdings, LLC, a Delaware limited liability company (“Trousdale”), in exchange for the equity of New Holdco, which after the Closing (as defined in the Merger Agreement (as defined below)) will either directly or indirectly wholly own Trousdale and wholly own Monroe (as defined below) and have no other assets or liabilities except for cash and as expressly set forth in the Debt Commitment Letter, in each case as described in Section 1 below. It is contemplated that, pursuant to an Agreement and Plan of Merger, dated as of the date hereof (as amended, modified or assigned with the prior written consent of the Equity Provider, the “Merger Agreement”), by and among Trousdale, Trousdale Acquisition Sub, Inc., a Delaware corporation (“Sub-S”) and a wholly owned subsidiary of Trousdale, and Morgans Hotel Group Co., a Delaware corporation (“Monroe”), Sub-S will, subject to receipt of the Monroe Stockholder Approval, be merged with and into Monroe pursuant to the Merger, with Monroe being the surviving entity of such Merger and a wholly-owned subsidiary of Trousdale or New Holdco. Each capitalized term used and not defined herein shall have the meaning ascribed thereto in the Merger Agreement.

 

1.                Commitment. The Equity Provider hereby commits (its “Commitment”), subject to the terms and conditions set forth herein to transfer, contribute and deliver to New Holdco immediately prior to the Effective Time (the “Initial Contribution”) the number of shares of Monroe Series A Preferred Securities and Monroe Warrants set forth beside its name on Schedule A hereto (the aggregate amount of such Monroe Series A Preferred Securities and Monroe Warrants, the “Rollover Contribution Shares”) in exchange for twenty-five percent (25%) of the Common Equity of New Holdco and fifty percent (50%) of the Preferred Equity of New Holdco, in each case outstanding as of immediately following the Effective Time, which shall reflect the same price per unit or share of New Holdco as is paid by and allocated to the other applicable equity holders of New Holdco in connection with the Closing. The Equity Provider will not be under any obligation under any circumstances to transfer, contribute or deliver, or cause to be transferred, contributed, or delivered, to Trousdale or New Holdco a number of shares in excess of the number of shares of Monroe Series A Preferred Securities and Monroe Warrants set forth beside its name on Schedule A hereto; and in no event will the Equity Provider be obligated to provide any other contribution to, or purchase any equity or debt of, or otherwise provide funds to, Trousdale, New Holdco, Sub-S or any other person. As promptly as reasonably practical after the formation of New Holdco (but in any event prior to the Closing), Trousdale shall cause New Holdco to execute a joinder to this letter agreement (in a form reasonably acceptable to Trousdale, Sub-S and the Equity Provider).

 

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2.                Conditions. The Commitment shall be subject to the following conditions: (i) the execution and delivery of the Merger Agreement by Monroe; (ii) the satisfaction or (with the prior written consent of the Equity Provider) (such consent not to be unreasonably withheld, conditioned or delayed)) waiver of each of the conditions to Trousdale’s and Sub-S’s obligations to effect the Closing set forth in Article VII of the Merger Agreement (other than any conditions that by their nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction of such conditions, and other than due to the failure of the Equity Provider to consummate the Initial Contribution when required hereby); (iii) the Debt Financing has been funded in accordance with the terms of the Debt Commitment Letter or will be funded in accordance with the terms thereof at the Closing; (iv) the substantially simultaneous closing of the contributions contemplated by the Equity Commitment Letter; (v) the execution and delivery by New Holdco and the equity holders of New Holdco (including the Equity Provider) of organizational documents of New Holdco containing the terms and conditions set forth on Schedule B and otherwise reasonably acceptable to the Equity Provider, and (vi) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided that in no event shall Trousdale, Sub-S or New Holdco consummate the transactions under the Merger Agreement or any similar or related transaction unless and until all of the above conditions are satisfied or waived by the Equity Provider.

 

3.                Parties in Interest; Third Party Beneficiaries. The parties hereto hereby agree that their respective agreements and obligations set forth herein are solely for the benefit of the other parties hereto and their respective successors and permitted assigns, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any other person any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Trousdale, New Holdco (upon its joinder hereto) or Sub-S to enforce, the obligations set forth herein; provided, that Monroe is an express third-party beneficiary hereof only to the extent set forth in Section 4 and shall have the right directly to enforce specifically the terms and provisions of this Agreement against the Equity Provider only to the extent set forth in Section 4.

 

4.                Enforceability. This Agreement may only be enforced by (i) Trousdale, New Holdco (upon its joinder hereto) or Sub-S, (ii) Monroe pursuant to Monroe’s right to seek specific performance of Trousdale’s or New Holdco’s (upon its joinder hereto) obligation to enforce each of the Equity Provider’s obligation to fund the Commitment in accordance with Sections 1 and 2 hereof, pursuant to, and subject to, and solely in accordance with, the terms and conditions of, Section 9.11(b) of the Merger Agreement and those set forth herein and for no other purpose (including without limitation any claim for monetary damages hereunder) or (iii) Monroe directly seeking specific performance of the Equity Provider’s obligation to contribute its Commitment in accordance with Sections 1 and 2 hereof under the circumstances, and only under the circumstances, in which Monroe would be permitted by Section 9.11(b) of the Merger Agreement to obtain specific performance requiring Trousdale or New Holdco (upon its joinder hereto) to enforce the Equity Provider’s obligation to contribute its Commitment and for no other purpose (including without limitation any claim for monetary damages hereunder). Notwithstanding any other term or condition of this Agreement, the rights and remedies of Trousdale, New Holdco (upon its joinder hereto), Sub-S and Monroe hereunder shall be limited to the right to specifically enforce the obligation of the Equity Provider to contribute the Rollover Contribution Shares upon and subject to the terms and conditions hereof and for no other purpose (including without limitation any claim for monetary damages hereunder).

 

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5.                No Modification; Entire Agreement; Certain Matters. This Agreement may not be amended or otherwise modified (including termination by mutual consent of the parties hereto) without the prior written consent of Trousdale, New Holdco (upon its joinder hereto), and the Equity Provider; provided that any such amendment or modification that is materially adverse to Monroe’s rights set forth in Section 3 and Section 4 shall also require Monroe’s prior written consent. The Merger Agreement, the Equity Commitment Letter and the Debt Commitment Letter may not be amended, modified or assigned in any manner adverse to the Equity Provider without the prior written consent of the Equity Provider (such consent not to be unreasonably withheld, conditioned or delayed). This Agreement constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its affiliates, on the one hand, and Trousdale, New Holdco (upon its joinder hereto) and Sub-S or any of their affiliates, on the other, with respect to the transactions contemplated hereby. Except as otherwise determined appropriate by the Equity Provider, the parties hereto intend for the contribution of the Rollover Contribution Shares by the Equity Provider to be treated as a rollover or other tax-free exchange for federal income tax purposes (to the extent of equity received in New Holdco). Following the date hereof, the parties will cooperate in good faith to determine a structure to effectuate the transactions described herein that minimizes tax consequences to the Equity Provider (and their direct and indirect owners) and will take such action as reasonably requested by the Equity Provider in furtherance thereof (including, in the event determined appropriate by the Equity Provider, causing New Holdco to be treated as a partnership for federal income tax purposes, or causing the contribution of the Rollover Contribution Shares to be treated as a taxable exchange).

 

6.                Governing Law and Venue; Waiver of Jury Trial.

 

(a)         This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under any applicable principles of conflicts of laws.

 

(b)         Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the Delaware Court of Chancery, any other court of the State of Delaware and any Federal court sitting in the State of Delaware in the event any action, suit or other proceeding arises out of this Agreement or the transactions contemplated hereby and (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. The parties hereto consent to the service of process in any manner permitted by the laws of the State of Delaware.

 

(c)          EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

7.                Counterparts. This Agreement may be executed in any number of counterparts (including by facsimile or by .pdf delivered via email), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

 

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8.                Confidentiality. This Agreement is being provided to Trousdale, New Holdco (upon its joinder hereto), Sub-S and Monroe solely in connection with the Merger. This Agreement may not be circulated or quoted by Trousdale, New Holdco (upon its joinder hereto), Sub-S or Monroe except with the prior written consent of the Equity Provider in each instance; provided, however, that no such written consent is required for any disclosure of the existence or content of this Agreement (excluding Schedule B) to (i) the extent required by Applicable Law, the applicable rules of any national securities exchange or as required in connection with any required SEC filing relating to the Merger (provided, that the disclosing person will provide the Equity Provider an opportunity to review such required disclosure in advance of such public disclosure being made) or (ii) Trousdale’s, New Holdco’s (upon its joinder hereto), Sub-S’s or Monroe’s representatives who need to know of the existence of this Agreement.

 

9.                Termination. The obligations of the Equity Provider under or in connection with this Agreement will terminate automatically and immediately upon the earliest to occur of (a) subject to the proviso in Section 2, the Closing (at which time all such obligations shall be discharged), (b) the termination of the Merger Agreement, the Equity Commitment Letter, or the Debt Commitment Letter (provided that, for the avoidance of doubt, any purported termination of the Merger Agreement that is not a valid termination shall not give rise to a termination of this Agreement pursuant to this Section 9), (c) the amendment, modification or assignment of the Merger Agreement, Equity Commitment Letter, or the Debt Commitment Letter without the prior written consent of the Equity Providers, (d) the Outside Date, and (e) Trousdale, Sub-S, New Holdco or Monroe or any of their respective affiliates initiates any Proceeding (whether in tort, contract or otherwise) against any Equity Provider or any Related Party (as defined below) of any Equity Provider in connection with this Agreement or the Merger Agreement or any of the transactions contemplated hereby or thereby except as expressly set forth in this Agreement or the Voting Agreement and except for any derivative Proceeding initiated by any stockholder of Monroe in connection with this Agreement or the Merger Agreement or any of the transactions contemplated hereby or thereby; provided that, in the case of each of (a) through (e) if Monroe shall have previously commenced an action pursuant to clause (ii) or (iii) of the first sentence of Section 4 hereof, this Agreement shall terminate upon the final, non-appealable resolution of such action and satisfaction by the Equity Provider of any obligations finally determined or agreed to be owed by the Equity Provider, consistent with the terms hereof); provided that Section 14 of this Agreement shall survive any termination of this Agreement and following any such termination, neither Trousdale, Sub-S, New Holdco nor any of their respective affiliates shall consummate the transactions under the Merger Agreement or any similar or related transaction without the prior written consent of the Equity Provider.

 

10.         No Assignment. This Agreement, the Commitment evidenced by this Agreement, and the rights and obligations hereunder, shall not be assignable, in whole or in part, by Trousdale, New Holdco (upon its joinder hereto), or Sub-S without the prior written consent of the Equity Provider, and the granting of such consent in a given instance shall be solely in the discretion of the Equity Provider and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment. The Equity Provider’s obligations to consummate the Commitment may not be assigned by the Equity Provider without the prior written consent of Trousdale and Monroe. Any purported assignment of this Agreement, the Commitment or the rights and obligations hereunder in contravention of this Section 10 shall be void.

 

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11.         Representations and Warranties of the Equity Provider. The Equity Provider hereby represents and warrants with respect to itself to Trousdale and New Holdco that (a) it has all limited partnership, trust or other organizational power and authority to execute, deliver and perform this Agreement; (b) the execution, delivery and performance of this Agreement by it has been duly and validly authorized and approved by all necessary limited partnership, trust or other organizational action by it; (c) this Agreement has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it enforceable against it in accordance with the terms of this Agreement, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity; (d) it is an “accredited investor” within the meaning of Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”); (e) it is acquiring the equity of New Holdco described in Section 1 for its own account (or for the account of the trust or plan or other entity referred to in the signature block at the end of this Agreement), for investment and not with a view to any resale or distribution thereof; (f) it understands that the equity securities of New Holdco have not been registered under the Securities Act or any United States state securities laws and may not be assigned, sold or otherwise transferred without registration under the Securities Act or any relevant state securities laws or exemption therefrom, that neither Trousdale nor New Holdco has any obligation or intention to register such equity under the Securities Act or United States state securities laws, or to permit sales pursuant to Regulation A under the Securities Act; and (g) it must therefore bear the economic risk of holding equity in New Holdco for an indefinite period of time. The Equity Provider also represents and warrants to Trousdale and New Holdco that the Rollover Contribution Shares as listed in Schedule A hereto are all of the shares of Monroe Capital Stock and other securities of Monroe exercisable for, or convertible into, shares of Monroe Capital Stock, owned, of record or beneficially, by the Equity Provider.

 

12.         Representations and Warranties of Trousdale, Sub-S and (Upon Its Joinder Hereto) New Holdco. Each of Trousdale, Sub-S and (upon its joinder hereto) New Holdco hereby represents and warrants with respect to itself to the Equity Provider that (a) it is duly organized, validly existing and in good standing and has all corporate, limited partnership, trust or other organizational power and authority to execute, deliver and perform this Agreement; (b) the execution, delivery and performance of this Agreement by it has been duly and validly authorized and approved by all necessary corporate, limited partnership, trust or other organizational action by it; and (c) this Agreement has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms of this Agreement, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity.

 

13.         New Holdco Organizational Documents. The Equity Provider, Trousdale and (upon its joinder hereto) New Holdco agree to negotiate in good faith with respect to, and enter into concurrently with the Closing, one or more definitive agreements (including organizational documents of New Holdco) that reflect the terms set forth on Schedule B and such other terms as are reasonably satisfactory to the Equity Provider.

 

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14.         Expense Reimbursement. At the Closing, or within five (5) Business Days after the termination of this Agreement, Trousdale shall reimburse the reasonable and documented out-of-pocket costs and expenses incurred by the Equity Provider and their Related Parties in connection with the transactions contemplated by this Agreement.

 

15.         Relationship of the Parties. Each party acknowledges and agrees that this Agreement is not intended to, and does not, create any agency, partnership, fiduciary or joint venture relationship between or among any of the parties hereto and neither this Agreement nor any other document or agreement entered into by any party hereto relating to the subject matter hereof shall be construed to suggest otherwise.

 

16.         Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered or sent if delivered in person or sent by facsimile transmission (provided confirmation of facsimile transmission is obtained), (ii) on the fifth (5th) Business Day after dispatch by registered or certified mail, (iii) on the next Business Day if transmitted by national overnight courier or (iv) on the date delivered if sent by e-mail (provided confirmation of e-mail receipt is obtained), in each case as follows. Notices, demands and communications, in each case to the respective parties, shall be sent to the applicable address set forth below, unless another address has been previously specified in writing by such party:

 

Notices to the Equity Provider:

 

As provided in Schedule A.

 

Notices to Trousdale, Sub-S or (upon its joinder hereto) New Holdco:

 

As provided in Section 9.02 of the Merger Agreement.

 

17.         No Recourse. Notwithstanding anything in this Agreement, each party hereto, by its acceptance of the benefits hereof, covenants, agrees and acknowledges that no recourse under this Agreement shall be had against any (i) Related Party (as defined below) of the Equity Provider (other than the Equity Provider) or (ii) any Related Party of any of such Related Parties (other than the Equity Provider), in each case whether by the enforcement of any assessment or by any legal or equitable proceedings, or by virtue of any statute, regulation or other applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on, or otherwise be incurred (whether by or through attempted piercing of the corporate (or limited liability company or limited partnership) veil, by or through a claim against any Related Party of the Equity Provider, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise) for any obligations of the Equity Provider under this Agreement. For the purposes of this letter agreement, the term “Related Party” shall mean any and all former, current or future directors, officers, employees, agents, direct or indirect equity holders, controlling persons, general or limited partners, managers, members, stockholders, representatives or affiliates of a person.

 

[remainder of the page intentionally left blank – signature page follows]

 

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	Sincerely,
	Yucaipa Hospitality Investments, LLC
	By:	/s/ Robert P. Bermingham
		Name:	Robert P. Bermingham
		Title:	Vice President and Secretary

 

[Signature Page to Rollover Commitment Letter]

 

 

Agreed to and accepted as of

the date first written above:

 

 

SBEEG Holdings, LLC
By:	/s/ Sam Nazarian
	Name: Sam Nazarian
	Title: Chairman & Chief Executive Officer
Trousdale Acquisition Sub, Inc.
By:	/s/ Sam Nazarian
	Name: Sam Nazarian
	Title: Chairman & President

 

[Signature Page to Rollover Commitment Letter]

 

 

Schedule A

 

Initial Contribution

 

 

Exhibit 3

 

EXECUTION COPY

 

MONROE VOTING AGREEMENT, dated as of May 9, 2016 (this “Agreement”), among SBEEG Holdings, LLC, a Delaware limited liability company (“Trousdale”) and Yucaipa Hospitality Investments, LLC (the “Stockholder”). Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Merger Agreement (as defined below).

 

WHEREAS, Morgans Hotel Group Co., a Delaware corporation (“Monroe”), Trousdale and Trousdale Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Trousdale (“Sub-S”), entered into that certain Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”);

 

WHEREAS the Stockholder owns the number of shares of Monroe Capital Stock set forth opposite its name on Schedule A hereto (such shares of Monroe Capital Stock, together with any other shares of capital stock of Monroe acquired by the Stockholder after the date hereof and during the term of this Agreement, being collectively referred to herein as the “Subject Shares”); and

 

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Trousdale requested that the Stockholder enter into this Agreement.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Section 1.              Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Trousdale as follows:

 

(a)         Authority; Execution and Deliver; Enforceability. The Stockholder has all requisite power and authority to execute this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by the Stockholder of this Agreement and consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Stockholder. The Stockholder has duly executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms. The execution and delivery by the Stockholder of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Stockholder under, any organizational documents of the Stockholder, any provision of any Contract to which the Stockholder is a party or by which any properties or assets of the Stockholder are bound, or, subject to the filings and other matters referred to in the next sentence, any provision of any Judgment or Applicable Law applicable to the Stockholder or the properties or assets of the Stockholder. No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to the Stockholder in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than such reports under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby. The Stockholder owns 75,000 shares of Monroe Series A Preferred Securities and owns the Monroe Warrants to purchase 12,500,000 shares of Monroe Common Stock.

 

 

(b)         The Subject Shares. The Stockholder is the beneficial owner of and has good and valid title to, the Subject Shares, free and clear of any Liens. The Stockholder does not own, of record or beneficially, any shares of capital stock of Monroe other than the Subject Shares. The Stockholder has the sole right to vote the Subject Shares, and none of the Subject Shares are subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Subject Shares, except as contemplated by this Agreement.

 

(c)          Merger Agreement. The Stockholder understands and acknowledges that Trousdale is entering into, and causing Sub-S to enter into, the Merger Agreement in reliance upon the Stockholder’s execution and delivery of this Agreement.

 

Section 2.              Representations and Warranties of Trousdale.

 

(a)         Representations and Warranties of Trousdale. Trousdale hereby represents and warrants to the Stockholder as follows: Trousdale has all requisite limited liability company power and authority to execute this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Trousdale of this Agreement and consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Trousdale. Trousdale has duly executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Trousdale, enforceable against Trousdale in accordance with its terms. The execution and delivery by Trousdale of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Trousdale under, any organizational documents of Trousdale, any provision of any Contract to which Trousdale is a party or by which any properties or assets of Trousdale are bound or, subject to the filings and other matters referred to in the next sentence, any provision of any Judgment or Applicable Law applicable to Trousdale or the properties or assets of Trousdale. No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Trousdale in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than such reports by Trousdale under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby. Neither Trousdale nor any of its Affiliates beneficially owns any shares of Monroe Capital Stock.

 

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Section 3.              Agreement to Vote; Other Covenants of the Stockholder. The Stockholder covenants and agrees as follows:

 

(a)         Agreement to Vote.

 

(1)         In Favor of Merger. Subject to the representation made in the last sentence of Section 2 of this Agreement remaining true and accurate and the covenant made in the last sentence of Section 5 of this Agreement being performed in all respects, at any meeting of the stockholders of Monroe called to seek the Monroe Stockholder Approval or in any other circumstances upon which a vote, consent or other approval with respect to the Merger Agreement, any other Transaction Agreement, the Merger or any other Transaction is sought, the Stockholder (i) shall, if a meeting is held, appear at such meeting or otherwise cause the Subject Shares to be counted as present at such meeting for purposes of establishing a quorum and (ii) shall vote (or cause to be voted) the Subject Shares in favor of granting the Monroe Stockholder Approval. Subject to the representation made in the last sentence of Section 2 of this Agreement remaining true and accurate and the covenant made in the last sentence of Section 5 of this Agreement being performed in all respects, Stockholder hereby consents and approves Monroe’s entry into, performance of and consummation of the Merger Agreement and with respect to any actions by Monroe that may be required for the purpose of complying with its obligations to consummate the transactions contemplated by the Merger Agreement, such consent and approval being given under Section 5.6(a) of that certain Securities Purchase Agreement, dated as of October 15, 2009, by and between Monroe, Yucaipa American Alliance Fund II, L.P. and Yucaipa American Alliance (Parallel) Fund II, L.P. and under Section 8(c) of that certain Certificate of Designation of Monroe, dated as of October 15, 2009.

 

(2)         Against Other Transactions. Subject to the representation made in the last sentence of Section 2 of this Agreement remaining true and accurate and the covenant made in the last sentence of Section 5 of this Agreement being performed in all respects, at any meeting of stockholders of Monroe or at any postponement or adjournment thereof or in any other circumstances upon which the Stockholder’s vote, consent or other approval is sought, the Stockholder shall vote (or cause to be voted) the Subject Shares against (i) any merger agreement or merger, consolidation, combination or sale of substantially all of Monroe’s assets, or any reorganization, recapitalization, dissolution, liquidation or winding up of or by Monroe (other than the Merger Agreement and the Merger and other than in accordance with the Merger Agreement or the Transaction Agreements), (ii) any Monroe Takeover Proposal and (iii) any amendment of the Monroe Charter or the Monroe Bylaws or other proposal or transaction involving Monroe or any Monroe Subsidiary (other than in accordance with the Merger Agreement or the Transaction Agreements), which amendment or other proposal or transaction requires a Monroe stockholders’ vote and would in any manner be reasonably expected to (i) prevent (A) the performance by Monroe of its obligations under the Merger Agreement or any other Transaction Agreement or (B) the consummation of the Merger or any other Transaction or (ii) change in any manner the voting rights of any class of Monroe Capital Stock. The Stockholder shall not take or commit or agree to take any action inconsistent with the foregoing.

 

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(3)         Revoke Other Proxies. The Stockholder represents that any proxies heretofore given in respect of the Subject Shares that may still be in effect are not irrevocable, and such proxies are hereby revoked.

 

(4)         IRREVOCABLE PROXY. Subject to the representation made in the last sentence of Section 2 of this Agreement remaining true and accurate and the covenant made in the last sentence of Section 5 of this Agreement being performed in all respects, the Stockholder hereby irrevocably grants to, and appoints, Trousdale, and any individual designated in writing by Trousdale, and each of them individually, as the Stockholder’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Subject Shares, or grant a consent or approval in respect of the Subject Shares in a manner consistent with this Section 3(a). The Stockholder understands and acknowledges that Trousdale is entering into the Merger Agreement in reliance upon the Stockholder’s execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(a) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. For the avoidance of doubt, the Stockholder may vote the Subject Shares on all matters other than those set forth in this Section 3(a)(4). The irrevocable proxy and power of attorney granted hereunder shall automatically terminate upon the termination of this Agreement.

 

(b)         No Transfer. Other than pursuant to this Agreement, the Stockholder shall not (i) sell, transfer, pledge, assign or otherwise dispose of (including by gift, merger or operation of law), encumber, hedge or utilize a derivative to transfer the economic interest in (collectively, “Transfer”), or enter into any Contract, option or other arrangement (including any profit sharing arrangement) with respect to the Transfer of, any Subject Shares to any person other than pursuant to the Merger, other than Transfers to Affiliates, limited partners, members or immediate family members of the Stockholder, a trust established for the benefit of the Stockholder and/or for the benefit of one or more members of the Stockholder’s immediate family, or charitable organizations, or upon the death of the Stockholder (collectively, a “Transferee”), provided that, as a condition to such Transfer, such Transferee enters into a joinder to this Agreement in a form reasonably acceptable to Trousdale, which shall provide that such Transferee agrees to be bound by this Agreement and the terms, conditions and obligations hereof, (ii) enter into any voting arrangement, whether by proxy, voting agreement, voting trust or otherwise (including pursuant to any loan of Subject Shares), with respect to any Subject Shares, or (iii) commit or agree to take any of the foregoing actions.

 

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(c)          No Solicitation. The Stockholder shall not, nor shall it authorize or permit any officer, director or employee of, or any investment banker, attorney or other adviser or representative of, the Stockholder to, (i) directly or indirectly solicit, initiate or knowingly encourage the submission of, any Monroe Takeover Proposal, (ii) enter into any agreement with respect to any Monroe Takeover Proposal or (iii) directly or indirectly participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to knowingly facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Monroe Takeover Proposal. The Stockholder shall promptly and in no event later than forty-eight (48) hours advise Monroe and Trousdale orally and in writing of any Monroe Takeover Proposal or inquiry made to the Stockholder that could reasonably be expected to lead to any Monroe Takeover Proposal, and the identity of the person making any such Monroe Takeover Proposal or inquiry and the terms of any such Monroe Takeover Proposal or inquiry.

 

(d)         Commercially Reasonable Efforts. The Stockholder shall not take any action that causes or could reasonably be expected to cause any condition to consummation of the Merger and the other Transactions not to be satisfied. The Stockholder shall not issue any press release or make any other public statement with respect to any Transaction Agreement, the Merger or any other Transaction without the prior consent of Monroe and Trousdale, except as may be required by Applicable Law (including, for the avoidance of doubt, making disclosure of the Transactions or entry into this Agreement in order to avoid violating the federal securities laws). For the avoidance of doubt, nothing herein shall be deemed to require the Stockholder to consummate the Rollover Investment if the conditions in the Rollover Letter are not satisfied.

 

(e)          Dual Hat Provision. This Agreement applies to the Stockholder solely in its capacity as a stockholder of Monroe and does not apply to the actions, judgments or decisions of any of the Stockholder’s officers, directors, employees or affiliates (as defined in the Merger Agreement) in his or her capacity as a director or officer of Monroe (including for the avoidance of doubt, exercising his or her fiduciary duties).

 

(f)           Waiver of Appraisal Rights. The Stockholder hereby consents to and approves the actions taken by the Monroe Board in approving the Transaction Agreements, the Merger and the other Transactions. The Stockholder hereby waives, and agrees not to exercise or assert, any appraisal rights under Section 262 of the DGCL in connection with the Merger unless this Agreement is terminated.

 

Section 4.              Termination. This Agreement shall automatically terminate upon the earliest of (i) the Effective Time, (ii) the termination of the Merger Agreement in accordance with its terms, (iii) without the Stockholder’s written consent, any amendment of the Merger Agreement that reduces the Merger Consideration or changes the form of the Merger Consideration, (iv) the Outside Date, or (v) in the event that the Monroe Board withdraws or modifies its approval or recommendation of the Merger and/or the Merger Agreement in accordance with the Merger Agreement and, in connection therewith, approves or recommends a Superior Monroe Proposal, in accordance with the Merger Agreement. The termination of this Agreement shall not relieve the liability of either party for breach hereof prior to such termination.

 

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Section 5.              Additional Matters. The Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as Trousdale may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement. Neither Trousdale nor any of its Affiliates shall acquire beneficial ownership of any shares of Monroe Capital Stock from and after the date hereof until the Closing.

 

Section 6.              General Provisions.

 

(a)         Most Favored Nation. Trousdale hereby agrees that in the event it enters into a voting agreement with another holder of Monroe Capital Stock that provides rights and benefits to such holder that are different than those of the Stockholder contained herein, Trousdale shall offer the Stockholder the opportunity to obtain the same rights and benefits provided for in such agreement, subject to the same terms and conditions set forth therein.

 

(b)         Amendments. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

 

(c)          Notice. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to Trousdale (and with a copy to Monroe) in accordance with Section 9.02 of the Merger Agreement and to the Stockholder at its address set forth on Schedule A hereto (or at such other address for a party as shall be specified by like notice).

 

(d)         Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section to this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Wherever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.

 

(e)          Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

(f)           Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. This Agreement shall become effective against Trousdale when one or more counterparts have been signed by Trousdale and delivered to the Stockholder. This Agreement shall become effective against the Stockholder when one or more counterparts have been executed by the Stockholder and delivered to Trousdale. Each party need not sign the same counterpart.

 

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(g)          Entire Agreement; No Third-Party Beneficiaries. This Agreement (i) constitutes the entire agreement and supersedes all prior agreements, understandings and representations, both written and oral, among the parties with respect to the subject matter hereof and (ii) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

 

(h)         Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the conflicts of laws principles of such State.

 

(i)             Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by Trousdale without the prior written consent of the Stockholder or by the Stockholder without the prior written consent of Trousdale, and any purported assignment without such consent shall be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

 

(j)            Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Delaware state court or in any Federal court located in the State of Delaware, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Delaware state court or any Federal court located in the State of Delaware in the event any suit, action or proceeding arises out of or relating to this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not bring any suit, action or proceeding arising out of or relating to this Agreement in any court other than any Delaware state court or any Federal court located in the State of Delaware and (d) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of the date first written above.

 

 

	SBEEG HOLDINGS, LLC
	By	/s/ Sam Nazarian
		Name: Sam Nazarian
		Title: Chariman & Chief Executive Officer

 

 

IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of the date first written above.

 

	YUCAIPA HOSPITALITY INVESTMENTS, LLC
	By	/s/ Robert P. Bermingham
		Name:	Robert P. Bermingham
		Title:	Vice President and Secretary

 

 

SCHEDULE A

 

		Number and Type of Shares of Monroe
Name and Address		Capital Stock
Yucaipa Hospitality Investments, LLC		0 shares of Common Stock
9130 Sunset Blvd.
Los Angeles, CA 90069

 

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