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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 11, 1998
LODGIAN, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 001-14537 52-2093696
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3445 Peachtree Road N.E., Suite 700, Atlanta, Georgia 30326
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (404) 364-9400
Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 11, 1998, the mergers (the "Mergers") contemplated by the terms
of the Amended and Restated Agreement and Plan of Merger (the "Merger
Agreement") among Lodgian, Inc. ("the Company"), Servico, Inc. ("Servico"),
Impac Hotel Group, L.L.C. ("Impac"), SHG-S Sub, Inc., SHG-I Sub, L.L.C., P-Burg
Lodging Associates, Inc., SHG-II Sub, Inc., Hazard Lodging Associates, Inc.,
SHG-III Sub, Inc., Memphis Lodging Associates, Inc., SHG-IV Sub, Inc., Delk
Lodging Associates, Inc., SHG-V Sub, Inc., Impac Hotel Development, Inc., SHG-VI
Sub, Inc., Impac Design and Constructions, Inc., SHG-VII Sub, Inc., Impac Hotel
Group, Inc. and SHG-VIII Sub, Inc., dated as of July 22, 1998, as amended, were
completed. As a result of the Mergers, Servico, Impac and each of the Impac
Affiliated Companies (as defined in the Merger Agreement) are each a wholly
owned subsidiary of the Company.
Pursuant to the terms of the Merger Agreement as previously approved by the
Servico shareholders and the members of Impac and the Impac Affiliated
Companies, the Servico shareholders received 18,439,809 newly issued shares of
the Company's common stock, par value $.01 per share (the "Common Stock") having
an aggregate fair market value of $112,943,830, and the members of Impac and the
Impac Affiliated Companies received 8,000,000 newly issued shares of the
Company's Common Stock, having an aggregate fair market value of $49 million,
and $15 million in cash consideration. In addition, the members of Impac and the
Impac Affiliated Companies will receive an additional 1,400,000 shares of the
Company's Common Stock, which shares are currently in escrow, upon the opening
of five hotels that are currently in development.
In connection with the financing for the Mergers, the Company obtained a
$265 million floating rate mortgage loan from Lehman Brothers Holdings Inc.
ITEM 5. OTHER EVENTS.
Following the completion of the Mergers, the following individuals became
directors and/or officers of the Company:
Name Position in the Company
- ---- -----------------------
Robert S. Cole Chief Executive Officer, President and Director
Karyn Marasco Chief Operating Officer and Executive Vice President
Warren M. Knight Chief Financial Officer and Vice President - Finance
Joseph C. Calabro Director and Chairman of the Office of the Chairman
of the Board
John Lang Director
Michael A. Leven Director
Peter R. Tyson Director
Richard H. Weiner Director
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
(1) Set forth below are the financial statements of Servico filed as a part
of this report, all of which are incorporated by reference to Servico's Annual
Report on Form 10-K, filed on March 31, 1998 (File No. 001-11342):
Report of Independent Certified Public Accountants;
Consolidated Balance Sheets as of December 31, 1997 and 1996;
Consolidated Statements of Income for the years ended December 31,
1997, 1996 and 1995;
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995; and
Notes to Consolidated Financial Statements.
(2) Set forth below are the financial statements of Impac and the Impac
Affiliated Companies filed as a part of this report, all of which are
incorporated by reference to Servico's Proxy Statement on Schedule 14A, filed on
July 24, 1998 (File No. 001-11342):
Report of Independent Accountants;
Consolidated and Combined Balance Sheets as of December 31, 1997 and
1996;
Consolidated and Combined Statements of Operations for the years ended
December 31, 1997, 1996 and 1995;
Consolidated and Combined Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995; and
Notes to Consolidated and Combined Financial Statements.
(b) Pro Forma Financial Information.
The pro forma financial information of the Company relating to the Mergers
shall be filed by amendment to this Form 8-K no later than February 26, 1999.
(c) Exhibits.
2.1 Amended and Restated Agreement and Plan of Merger (the "Merger
Agreement") among Lodgian, Inc., Servico, Inc., Impac Hotel Group, L.L.C., SHG-S
Sub, Inc., SHG-I Sub, L.L.C., P-Burg Lodging Associates, Inc., SHG-II Sub, Inc.,
Hazard Lodging Associates, Inc., SHG-III Sub, Inc., Memphis Lodging Associates,
Inc., SHG-IV
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Sub, Inc., Delk Lodging Associates, Inc., SHG-V Sub, Inc., Impac Hotel
Development, Inc., SHG-VI Sub, Inc., Impac Design and Constructions, Inc.,
SHG-VII Sub, Inc., Impac Hotel Group, Inc. and SHG-VIII Sub, Inc., dated as of
July 22, 1998, incorporated by reference to Appendix A to Servico's Proxy
Statement on Schedule 14A, filed on July 24, 1998 (File No. 001-11342).
2.2 Amendment to the Merger Agreement, dated as of September 16, 1998,
incorporated by reference to Exhibit 2 to Servico's Current Report on Form 8-K
dated September 16, 1998 (File No. 001-11342).
10.1 Loan Agreement, dated as of December 11, 1998, between Servico
Windsor, Inc., Secore Financial Corporation and the borrowers listed on the
signature pages thereto.
10.2 Pledge Agreement, dated as of December 11, 1998, among Secore
Financial Corporation, Lehman Brothers Holdings Inc., Lodgian, Inc., Servico,
Inc., Servico Operations Corporation, Sharon Motel Enterprises, Inc., KDS
Corporation, AMIOP Acquisition Corp., Servico Acquisition Corp. and Palm Beach
Motel Enterprises.
10.3 Guaranty, dated as of December 11, 1998, by Servico, Inc., Lodgian,
Inc., Servico Operations Corporation, Sharon Motel Enterprises, Inc., KDS
Corporation, AMIOP Acquisition Corp., Servico Acquisition Corp. and Palm Beach
Motel Enterprises in favor of Secore Financial Corporation.
20.1 Definitive Proxy Statement, incorporated by reference to Servico's
Proxy Statement on Schedule 14A, filed on July 24, 1998 (File No. 001-11342).
99.1 Press release dated November 9, 1998.
99.2 Press release dated December 11, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LODGIAN, INC.
By: /s/ Warren M. Knight
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Warren M. Knight
Chief Financial Officer
Dated: December 28, 1998
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -------------------------------------------------
2.1 Amended and Restated Agreement and Plan of Merger
(the "Merger Agreement") among Lodgian, Inc.,
Servico, Inc., Impac Hotel Group, L.L.C., SHG-S
Sub, Inc., SHG-I Sub, L.L.C., P-Burg Lodging
Associates, Inc., SHG-II Sub, Inc., Hazard Lodging
Associates, Inc., SHG-III Sub, Inc., Memphis
Lodging Associates, Inc., SHG-IV Sub, Inc., Delk
Lodging Associates, Inc., SHG-V Sub, Inc., Impac
Hotel Development, Inc., SHG-VI Sub, Inc., Impac
Design and Constructions, Inc., SHG-VII Sub, Inc.,
Impac Hotel Group, Inc. and SHG-VIII Sub, Inc.,
dated as of July 22, 1998, incorporated by
reference to Appendix A to Servico's Proxy
Statement on Schedule 14A, filed on July 24, 1998
(File No. 001-11342).
2.2 Amendment to the Merger Agreement, dated as of
September 16, 1998, incorporated by reference to
Exhibit 2 to Servico's Current Report on Form 8-K
dated September 16, 1998 (File No. 001-11342).
10.1 Loan Agreement, dated as of December 11, 1998,
between Servico Windsor, Inc., Secore Financial
Corporation and the borrowers listed on the
signature pages thereto.
10.2 Pledge Agreement, dated as of December 11, 1998,
among Secore Financial Corporation, Lehman
Brothers Holdings Inc., Lodgian, Inc., Servico,
Inc., Servico Operations Corporation, Sharon Motel
Enterprises, Inc., KDS Corporation, AMIOP
Acquisition Corp., Servico Acquisition Corp. and
Palm Beach Motel Enterprises.
10.3 Guaranty, dated as of December 11, 1998, by
Servico, Inc., Lodgian, Inc., Servico Operations
Corporation, Sharon Motel Enterprises, Inc., KDS
Corporation, AMIOP Acquisition Corp., Servico
Acquisition Corp. and Palm Beach Motel Enterprises
in favor of Secore Financial Corporation.
20.1 Definitive Proxy Statement, incorporated by
reference to Servico's Proxy Statement on Schedule
14A, filed on July 24, 1998 (File No. 001-11342).
99.1 Press release dated November 9, 1998.
99.2 Press release dated December 11, 1998.
LOAN AGREEMENT
This LOAN AGREEMENT dated as of December 11, 1998, between the undersigned
borrowers listed on the signature pages hereto (collectively, "Borrower"), and
SERVICO WINDSOR, INC., listed on the signature pages hereto as "Canadian
Guarantor" ("Canadian Guarantor") each having its principal place of business
c/o Lodgian, Inc., 3445 Peachtree Road, N.E., Two Live Oak Center, Suite 700,
Atlanta, Georgia 30326, and SECORE FINANCIAL CORPORATION, a Pennsylvania
corporation, having an address at 3 Bethesda Metro Center, Suite 700, Bethesda,
Maryland 20814, individually and as Agent for one or more Co-Lenders and
successors ("Lender").
W I T N E S S E T H:
WHEREAS, Lender is concurrently herewith making a loan to Borrower in the
original principal amount of $265,000,000 (the "Loan") secured by a mortgage
lien on, and security interest in, Owner's interest in and to the real and
personal property comprising the hotels listed on the attached Schedule A;
WHEREAS, the Loan is evidenced by the Note (defined below) and secured by,
among other things, (i) those certain instruments titled Mortgage, Deed of
Trust, Assignment of Leases and Rents and Security Agreement, each dated as of
the date hereof from each of the parties constituting Borrower (other than
Servico New York, Inc.) to Lender, which encumber the Mortgage Property except
the Clarion Property (defined in Section 72) and the Mortgaged Property
described on Schedule A attached hereto as Property No. 88 (the "Canadian
Property"), (ii) the Clarion Mortgage (defined in Section 72) by Servico New
York, Inc. which encumbers the Clarion Property, and (iii) that certain
debenture dated the date hereof by Canadian Guarantor (defined below) (the
"Canadian Mortgage"), which encumbers the Canadian Property (as such instruments
in (i), (ii) and (iii) may be subsequently amended, restated, severed and
modified, individually or collectively, as the context may require, the
"Mortgage"; the Note, the Mortgage, this Agreement, the Guaranty, the
Environmental Agreement, the Canadian Loan Documents (defined below) and all
other documents executed or delivered in connection with the Loan, collectively,
the "Loan Documents"); and
WHEREAS, Lender and Owner have agreed to enter into this Loan Agreement to
memorialize their understanding regarding their respective rights and
obligations in respect of the Loan.
NOW, THEREFORE, in consideration of the making of the Loan and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
1. DEFINED TERMS
The following terms shall have the following meanings:
(a) "Access Laws" has the meaning set forth in Section 39 hereof.
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(b) "Accounts Receivable" shall mean all right, title and interest of Owner
arising from the operation of the Land and the Improvements in and to all
payments for goods or property sold or leased or for services rendered, whether
or not yet earned by performance, and not evidenced by an instrument or chattel
paper (hereinafter referred to as "Accounts Receivable") including, without
limiting the generality of the foregoing, (i) all accounts, contract rights,
book debts, and notes arising from the operation of a hotel on the Land and the
Improvements or arising from the sale, lease or exchange of goods or other
property and/or the performance of services, (ii) Owner's rights to payment from
any consumer credit/charge card organization or entities which sponsor and
administer such cards as the American Express Card, the Visa Card and the
MasterCard, (iii) Owner's rights in, to and under all purchase orders for goods,
services or other property, (iv) Owner's rights to any goods, services or other
property represented by any of the foregoing, (v) monies due to or to become due
to Owner under all contracts for the sale, lease or exchange of goods or other
property and/or the performance of services including the right to payment of
any interest or finance charges in respect thereto (whether or not yet earned by
performance on the part of Owner) and (vi) all collateral security and
guaranties of any kind given by any person or entity with respect to any of the
foregoing. Accounts Receivable shall include those now existing or hereafter
created, substitutions therefor, proceeds (whether cash or non-cash, movable or
immovable, tangible or intangible) received upon the sale, exchange, transfer,
collection or other disposition or substitution thereof and any and all of the
foregoing and proceeds therefrom.
(c) "Additional Interest" shall have the meaning set forth in Section 72
hereof.
(d) "Affiliate" shall mean, with reference to a specified Person, any
Person that directly or indirectly through one or more intermediaries Controls
or is Controlled by or is under common Control with the specified Person and any
subsidiaries (including consolidated subsidiaries) of such specified Person.
(e) "Agent" shall have the meaning set forth in Subsection 71(b)(iv)
hereof.
(f) "Aggregate Debt Service Coverage Ratio" shall mean the ratio of (a) the
sum of NOI (defined below) derived from the operation of each of the Mortgaged
Properties, including Rents and Accounts Receivable, other than the Release
Premises (if the calculation is being made in connection with a Property
Release) and any Mortgaged Property which has, prior to any particular Property
Release, been theretofore released, during the applicable period, to (b) the
total Debt Service (defined below) that would be payable under the Note for the
applicable period. For purposes of this calculation, "Debt Service" shall mean,
for any given period during the term of the Loan, an amount equal to the
aggregate amount of interest payable outstanding on the Loan for such period
assuming an interest rate equal to the greater of (i) 8.85% per annum or (ii)
the Applicable Interest Rate (as defined in the Note), together with any
Additional Interest (defined in Section 72), but excluding the Exit Fee.
Notwithstanding the foregoing, the Aggregate Debt Service Coverage Ratio for
Mortgaged Properties owned for less than twelve (12) months as of the date of
the calculation shall be calculated on an annualized basis based on the basis of
the calendar month which is two (2) months immediately preceding the calculation
date."
(g) "Allocated Loan Amount" shall have the meaning with respect to each
Mortgaged Property as set forth on Schedule A.
(h) "Asbestos" has the meaning set forth in Section 36 hereof.
(i) "Assignment" has the meaning set forth in Section 2 hereof.
(j) "Borrower" has the meaning set forth in the preamble to this Agreement.
<PAGE>
(k) "Canadian Guarantee" means that certain guarantee of even date herewith
by the Canadian Guarantor to the Lender.
(l) "Canadian Guarantor" has the meaning set forth in the preamble of this
Agreement.
(m) "Canadian Loan Documents" shall mean the Canadian Mortgage, the
debenture pledge agreement dated the date hereof between Canadian Guarantor and
Lender, and the guaranty dated the date hereof by Canadian Guarantor to Lender
and all other documents executed or delivered in connection with the Canadian
Guarantee.
(n) "Canadian Mortgage" has the meaning set forth in the Recitals of this
Agreement.
(o) "Canadian Property" has the meaning set forth in the Recitals of this
Agreement.
(p) "Change in Law" shall have the meaning provided in Subsection
71(j)(ii).
(q) "Co-Lender" shall have the meaning set forth in Subsection 71(b)(v)
hereof.
(r) "Collateral" has the meaning set forth in Section 29 hereof.
(s) "Condemnation" has the meaning set forth in Section 8 hereof.
(t) "Control" shall mean in (a) in the case of a corporation, ownership,
directly or through ownership of other entities, of at least ten percent (10%)
of all the voting stock (exclusive of stock which is voting only as required by
applicable law or in the event of nonpayment of dividends and pays dividends
only on a nonparticipating basis at a fixed or floating rate), and (b) in the
case of any other entity, ownership, directly or through ownership of other
entities, of at least ten percent (10%) of all of the beneficial equity
interests therein (calculated by a method that excludes from equity interests,
ownership interests that are nonvoting (except as required by applicable law or
in the event of nonpayment of dividends or distributions) and pay dividends or
distributions only on a non-participating basis at a fixed or floating rate) or,
in any case, (c) the power directly or indirectly, to direct or control, or
cause the direction of, the management policies of another Person, whether
through the ownership of voting securities, general partnership interests,
common directors, trustees, officers by contract or otherwise. The terms
"controlled" and "controlling" shall have meanings correlative to the foregoing
definition of "Control."
(u) "Debt" means the outstanding principal balance of the Note from time to
time, with all accrued and unpaid interest thereon, the Exit Fee (defined in the
Note), the Extension Fee (defined in the Note) the Breakage Costs (as defined in
the Note), if any, and all other sums now or hereafter due under the Loan
Documents.
(v) "Default Rate" means the rate of interest payable from and after the
occurrence of an Event of Default, as more particularly described in the Note;
provided, however, that with respect to an Event of Default of the type
described in Section 24(a), such rate of interest shall apply from and after the
date on which any such payment is due, without any period of grace or cure, as
more particularly described in the Note.
(w) "Domestic Lending Office" shall mean the office set forth in the
Preamble for
<PAGE>
Lender, individually and as Agent for the Co-Lenders, or such other office as
may be designated from time to time by written notice to Owner.
(x) "Eligible Account" shall mean an account that is (i) maintained with an
Eligible Institution; (ii) a segregated trust account or accounts maintained
with a federal or state chartered depository institution or trust company with
trust powers acting in its fiduciary capacity, which in the case of any state
chartered depository institution or trust company is subject to regulations or
has established internal guidelines regarding fiduciary funds on deposit
substantially similar to federal requirements; or (iii) such other account as is
reasonably acceptable to Lender, provided that Lender receives written
confirmation by the Rating Agencies that the selection of such account shall not
result in a downgrade, withdrawal or qualification of the ratings then assigned
to the Securities.
(y) "Eligible Institution" shall mean a depository institution or trust
company the long-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the long-term unsecured debt obligations of which) have been
rated by the Rating Agencies in a rating category of not less than A+ or Aa3, as
applicable, or the short-term deposits or commercial paper of which are rated in
a rating category of not less than A-1 or P1, as applicable, at the time of any
deposit therein.
(z) Eligible Investment" shall have the meaning set forth in Section 7
hereof.
(aa) "Environmental Agreement" has the meaning set forth in Section 2
hereof.
(bb) "Environmental Laws" has the meaning set forth in the Environmental
Agreement.
(cc) "Equipment" means all machinery, furnishings, equipment, fixtures
(including, without limitation, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures), inventory and articles of
personal property and accessions thereof and renewals, replacements thereof and
substitutions therefor (including, without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs,
carpeting, drapes, draperies, curtains, shades, venetian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks,
stools, sofas, chinaware, linens, pillows, blankets, glassware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry
systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, clock radios, television sets, intercom and paging equipment, electric
and electronic equipment, dictating equipment, private telephone systems,
medical equipment, potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing apparatus, cooling and air-conditioning systems,
elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets,
electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving,
spotlighting equipment, dishwashers, garbage disposals, washer and dryers),
other customary hotel equipment and other property of every kind and nature,
whether tangible or intangible, whatsoever owned by Owner, or in which Owner has
or shall have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Premises and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Owner, or in which Owner has or shall have an interest, now or hereafter located
upon the Premises and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation, enjoyment and occupancy of the
<PAGE>
Premises and the Improvements.
(dd) "ERISA" has the meaning set forth in Section 40 hereof.
(ee) "Eurodollar Lending Office" shall mean the office of Agent (or any
Co-Lender) designated as such by Agent from time to time by written notice to
Owner.
(ff) "Event of Default" has the meaning set forth in Section 24 hereof.
(gg) "Exit Fee" shall have the meaning set forth in the Note.
(hh) "Expenses" shall mean, with respect to any Mortgaged Property, for any
given period (and shall include the pro rata portion for such period of all such
expenses attributable to, but not paid during, such period), all expenses as
determined in accordance with the Uniform System of Accounts, by Borrower during
that period in connection with the operation of such Mortgaged Property for
which it is to be determined, including without limitation:
A. expenses for cleaning, repair, maintenance, decoration and painting
of the Mortgaged Property (including, without limitation, parking lots and
roadways), net of any insurance proceeds in respect of any of the foregoing;
B. wages (including overtime payments), benefits, payroll taxes and
all other related expenses for Owner's on-site personnel, up to and including
(but not above) the level of the on-site manager, engaged in the repair,
operation and maintenance of the Mortgaged Property and service to tenants and
on-site personnel engaged in audit and accounting functions performed by Owner;
C. management fees equal to the greater of (i) the management fee
pursuant to the Management Agreement and (ii) four percent (4%) of Gross Income.
Such fees shall include all fees for management services whether such services
are performed at such Mortgaged Property or off-site;
D. franchise fees, reservation fees and other royalties or similar
payments equal to the greater of (i) such fees and payments due under the
Franchise Agreement and (ii) four percent (4%) of room revenues (exclusive of
franchisee's share of costs for registration and advertising systems);
E. the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item and
the cost of building and cleaning supplies;
F. the cost of any leasing commissions and tenant concessions and
improvements payable by Owner pursuant to any Leases which are in effect for
such Mortgaged Property during such period as such amounts are recognized in
accordance with the Uniform System of Accounts; provided, however, that in no
event less than on a straight line basis during the remaining respective base
term (excluding extension, renewal or other option);
G. Insurance Premiums;
<PAGE>
H. legal, accounting and other professional fees and expenses;
I. the cost of all equipment to be used in the ordinary course of
business, which is not capitalized in accordance with the Uniform System of
Accounts;
J. Taxes and Other Charges, including, without limitation, the Ground
Rent;
K. advertising and other marketing costs and expenses;
L. casualty losses to the extent not reimbursed by a third party;
M. all amounts that are reserved for hereunder and under the Mortgage,
including those funds which are deposited into the FF&E Replacement Reserve
Account or would be required to be deposited in the FF&E Replacement Reserve
Account in the event the FF&E Replacement Reserve Account is not yet
established; and
N. a furniture, fixtures and equipment reserve equal to the greater of
(i) such reserves required under the Management Agreement and the Franchise
Agreement and (ii) five percent (5%) of Gross Income, to the extent such amounts
are not duplicative of the amounts set forth in clause (M) above.
Notwithstanding the foregoing, Expenses shall not include (i)
depreciation or amortization or any other non-cash item of expense unless
approved by Lender; (ii) interest, principal, fees, costs and expense
reimbursements of Lender in administering the Loan but not in exercising any of
its rights under this Agreement or the other Loan Documents; or (iii) any
expenditure (other than leasing commissions, tenant concessions and improvements
and replacement reserves) which is properly treatable as a capital item under
the Uniform System of Accounts.
(ii) "FF&E Replacement Reserve Account" has the meaning set forth in
Section 7 hereof.
(jj) "FF&E Replacement Reserve Fund" has the meaning set forth in Section 7
hereof.
(kk) "Franchise Agreement" means, collectively, the franchise agreements
set forth on Schedule A hereto pursuant to which Owner has the right to operate
the hotel located on the Mortgaged Property under a name and/or hotel system
controlled by such franchisor.
(ll) "Franchisor" means, for each of the individual hotels comprising the
Mortgaged Property, the franchisor under the respective Franchise Agreement.
(mm) "Gross Income" means The term "Gross Income" as used herein shall mean
with respect to any Mortgaged Property for any given period the gross income
derived from the operation of such Mortgaged Property for such period, including
Rents and Accounts Receivable.
(nn) "Ground Lease" shall mean with respect to any Mortgaged Property in
which Owner owns a leasehold interest, the Ground Lease described in the
applicable Mortgage.
(oo) "Ground Rent" shall mean all ground rent and other charges due
pursuant to a Ground Lease with respect to any Mortgaged Property.
<PAGE>
(pp) "Guarantor" means Servico, Inc., Lodgian, Inc., Servico Operations
Corporation, Sharon Motel Enterprises, KDS Corporation, AMIOP Acquisition Corp.,
Servico Acquisition Corp. and Palm Beach Motel Enterprises, Inc., collectively
as guarantors, under the Guaranty and any other guarantor of all or any part of
the Debt.
(qq) "Guaranty" means that certain guaranty of even date herewith by the
Guarantor to Lender.
(rr) "Hazardous Substances" has the meaning set forth in the Environmental
Agreement.
(ss) "Improvements" means the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located on the Premises.
(tt) "Insurance Premiums" has the meaning set forth in Section 4(d) hereof.
(uu) "Insured Casualty" has the meaning set forth in Section 4(e)(ii)
hereof.
(vv) "Intangibles" means, without limitation, all of Owner's right, title
and interest in and to all accounts (including, without limiting the generality
of the foregoing, (i) all accounts, contract rights, book debts, and notes
arising from the operation of a hotel on the Land (defined in the Mortgage) and
the Improvements (defined in the Mortgage) or arising from the sale, lease or
exchange of goods or other property and/or the performance of services, (ii)
Owner's rights to payment from any consumer credit/charge card organization or
entities which sponsor and administer such cards as the American Express Card,
the Visa Card and the Mastercard, (iii) Owner's rights in, to and under all
purchase orders for goods, services or other property, (iv) Owner's rights to
any goods, services or other property represented by any of the foregoing, (v)
monies due to or to become due to Owner under all contracts for the sale, lease
or exchange of goods or other property and/or the performance of services
including the right to payment of any interest or finance charges in respect
thereto (whether or not yet earned by performance on the part of Owner) and (vi)
all collateral security and guaranties of any kind given by any person or entity
with respect to any of the foregoing ("Accounts Receivable") (Accounts
Receivable shall include those now existing or hereafter created, substitutions
therefor, proceeds (whether cash or non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange, transfer, collection or other
disposition or substitution thereof and any and all of the foregoing and
proceeds therefrom)), escrows, documents, instruments, chattel paper, claims,
deposits and general intangibles, as such terms are defined in the Uniform
Commercial Code, and all contract rights, franchises, books, records,
appraisals, architects and engineering plans, specifications, environmental and
other reports relating to the Premises, trademarks, trade names, symbols,
permits, licenses (to the extent assignable), approvals, actions, tenant or
guest lists, correspondence with present and prospective purchasers, tenants,
guests and suppliers, advertising materials and telephone exchange numbers as
identified in such materials, refunds of real estate taxes and assessments and
causes of action which now or hereafter relate to, are derived from or are used
in connection with the Premises, or the use, operation, maintenance, occupancy
or enjoyment thereof or the conduct of any business or activities thereon.
(ww) "Intercreditor Agreement" means in the event that the Loan is
syndicated pursuant to Section 71 hereof, the intercreditor agreement that may
be entered into between Lender, individually as a Co-Lender and as Agent, and
the Co-Lenders, as same be further supplemented,
<PAGE>
amended and modified.
(xx) "Leases" means all leases and other agreements affecting the use,
enjoyment or occupancy of the Premises or the Improvements heretofore or
hereafter entered into (including, without limitation, subleases, licenses,
concessions, tenancies and other occupancy agreements covering or encumbering
all or any portion of the Premises), together with any guarantees, supplements,
amendments, modifications, extensions and renewals of any thereof, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto.
(yy) "Lender" has the meaning set forth in the preamble to this Agreement.
(zz) "Licenses" has the meaning set forth in Section 10(e) of this
Agreement.
(aaa) "Loan" has the meaning set forth in the recitals of this Agreement.
(bbb) "Loan Documents" has the meaning set forth in the recitals of this
Agreement.
(ccc) "Loan-to-Value Ratio" means the ratio of: (i) the Debt evidenced by a
portion of the Note equal to the Allocated Loan Amount with respect to such
Mortgaged Property, plus all other debt (or other liquidated economic
obligations) which are then outstanding and secured by the applicable Mortgaged
Property, to (ii) the appraised value of the Mortgaged Property as estimated by
an appraiser acceptable to Lender. Any appraisal for purposes of calculating the
Loan-to-Value Ratio shall be performed in accordance with the then-approved
standards under the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as amended (FIRREA).
(ddd) "Management Agreement" means, collectively, the Consulting Agreements
and Management Agreements more particularly set forth on Schedule A hereto
pursuant to which the managers identified therein operate the Mortgaged Property
as hotels.
(eee) "Manager" means the Person set forth on Schedule A attached hereto.
(fff) "Material Adverse Effect" shall have the meaning set forth in Section
24(j).
(ggg) "Material Lease" has the meaning set forth in Section 9(b) of this
Agreement.
(hhh) "Maturity Date" means the Maturity Date (as such term is defined in
the Note).
(iii) "Mortgage" has the meaning set forth in the recitals of this
Agreement.
(jjj) "Mortgaged Property" shall mean the Premises, all real and personal
property located on or related to the Premises, including without limitation,
the Collateral, Equipment, Improvements, Intangibles, Rents, Accounts
Receivable, Condemnation awards, insurance proceeds, tradenames, trademarks,
servicemarks, logos, copyrights, goodwill, books and records, all refunds,
rebates or credits in connection with a reduction in real estate taxes and
assessments charged against the Premises as a result of tax certiorari or any
applications or proceedings for reduction, all agreements, contracts,
certificates, instruments, franchises, permits, licenses, including liquor
licenses and hotel business licenses, plans, specifications and other documents,
now or hereafter entered into, and all proceeds, substitutions and replacements
thereof.
<PAGE>
(kkk) "NOI" as used herein shall mean, with respect to any Mortgaged
Property, for any given period, the Gross Income for such Mortgaged Property for
such period less Expenses attributable to such Mortgaged Property for such
period, as more particularly described on the operating statements for the
Mortgaged Property delivered by Owner to Lender pursuant to the this Loan
Agreement. NOI shall include, only Rents and Accounts Receivable earned in
accordance with the Uniform System of Accounts and such other income, including
any rent loss or business interruption insurance proceeds, laundry, parking,
vending or concession income, late fees, forfeited security deposits and other
miscellaneous tenant charges and Expenses actually paid or payable on an accrual
basis attributable to such Mortgaged Property on an annualized basis during the
applicable period ending on the last day of the month that is immediately prior
to the month during which the NOI is being calculated, as set forth on operating
statements satisfactory to Lender. NOI shall be calculated on an accrual basis
in accordance with the Uniform System of Accounts. Notwithstanding the
foregoing, NOI shall not include (a) Condemnation or insurance proceeds
(excluding rent or business interruption insurance proceeds); (b) any proceeds
from the sale, exchange, transfer, financing or refinancing of all or any
portion of the Mortgaged Property for which it is to be determined, (c) amounts
received from tenants as security deposits; or (d) any other type of income
otherwise includible in NOI but paid directly by any tenant to a person or
entity other than Owner or its respective agents or representatives, unless such
amounts are included as an Expense.
(lll) "Note" shall collectively mean (i) each of those certain promissory
notes dated the date hereof by each of the borrowers set forth on Schedule C
(collectively, the "Global Note"), (ii) each of those certain amended and
restated promissory notes described on Schedule C-1 (collectively, the "Florida
Note"), (iii) each of those amended and restated promissory notes described on
Schedule C-2 (collectively, the "Maryland Note") and (iv) that certain
consolidated, amended and restated promissory note and the other promissory
notes and bonds described on Schedule C-3 (collectively, the "NY Note"), as such
notes may be subsequently modified, amended, severed and restated.
(mmm) "NY Stub Note" shall mean that certain mortgage note in the principal
amount of $4,278,018.00 by Albany Hotel, Inc., Servico Jamestown, Inc., Servico
Niagara Falls, Inc. and Servico Grand Island, Inc.
(nnn) "NY Consolidated Note" shall mean that certain consolidated, amended
and restated promissory note listed on Schedule C-3 as No. 1, as such
consolidated, amended and restated promissory note may be amended modified,
severed and restated.
(ooo) "Obligations" shall mean Borrower's obligation for the payment of the
Debt and the performance by Owner of the Other Obligations.
(ppp) "Omni Note" shall mean the amended and restated note listed as No. 2
on Schedule C-1.
(qqq) "Other Charges" has the meaning set forth in Section 5 hereof.
(rrr) "Other Obligations" shall mean:
(i) the performance of all other obligations of Owner (other than for
the payment of the Debt) contained herein and the Mortgage;
<PAGE>
(ii) the performance of each obligation of Owner contained in any
other agreement given by Owner to Lender which is for the purpose of
further securing the obligations secured by the Mortgage, and any
amendments, modifications and changes thereto; and
(iii) the performance of each obligation of Owner contained in any
renewal, extension, amendment, modification, consolidation, change of, or
substitution or replacement for, all or any part of the Note, this Loan
Agreement, the Mortgage or the other Loan Documents.
(sss) "Owner" shall mean, collectively, Borrower and Canadian Guarantor.
(ttt) "Permitted Exceptions" shall have the meaning set forth in Section 4.
(uuu) "Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, limited liability company, association,
company, trust or other enterprise or any government or political subdivision or
agency, department or instrumentality thereof.
(vvv) "Policies" has the meaning set forth in Section 4(d) hereof.
(www) "Premises" means, collectively, the real property comprising the
Mortgaged Property, more particularly described on Exhibit A to each of the
instruments comprising the Mortgage.
(xxx) "Remedial Work" has the meaning set forth in Section 37 hereof.
(yyy) "Rents" means all income, rents, room rates, issues, profits,
revenues (including oil and gas or other mineral royalties and bonuses),
deposits and other benefits from the Mortgaged Property including, without
limitation, all revenues and credit card receipts collected from guest rooms,
restaurants, bars, mini-bars, meeting rooms, banquet rooms and recreational
facilities and otherwise, all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the possession, use or occupancy of all or any portion of the
Mortgaged Property or personalty located thereon, or rendering of services by
Owner or any operator or manager of the hotel or the commercial space located in
the Improvements or acquired from others including, without limitation, from the
rental of any office space, retail space, commercial space, guest room or other
space, halls, stores or offices, including any deposits securing reservations of
such space (except to the extent such deposits are required to be returned or
refunded to the depositor), exhibit or sales space of every kind, license,
lease, sublease and concession fees and rentals, health club membership fees,
food and beverage wholesale and retail sales, service charges, net vending
machine sales and proceeds, if any, from business interruption or other loss of
income insurance relating to the use, enjoyment or occupancy of the Mortgaged
Property, whether paid or accruing before or after the filing by or against
Owner of any petition for relief under 11 U.S.C. ss.101 et. seq., as the same
may be amended from time to time.
(zzz) "Required Repair Account" has the meaning set forth in Section 64
hereof.
(aaaa) "Required Repair Fund" has the meaning set forth in Section 64
hereof.
<PAGE>
(bbbb) "Securities" has the meaning set forth in Section 21 hereof.
(cccc) "Servicer" means the servicer of the Loan designated by Lender, in
its sole and absolute discretion, from time to time.
(dddd) "Tax and Insurance Escrow Fund" has the meaning set forth in Section
6 hereof.
(eeee) "Taxes" has the meaning set forth in Section 5 hereof.
(ffff) "Town Center Note" shall mean the amended and restated promissory
note listed as no. 2 on Schedule C-2.
(gggg) "Uniform Commercial Code" means the Uniform Commercial Code, as
adopted and enacted by the State or States where any of the Mortgaged Property
is located or with respect to any Mortgaged Property located in Louisiana,
Louisiana Commercial Laws (La. R.S. 10:1-101 et seq.).
As to any particular Mortgaged Property, "Uniform Commercial Code" means
the Uniform Commercial Code as adopted and enacted by the State or the States
where that Mortgaged Property is located.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Note.
2. PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS
(a) Payments made by Borrower to Lender under the Note and hereunder shall
be applied by Lender in the following order of priority: (i) first, to required
deposits to the escrows established in accordance herewith for the payment of
Taxes and Other Charges and Insurance Premiums, if applicable; (ii) next, to
required deposits to the FF&E Replacement Reserve Fund and the Required Repair
Fund as provided in this Loan Agreement; (iii) next, to reimburse Lender for any
unpaid costs and expenses incurred by Lender on Owner's behalf; (iv) next, to
accrued and unpaid interest on the Loan; (v) next, to the Breakage Costs (as
defined in the Note), if any, and to the Exit Fee, if any, and (vi) last, to the
reduction of the principal balance of the Loan; or, upon a Triggering Event
(defined in Section 66), in accordance with the Cash Management Agreement
(defined in Section 66) or upon an Event of Default, in such other order and
priority as Lender shall determine in its sole discretion.
(b) All the covenants, conditions and agreements contained in the Note, the
Mortgage, this Agreement, the Assignment of Leases and Rents dated as of the
date hereof from Owner to Lender (the "Assignment"), the Environmental Indemnity
Agreement dated as of the date hereof between Lender and Borrower (the
"Environmental Agreement"), the Guaranty and the other Loan Documents are hereby
made a part of this Agreement to the same extent and with the same force as if
fully set forth herein.
<PAGE>
(c) Notwithstanding anything to the contrary herein, in the Note, the
Mortgage or the other Loan Documents, all payments or prepayments of the
principal balance of the Note, either voluntary or involuntary, shall be applied
to the Debt in the following order and priority: first, to the portion of the
Debt evidenced by the Global Note and the Maryland Note (other than the Town
Center Note) on a pro-rata basis; second, to the portion of the Debt evidenced
by the Florida Note (other than the Omni Note) on a pro-rata basis third, to the
Debt evidenced by the Town Center and the Omni Note on a pro-rata basis and
fourth, to the Debt evidenced by the NY Note on a pro-rata basis;
notwithstanding the foregoing, no sums shall be applied to the NY Note if such
payment would reduce the outstanding principal sum of the NY Note to less than
$39,353,018.00, unless at the time of such application of such sums the
outstanding principal amount of the Global Note, the Florida Note, the Maryland
Note, the Town Center Note and the Omni Note are each $0.00.
3. WARRANTY OF TITLE
Owner represents and warrants that Owner has good, marketable and insurable
fee simple title and/or leasehold title, as applicable, to the Mortgaged
Property (or is the lessee thereof pursuant to leasing arrangements that have
been approved by Lender) and has the full power, authority and right to execute,
deliver and perform its obligations under this Agreement and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign, hypothecate and grant a security interest in the Mortgaged
Property (except with respect to certain municipal permits and licenses, and
certain contracts and franchises the assignability of which, by their terms or
as a matter of law is restricted) and that Owner possesses an unencumbered fee
estate and/or leasehold estate, as applicable, in the Premises and the
Improvements, and subject to Section 13 hereof, that it owns the Mortgaged
Property free and clear of all liens, encumbrances and charges whatsoever except
for those exceptions approved by Lender and shown in the title insurance policy
insuring the lien of the Mortgage (the "Permitted Exceptions"), and that the
Mortgage is and will remain a valid and enforceable first lien on and security
interest in the Mortgaged Property, subject only to such exceptions. Borrower
shall forever warrant, defend and preserve such title and the validity and
priority of the lien of the Mortgage and shall forever warrant and defend such
title, validity and priority to Lender against the claims of all persons
whomsoever.
4. INSURANCE
(a) Owner, at its sole cost and expense, will keep the Mortgaged Property
insured during the entire term of this Agreement for the mutual benefit of Owner
and Lender against loss or damage by fire and against loss or damage by other
risks and hazards covered by a standard extended coverage insurance policy
including, without limitation, riot and civil commotion, vandalism, malicious
mischief, burglary and theft. The insurance policy shall contain option perils
and income loss endorsements and if any of the Improvements or the use of the
Mortgaged Property shall at any time constitute legal non-conforming structures
or uses, a law and ordinance endorsement. Such insurance shall be in an amount:
(i) equal to at least the then full replacement cost of the Improvements and the
Equipment, without deduction for physical depreciation; and (ii) such that the
insurer would not deem Owner a co-insurer under such policies. The deductible in
respect of such insurance shall not be in excess of $25,000, except in the case
of windstorm insurance for which the deductible shall not exceed one percent
(1%) of the "replacement value" of the applicable Mortgaged Property as
determined by Lender (provided with respect to "named windstorm" insurance, the
deductible shall not exceed 2% of the "replacement value" of the
<PAGE>
applicable Mortgaged Property provided that Owner delivers a "deductible
buyback" policy for "named windstorm" coverage which shall insure a maximum
deductible of not more than $250,000), and in the case of earthquake insurance,
for which the deductible shall not exceed ten percent (10%) of the Allocated
Loan Amount relating to the applicable Mortgaged Property. From time to time,
upon Lender's request, Owner shall promptly furnish Lender with evidence that
the insurance required hereunder is in full force and effect, and that Lender
shall be given not less than 30 days notice of any cancellation of any such
required coverage. Each policy shall contain the "Replacement Cost Endorsement"
with a waiver of depreciation.
(b) Owner shall also obtain and maintain during the entire term of this
Agreement, at its sole cost and expense, for the mutual benefit of Owner and
Lender, the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is currently
or at any time in the future located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards and in which
flood insurance has been made available under the National Flood Insurance Act
of 1968, the Flood Disaster Act of 1973 or the National Flood Insurance Reform
Act of 1994 (and any amendment or successor act thereto) in an amount at least
equal to the lesser of: (A) the Allocated Loan Amount applicable to the
Mortgaged Property; and (B) the maximum limit of coverage available with respect
to the Improvements and the Equipment under such Act.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and "Dram shop" or other liquor liability
coverage if alcoholic beverages are sold from or may be consumed at the
Mortgaged Property, and containing minimum limits per occurrence of
$5,000,000.00 for the Premises and the Improvements, except that if the
Mortgaged Property contains a swimming or health club facility, or if any
buildings at the Mortgaged Property contain 6 or more stories, the minimum
limits per occurrence shall be $10,000,000.00, or such greater amount as may be
required under the Franchise Agreement.
(iii) Rental loss insurance in an amount equal to the aggregate annual
amount of all rents and additional rents payable by all of the tenants under the
Leases (whether or not such Leases are terminable in the event of a fire or
casualty), such rental loss insurance to cover rental losses for a period of at
least eighteen (18) months after the date of the fire or casualty in question.
The amount of such rental loss insurance shall be increased from time to time
during the term of this Agreement as and when new Leases and renewal Leases are
entered into in accordance with the terms of this Agreement, to reflect all
increased rent and increased additional rent payable by all of the tenants under
such renewal Leases and all rent and additional rent payable by all of the
tenants under such new Leases.
(iv) Business income insurance: (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in
Section 4(a); (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and all personal
property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration of 18 months from the date of the completion of the Restoration,
whichever first occurs, and
<PAGE>
notwithstanding that the policy may expire prior to the end of such period; and
(D) in an amount equal to the projected gross income less non-continuing
expenses from the operation of the Mortgaged Property as a hotel, including all
Rents and Accounts Receivable, for a period of 18 months. The amount of such
business income insurance shall be determined prior to the date hereof and at
least once each year thereafter based on clause (D) of this subsection. All
insurance proceeds payable to Lender pursuant to this Section shall be held by
Lender and shall be applied to the obligations secured hereunder from time to
time due and payable hereunder and under the Note; provided, however, that after
such application to Borrower's obligations hereunder Lender shall make available
from time to time upon Owner's request such amounts as may be reasonably
necessary to operate and maintain the Mortgaged Property; provided further,
however that nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured hereunder on the respective dates of
payment provided for in the Note except to the extent such amounts are actually
and timely paid out of the proceeds of such business income insurance;
(v) Insurance, in an amount equal to the lesser of $2,000,000, or the
insurable value of the Improvements, against loss or damage from: (A) leakage of
sprinkler systems; and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the Improvements.
(vi) Worker's compensation insurance with respect to any employees of
Owner, as required by any governmental authority or legal requirement.
(vii) Motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence of $5,000,000 or such greater amount as may be required under the
Franchise Agreement.
(viii) A blanket fidelity bond and errors and omissions insurance
coverage insuring against losses resulting from dishonest or fraudulent acts
committed by: (A) Owner's personnel; (B) any employees of outside firms that
provided appraisal, legal, data processing (in lieu of Owner providing the
coverage in (B), Lender shall accept such coverage from a policy delivered by
such outside firms provided such coverage names Lender as an additional insured
and is otherwise acceptable to Lender), or other services for Owner; and (C)
temporary contract employees or student interns.
(ix) Earthquake insurance (including subsidence), if the Mortgaged
Property is located in an earthquake prone region on terms consistent with the
comprehensive all-risk insurance policy referred to in Subsection 4(a) above and
if required by Lender.
(x) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests in the Mortgaged Property
or as may be required by the Franchise Agreement.
(c) Owner shall increase the amount of insurance required to be provided
hereunder at the time that each such policy is renewed (but, in any event not
less frequently than once during each 12-month period) by using the an appraiser
or a contractor to determine whether there has been an increase in the
replacement cost of the improvement since the most recent adjustment of any such
policy and, if there has been any such increase, the amount of insurance
required to be provided hereunder shall be adjusted accordingly.
<PAGE>
(d) All policies of insurance required pursuant to this Section
(collectively, the "Policies") shall: (i) be issued by an insurer with a claims
paying ability rating of not less than AA or Aa, as applicable, by Moody's
Investors Service, Inc., Standard & Poor's Rating Group, Fitch Investor Service
and Duff & Phelps, Inc. (the "Rating Agencies"), (ii) contain a standard
noncontributory mortgagee clause naming Lender as the person to which all
payments made by such insurance company shall be paid; (iii) be maintained
throughout the term of this Agreement without cost to Lender; (iv) be assigned
and delivered to Lender (or in lieu of such policies, certificates evidencing
such insurance may be delivered to Lender); (v) contain such provisions as
Lender deems reasonably necessary or appropriate to protect its interest
including, without limitation, endorsements providing that neither Owner, Lender
nor any other party shall be a co-insurer thereunder, and that Lender shall
receive at least 30 days prior written notice of any modification, reduction or
cancellation; and (vi) be reasonably satisfactory in form and substance to
Lender, and be approved by Lender as to amounts, form, risk coverage,
deductible, loss payees and insureds. Owner shall pay the premiums for the
Policies (the "Insurance Premiums") as they become due and payable. Not later
than 30 days prior to the expiration date of each of the Policies, Owner will
deliver to Lender satisfactory evidence of the renewal of each Policy
accompanied by evidence satisfactory to Lender of payment of the Insurance
Premiums then payable.
(e) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Owner shall give prompt notice thereof to
Lender.
(i) In the case of a loss covered by Policies, Lender may participate
in the settlement and adjustment of any claim; provided, however, that Owner may
adjust losses aggregating not in excess of $100,000.00 if such adjustment is
carried out in a competent and timely manner, and provided in any case that
Lender shall be, and is hereby, authorized to collect and receipt for any such
insurance proceeds. The expenses incurred by Lender in the adjustment and
collection of insurance proceeds shall become part of the Debt, shall be secured
by the Mortgage and shall be reimbursed by Owner to Lender on demand.
(ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (an "Insured Casualty") the insurance
proceeds in respect of which are less than or equal to the lesser of (A)
$1,000,000 or (ii) five percent (5%) of the Allocated Loan Amount applicable to
the Mortgaged Property (the lesser of such amount, the "Threshold Amount") and
the cost of completing the restoration shall be less than or equal to the
Threshold Amount, such proceeds shall be paid to Owner for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or the part
thereof subject to the Insured Casualty, as provided for below; and Owner hereby
covenants and agrees forthwith to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding. In the event of an Insured
Casualty the insurance proceeds in respect of which equal or exceed the
Threshold Amount where: (A) the proceeds of insurance are sufficient to enable
Owner to fully restore the Mortgaged Property (or Owner deposits with Lender any
shortfall or provides evidence that such sums have been paid toward restoration
of the Mortgaged Property); (B) the term of, and proceeds derived from, Owner's
business interruption insurance (or other similar insurance) shall be sufficient
to fully cover the period that the Mortgaged Property is undergoing restoration
(or Owner deposits with Lender any shortfall or provides evidence that such sums
have been paid toward the operation of the Mortgaged Property); (C) Lender
determines that the restoration is reasonably capable of being completed, at
least 12 months prior to the Maturity Date; (D) the Loan-to-Value Ratio upon
completion of restoration is estimated, by an appraiser acceptable to Lender, to
be no greater than .65 to 1.0; (E) the Franchise Agreement has not been, and
cannot be, terminated as a result of the Insured Casualty; (F) the restoration
can
<PAGE>
be completed within 12 months from the date that the Insured Casualty occurred,
or within such shorter time period as may be required by the Franchise
Agreement; (G) the restoration is permitted or required under the Franchise
Agreement and shall be completed in accordance with all applicable federal,
state and local laws; (H) the Aggregate Debt Service Coverage Ratio upon
completion is reasonably anticipated to be at least equal to the greater of (1)
1.42:1.0 and (2) the Aggregate Debt Service Coverage Ratio in effect immediately
prior to the date of the casualty; (I) Owner shall commence the Restoration as
soon as reasonably practicable (but in no event later than forty-five (45) days
after such damage or destruction occurs) and shall diligently pursue the same to
satisfactory completion; (J) the Mortgaged Property and the use thereof after
the Restoration will be in compliance with all applicable zoning laws,
ordinances, rules and regulations; and (K) less than 50% of the total floor area
of the Improvements has been damaged, destroyed or rendered unusable as a result
of such fire or casualty, then, if no Event of Default shall have occurred and
be continuing, the proceeds of insurance shall be paid to Owner for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or the part
thereof subject to the Insured Casualty, as provided for below; and Owner hereby
covenants and agrees forthwith to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding. NOI for purposes of this
calculation shall be NOI for the 12 calendar month period immediately preceding
the casualty, unless the appraiser referenced in clause (D) above estimates that
NOI after the restoration will be more than ten (10%) percent less than NOI for
such 12 calendar month period, in which case the Aggregate Debt Service Coverage
Ratio shall be calculated using the appraiser's estimate of NOI.
(iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Lender in its sole discretion,
be applied to the payment of the Debt or paid to Owner for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or the part
thereof subject to the Insured Casualty, in the manner set forth below. In no
case shall any such application reduce or postpone any payments otherwise
required pursuant to the Note, other than the final payment on the Note.
(iv) In the event that proceeds of insurance, if any, shall be made
available to Owner for the restoring, repairing, replacing or rebuilding of the
Mortgaged Property, Owner hereby covenants to restore, repair, replace or
rebuild the Mortgaged Property to be of at least equal value and of
substantially the same character as prior to such damage or destruction, all to
be effected in accordance with applicable law and plans and specifications
approved in advance by Lender and otherwise in accordance with the requirements
of the Franchise Agreement, if any; provided, however, that Owner shall pay all
costs (and if required by Lender, shall deposit the total thereof with Lender in
advance) of such restoring, repairing, replacing or rebuilding in excess of the
net proceeds of insurance made available pursuant to the terms hereof. The net
proceeds of insurance shall be held by Lender and shall be invested in Eligible
Investments as directed by Owner in a manner consistent with the completion of
restoration until disbursed in accordance with this Section 4.
(v) In the event Owner is entitled to insurance proceeds held by
Lender, such proceeds shall be disbursed from time to time upon Lender being
furnished with: (A) evidence satisfactory to it of the estimated cost of
completion of the restoration, repair, replacement and rebuilding; (B) funds,
or, at Lender's option, assurances satisfactory to Lender that such funds are
available, sufficient in addition to the proceeds of insurance to complete the
proposed restoration, repair, replacement and rebuilding; and (C) such
architect's certificates, waivers of lien for work previously performed or
contemporaneously funded, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of cost, payment
and performance
<PAGE>
as Lender may reasonably require and approve. Lender may, in any event, require
that all plans and specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Lender prior to commencement of work
(which approval shall not be unreasonably withheld). No payment made prior to
the final completion of the restoration, repair, replacement and rebuilding
shall exceed ninety (90%) percent of the value of the work performed from time
to time. Funds other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds, and at all times the undisbursed balance of such
proceeds remaining in Lender's possession, together with funds deposited for
that purpose or irrevocably committed to the satisfaction of Lender by or on
behalf of Owner for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the cost of completion of the restoration, repair,
replacement or rebuilding, free and clear of all liens and claims of lien. Any
surplus which may remain out of insurance proceeds held by Lender after payment
of such costs of restoration, repair, replacement or rebuilding shall be
delivered to Borrower, provided such restoration was performed in accordance
with the provisions of this Section and Owner is not then in default of its
obligations under the Loan Documents.
(vi) Notwithstanding anything to the contrary in this Section 4, the
provisions of Subsection 4(e) are subject to the provisions of any applicable
Ground Lease.
(f) Owner shall not carry separate insurance, concurrent in kind or form or
contributing in the event of loss, with any insurance required under this
Section. Notwithstanding the foregoing, Borrower may carry insurance not
required under this Agreement, provided any such insurance affecting the
Mortgaged Property shall be for the mutual benefit of Owner and Lender, as their
respective interests may appear, and shall be subject to all other provisions of
this Section.
5. PAYMENT OF TAXES
Owner shall pay all taxes and assessments now or hereafter levied, assessed
or imposed against the Mortgaged Property or any part thereof (collectively, the
"Taxes") and all Ground Rents, maintenance charges, water rates and sewer rents,
other governmental impositions, and other charges including, without limitation,
vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied, assessed or imposed against the
Mortgaged Property or any part thereof (collectively, the "Other Charges") as
they become due and payable. Owner will deliver to Lender evidence satisfactory
to Lender that the Taxes and Other Charges have been so paid, or are not then
delinquent, no later than 30 days following the date on which the Taxes and/or
Other Charges would otherwise be delinquent if not paid. Owner shall not suffer,
and shall promptly cause to be paid and discharged, any lien or charge
whatsoever which may be or become a lien or charge against the Mortgaged
Property, and shall promptly pay for all utility services provided to the
Mortgaged Property. Upon Lender's request, Owner shall furnish to Lender or its
designee receipts for the payment of the Taxes prior to the date such
obligations shall become delinquent. Owner shall be entitled to contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount of any Taxes or Other Charges. Notwithstanding
the preceding sentence, during the pendency of any such contest Owner shall pay
or cause to be paid all Taxes and Other Charges as and when due and payable, or
otherwise in accordance with Section 32 hereof.
6. TAX, INSURANCE AND GROUND RENT ESCROW FUND
<PAGE>
(a) Owner shall pay to Lender on the first day of each calendar month: (i)
one-twelfth of an amount which would be sufficient to pay the Taxes payable, or
estimated by Lender to be payable, during the next ensuing 12 months; and (ii)
subject to Subsection 6(b) below, one-twelfth of an amount which would be
sufficient to pay the Insurance Premiums due for the renewal of the coverage
afforded by the Policies upon the expiration thereof (the amounts described in
clauses (i) and (ii) above, collectively, the "Tax and Insurance Escrow Fund"),
which Tax and Insurance Escrow Fund shall be held in an Eligible Account by
Lender. The Tax and Insurance Escrow Fund and the monthly installments of
principal and interest payable under the Note shall be added together and shall
be paid as an aggregate sum by Owner to Lender. Owner hereby pledges to Lender
any and all monies now or hereafter deposited in the Tax and Insurance Escrow
Fund as additional security for the payment of the Debt. Lender will apply the
Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Owner pursuant to Sections 4 and 5 hereof. Provided that
sufficient funds are then available to pay the current Taxes and Insurance
Premiums, Lender shall discharge such obligations at such time as will effect
the maximum discount available, if any. If the amount of the Tax and Insurance
Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Sections 4 and 5 hereof, Lender shall, in its discretion, return any
excess to Owner or credit such excess against future payments to be made to the
Tax and Insurance Escrow Fund. If the Tax and Insurance Escrow Fund is not
sufficient to pay the items set forth in clauses (i) and (ii) above, Owner shall
promptly pay to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. Upon the occurrence of an Event of
Default, Lender may apply any sums then comprising the Tax and Insurance Escrow
Fund to the payment of the Debt in any order in its sole discretion. Until
expended or applied as above provided, any amounts in the Tax and Insurance
Escrow Fund shall constitute additional security for the Debt. To the extent
permitted by applicable law, the Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by Lender.
The Tax and Insurance Escrow Reserve Fund shall be invested and reinvested by
Lender, at Owner's direction, in one or more Eligible Investments, subject to
the following restrictions: (A) such Eligible Investments and the proceeds
thereof shall be deemed a part of the Tax and Insurance Escrow Reserve Fund; (B)
each such Eligible Investments shall be made in the name of Lender (in its
capacity as such) or in the name of a nominee of Lender under its complete and
exclusive dominion and control or, if applicable law provides for perfection of
pledges of an instrument not evidenced by a certificate or other instrument
through registration of such pledge on books maintained by or on behalf of the
issuer of such investment, such pledge may be so registered; (C) Lender shall
have the sole control over such investment, the income thereon and the proceeds
thereof; (D) other than investments described in clause (B) above, any
certificate or other instrument evidencing such investment shall be delivered
directly to Lender or its agent; (E) the proceeds of each investment shall be
remitted by the purchaser thereof directly to Lender and (F) Lender shall not be
liable for any loss sustained on the investment of any funds constituting a part
of the Tax and Insurance Escrow Reserve Fund (except for losses resulting from
Lender's gross negligences or willful default). No earnings or interest on the
Tax and Insurance Escrow Fund shall be payable to Owner, but shall remain part
of the Tax and Insurance Escrow Fund as set forth above.
(b) Anything to the contrary contained herein notwithstanding, Owner shall
be required to make the payments described in clause (ii) of subsection (a) of
this Section only upon an Event of Default and/or a Triggering Event (as defined
in Section 66 hereof).
(c) (i) Notwithstanding anything to the contrary contained in this
Agreement, upon the occurrence of a Triggering Event, Owner shall pay to Lender
on the first day of each
<PAGE>
calendar month one-twelfth of an amount which would be sufficient to pay the
Ground Rent payable pursuant to the Ground Leases, as determined by Lender, for
the next ensuing 12 months (the "Ground Rent Escrow Fund"), which Ground Rent
Escrow Fund shall be held in an Eligible Account by Lender. Owner agrees to pay
or cause to be paid all Ground Rent pursuant to the Ground Leases. At least ten
(10) Business Days prior to the due date of any Ground Rent and not more
frequently than once each month Owner may notify Lender in writing and request
that Lender pay such Ground Rent on behalf of Owner on or prior to the due date
thereof, and provided no Event of Default exists and there are sufficient funds
available in the Ground Rent Escrow Fund, Lender shall make such payments before
same are delinquent. Owner hereby pledges to Lender any and all monies now or
hereafter deposited in the Ground Rent Escrow Fund as additional security for
the Debt. Together with each request for the payment of Ground Rent, Owner shall
deliver to Lender copies of invoices for Ground Rent from the applicable ground
lessor, if so issued, and all other documents necessary, as reasonably
determined by Lender, for the payment of the Ground Rent which are the subject
of such request. If the Ground Rent Escrow Fund is not sufficient to pay the
Ground Rent due pursuant to the Ground Leases, Owner shall pay to Lender
promptly upon demand an amount which Lender shall estimate as sufficient to make
up the deficiency. To the extent permitted by applicable law, the Ground Rent
Escrow Fund shall be commingled with other monies held by Lender. The Ground
Rent Escrow Reserve Fund shall be invested and reinvested by Lender, at Owner's
direction, in one or more Eligible Investments, subject to the following
restrictions: (A) such Eligible Investments and the proceeds thereof shall be
deemed a part of the Ground Rent Escrow Reserve Fund; (B) each such Eligible
Investments shall be made in the name of Lender (in its capacity as such) or in
the name of a nominee of Lender under its complete and exclusive dominion and
control or, if applicable law provides for perfection of pledges of an
instrument not evidenced by a certificate or other instrument through
registration of such pledge on books maintained by or on behalf of the issuer of
such investment, such pledge may be so registered; (C) Lender shall have the
sole control over such investment, the income thereon and the proceeds thereof;
(D) other than investments described in clause (B) above, any certificate or
other instrument evidencing such investment shall be delivered directly to
Lender or its agent; (E) the proceeds of each investment shall be remitted by
the purchaser thereof directly to Lender and (F) Lender shall not be liable for
any loss sustained on the investment of any funds constituting a part of the
Ground Rent Escrow Reserve Fund (except for losses resulting from Lender's gross
negligences or willful default). No earnings or interest on the Ground Rent
Escrow Fund shall be payable to Owner, but shall remain part of the Ground Rent
Escrow Fund as set forth above. (ii) Upon the occurrence of a Triggering Event,
Owner hereby agrees to deposit with Lender the Ground Rent deferred by Owner
pursuant to the Ground Lease applicable to Property No. 57 on Schedule A of the
Loan Agreement (Omni Albany Hotel), in the amount of $1,721,037 (the "Albany
Deferred Rent Payment"). The Owner represents and warrants to Lender that (A)
the amount of the deferred Ground Rent relating to the Omni Hotel is $1,721,037
as shown on Exhibit K attached hereto, (B) the Albany Deferred Rent Payment is
not due and payable pursuant to the applicable Ground Lease in connection with
the Loan by Lender to Owner, (B) the Albany Deferred Rent Payment is due and
payable only upon the occurrence of one of the events in Section 3.01(b) of the
Ground Lease and (c) upon a Foreclosure (as defined in the Ground Lease) of the
Mortgage, neither Lender, its successors and/or assigns, nor a purchaser of the
Mortgaged Property from Lender after Foreclosure would be obligated to pay all
or a part of such Albany Deferred Rent Payment except upon the occurrence of the
events listed in Section 3.01(b) of the Ground Lease. The Albany Deferred Rent
Payment shall be held by Lender as additional security for the Loan and Owner
shall not be entitled to the Albany Deferred Rent Payment until the payment in
full of the Debt. Upon the occurrence of an Event of Default, Lender may apply
the Albany Deferred Rent Payment, in its discretion, to any outstanding amounts
due pursuant to the terms of the Note, the Mortgage or the other Loan
<PAGE>
Documents.
7. FF&E REPLACEMENT RESERVE; REPAIR ESCROW
(a) Commencing on the first Payment Date and on each Payment Date
thereafter, Owner shall pay to Lender one twelfth of the amount (the "FF&E
Replacement Reserve Monthly Deposit") equal to five (5) percent (5%) of the
Gross Income for the Mortgaged Properties for the calendar month immediately
preceding the month preceding the due date as shown on the monthly operating
statements delivered pursuant to Section 19(c) hereof, to be applied to maintain
and replace (i) the furniture, fixtures and equipment used in the guest rooms,
hallways, lobbies, restaurants, lounges, meeting and banquet rooms, and other
public interior areas accessible by the public for regular use and (ii) the
furniture, fixtures and equipment located on or about the exterior of the
Improvements or make other improvements to the exterior thereof, if required by
the Franchisor pursuant to a PIP or otherwise, including those items as set
forth in the Approved Capital Budget for each Mortgaged Property (collectively,
the "FF&E Replacements"), and such amounts paid by Owner and so deposited by
Lender shall hereinafter be referred to as the "FF&E Replacement Reserve Fund".
Notwithstanding anything in the preceding sentence to the contrary, (i) a
portion of the FF&E Replacement Reserve in the amount of $4,600,000 (the
"Special FF&E Repair Deposit") shall be disbursed to Owner to reimburse Owner or
to pay for the cost of those work items listed on Schedule D attached hereto
with respect to those fourteen (14) Mortgaged Properties listed under the
heading "Special FF&E Reserve Account" in accordance with the provisions of
Section 64 and as reasonably approved by Lender ("Special FF&E Repairs") and
(ii) Owner shall be obligated to spend such $4,600,000 with respect to such
fourteen (14) Mortgaged Properties and complete those Special FF&E Repairs in
accordance with 64 on or before July 1, 1999. Lender will maintain the FF&E
Replacement Reserve Fund in a segregated account (the "FF&E Replacement Reserve
Account"), which shall be an Eligible Account, and the FF&E Replacement Reserve
Fund shall be invested and reinvested by Lender, at Owner's direction, in one or
more Eligible Investments, subject to the following restrictions: (A) such
Eligible Investments and the proceeds thereof shall be deemed a part of the FF&E
Replacement Reserve Fund; (B) each such Eligible Investments shall be made in
the name of Lender (in its capacity as such) or in the name of a nominee of
Lender under its complete and exclusive dominion and control or, if applicable
law provides for perfection of pledges of an instrument not evidenced by a
certificate or other instrument through registration of such pledge on books
maintained by or on behalf of the issuer of such investment, such pledge may be
so registered; (C) Lender shall have the sole control over such investment, the
income thereon and the proceeds thereof; (D) other than investments described in
clause (B) above, any certificate or other instrument evidencing such investment
shall be delivered directly to Lender or its agent; (E) the proceeds of each
investment shall be remitted by the purchaser thereof directly to Lender and (F)
Lender shall not be liable for any loss sustained on the investment of any funds
constituting a part of the FF&E Replacement Reserve Fund (except for losses
resulting from Lender's gross negligences or willful default).
(b) Owner hereby grants a first priority security interest to Lender, as
security for payment of all sums due under the Loan and the performance of all
other terms, conditions and provisions to be paid and performed, of all Owner's
right, title and interest in and to the FF&E Replacement Reserve Fund and the
FF&E Replacement Reserve Account and shall execute and deliver to Lender such
UCC-1 Financing Statements and other documents or instruments as Lender may
request in order to grant and perfect such security interest. Owner shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in the FF&E Replacement Reserve Fund or the FF&E
Replacement Reserve Account or permit any lien
<PAGE>
or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto. Upon the occurrence of an Event of Default, Lender
may apply any sums then present in the FF&E Replacement Reserve Fund to the
payment of the Debt (as defined in the Note) in any order in its sole
discretion. Until expended or applied as above provided, the FF&E Replacement
Reserve Fund shall constitute additional security for the Debt.
(c) (i) After the commencement of Owner's obligation to make the FF&E
Replacement Reserve Monthly Deposit pursuant to Section 7(a), except as provided
for in Subsection (c)(iii) below or otherwise in this Agreement, Lender shall
make disbursements from the FF&E Replacement Reserve Account to pay Owner only
for FF&E Replacements. Lender shall not be obligated to make disbursements from
the FF&E Replacement Reserve Account to pay for or to reimburse Owner for the
costs of routine maintenance (other than the regular replacement of furniture,
fixtures and equipment constituting FF&E Replacements or as permitted pursuant
to Section 7(e) hereof or in the Approved Capital Budget) to an individual
Mortgaged Property or for costs which are to be reimbursed from the Required
Repair Fund (as such term is defined in Section 64 of this Agreement).
(ii) Lender shall, upon written request from Owner and satisfaction of
the requirements set forth in Section 7(a) and Section 7(b) of this Agreement,
disburse to Owner amounts from the FF&E Replacement Reserve Account to pay for
the actual approved costs of FF&E Replacements or to reimburse the Borrower
therefor in accordance with the Approved Capital Budget within ten (10) days of
Lender's receipt of a request for disbursement in accordance with Section 7(d).
In no event shall Lender be obligated to disburse funds from the FF&E
Replacement Reserve Account if an Event of Default exists.
(iii) Notwithstanding anything herein to the contrary, Owner shall not
be entitled to request disbursements from the FF&E Replacement Reserve Fund with
respect to the fourteen (14) Mortgaged Properties under the heading "Special
FF&E Reserve Account" on Schedule D until Owner has completed the Special FF&E
Repairs for the applicable Mortgaged Property and has incurred, received
disbursements for and paid for the cost of such Special FF&E Repairs in an
amount equal to the "Allocated Amount" set forth on the Part of Schedule D
entitled "Special FF&E Reserve Account".
(d) Each request for disbursement from the FF&E Replacement Reserve Account
shall be in a form specified or approved by Lender as more particularly set
forth as Exhibit B and shall certify as to the following matters: (i) the
specific FF&E Replacements for which the disbursement is requested, (ii) the
amounts requested are for the costs of such FF&E Replacements that have been
paid or incurred since the immediately preceding request; (iii) the FF&E
Replacement for which the disbursement is requested is a permitted expenditure
on the current Approved Capital Budget and Subsection (a), (iv) the amount
requested is less than or equal to the amount budgeted for such FF&E Replacement
in the current Approved Capital Budget and (v) that all FF&E Replacements that
were the subject of the prior request for disbursement, if applicable, have been
made in accordance with all applicable Legal Requirements (defined below) of any
Governmental Authority (defined below) having jurisdiction over the applicable
Mortgaged Property to which the FF&E Replacements are being provided and the
cost of such FF&E Replacements has been paid in full or as required under the
applicable contract as set forth in Subsection 7(e) below. Each request for
disbursement shall include copies of invoices for all items or materials to be
purchased and all contracted laborer services to be provided in connection with
the FF&E
<PAGE>
Replacements for which the disbursement is requested and a statement setting
forth in reasonable detail the persons or entities to which payments were made
for the FF&E Replacements that were the subject of the prior request for
disbursement and shall set forth the amount paid to such person or entities,
together with evidence satisfactory to Lender of payment of all such amounts for
which the prior request for disbursement was made, which evidence shall include
copies of paid invoices and lien waivers. Prior to Owner's making of the initial
FF&E Replacement Reserve Monthly Deposit in accordance with Section 7(a) or
thereafter with respect to any calendar month during which a request for
disbursement from the FF&E Replacement Reserve Fund is not submitted to Lender
pursuant to this Section 7(d), Owner shall deliver to Lender, as a part of the
monthly reports to be delivered pursuant to Section 19 of this Loan Agreement an
Officer's Certificate setting forth the amounts paid during the preceding
calendar month for FF&E Replacements and setting forth each person to whom such
amounts were paid, the amount paid to each such person and the related FF&E
Replacement provided by each such person.
(e) Except as set forth below in this Subsection (e), each request for
disbursement from the FF&E Replacement Reserve Account shall be made only after
Owner has certified to Lender that the FF&E Replacement for which such
disbursement is requested has been completed. If the cost of any FF&E
Replacement exceeds $10,000.00 and the contract therefor so requires, a request
for disbursement may be made periodically in accordance with such contract;
provided, however, that any materials for which the request for disbursement is
made shall be on site at the individual Mortgaged Property and shall have been
properly secured or installed in the individual Mortgaged Property; and provided
further, however, that funds remain in the FF&E Replacement Reserve Account,
which, together with the FF&E Replacement Reserve Monthly Deposits scheduled to
be made over the balance of the contract term, will be, in Lender's judgment,
sufficient to complete the FF&E Replacement being performed under such contract.
If a contract requires an advance deposit for the delivery of materials to the
site, Owner may request the amount of such deposit to be released from the FF&E
Replacement Reserve Account, to be determined by Lender its sole and absolute
discretion.
(f) Owner shall not make a request for disbursement from the FF&E
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all FF&E
Replacements in any request shall not be less than Fifteen Thousand and
No/Dollars ($15,000).
(g) Owner shall make FF&E Replacements when required by sound hotel
management practices in order to keep the Mortgaged Property in condition and
repair consistent with requirements under the Franchise Agreement affecting the
Mortgaged Property and Owner's standards and practices as of the date hereof, at
a minimum in accordance with the prevailing standards for hotel properties of
similar age, size, construction and the then-current Franchisor in the
metropolitan area in which the Mortgaged Property is located, and to keep the
Mortgaged Property from deteriorating. Owner shall complete all FF&E
Replacements in a good and workmanlike manner as soon as practicable following
the commencement of making each such FF&E Replacement.
(h) Lender reserves the right, at its option, to approve all Material
Contracts or Material Work Orders (each defined below) with materialmen,
mechanics, suppliers, subcontractors, contractors or other parties providing
labor or materials in connection with the FF&E Replacements. Upon Lender's
request, Owner shall assign any contract or subcontract to Lender. The term
"Material Contract" and "Material Work Order" as used herein shall mean
<PAGE>
contracts or work orders in excess of $100,000.
(i) In the event Lender determines in its reasonable discretion that any
FF&E Replacement is not being performed in a workmanlike or timely manner
(subject to Force Majeure (defined below)) or that any FF&E Replacement has not
been completed in a workmanlike or timely manner, Lender shall have the option
to withhold any further disbursements from the FF&E Replacement Reserve Account
for such Mortgaged Property and, upon ten (10) days prior written notice if not
cured to Lender's reasonable satisfaction, to proceed under existing contracts
or to contract with third parties to complete such FF&E Replacement and to apply
the FF&E Replacement Reserve Fund toward the labor and materials necessary to
complete such FF&E Replacement and, without providing any prior notice to Owner,
to exercise any and all other remedies available to Lender upon an Event of
Default hereunder. The term "Force Majeure" shall have the following meaning
herein: Owner shall be excused for the period of any delay in the performance of
any obligations hereunder when prevented from so doing by cause or causes beyond
Owner's control which shall include, without limitation, all labor disputes,
civil commotion, war, war-like operations, invasion, rebellion, hostilities,
military or usurped power, sabotage, governmental regulations or controls, fire
or other casualty, inability to obtain any materials, or services or through
acts of God.
(j) In order to facilitate Lender's completion or making of the FF&E
Replacements pursuant to Section 7(i) above, Owner grants Lender the right to
enter onto any individual Mortgaged Property and perform any and all work and
labor necessary to complete or make the FF&E Replacements and/or employ watchmen
to protect such individual Mortgaged Property from damage. All sums so expended
by Lender (exclusive of sums disbursed from the FF&E Replacement Reserve
Account) shall be deemed to have been advanced under the Loan to Owner and
secured by the Mortgage. For this purpose Owner constitutes and appoints Lender
its true and lawful attorney-in-fact with full power of substitution to complete
or undertake the FF&E Replacements in the name of Owner. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Owner empowers said attorney-in-fact as follows: (i) to use any funds in the
FF&E Replacement Reserve Account for the purpose of making or completing the
FF&E Replacements; (ii) to make such additions, changes and corrections to the
FF&E Replacements as shall be necessary or desirable to complete the FF&E
Replacements; (iii) to employ such contractors, subcontractors, agents,
architects and inspectors as shall be required for such purposes; (iv) to pay,
settle or compromise all existing bills and claims which are or may become liens
against any individual Mortgaged Property, or as may be necessary or desirable
for the completion of the FF&E Replacements, or for clearance of title; (v) to
execute all applications and certificates in the name of Owner which may be
required by any of the contract documents; (vi) to prosecute and defend all
actions or proceedings in connection with any individual Mortgaged Property or
the rehabilitation and repair of any individual Mortgaged Property; and (vii) to
do any and every act which Owner might do in its own behalf to fulfill the terms
of this Agreement.
(k) Nothing in this Section 7 shall: (i) make Lender responsible for making
or completing the FF&E Replacements; (ii) require Lender to expend funds in
addition to the FF&E Replacement Reserve Fund to make or complete any FF&E
Replacement; (iii) obligate Lender to proceed with the FF&E Replacements; or
(iv) obligate Lender to demand from Owner additional sums to make or complete
any FF&E Replacement.
(l) Upon reasonable prior notice by Lender, Owner shall permit Lender and
Lender's agents and representatives (including, without limitation, Lender's
engineer, architect, or
<PAGE>
inspector) or third parties making FF&E Replacements pursuant to this Section 7
to enter onto each individual Mortgaged Property during normal business hours
(subject to the rights of tenants under their Leases) to inspect the progress of
any FF&E Replacements and all materials being used in connection therewith and
to examine all plans and shop drawings relating to such FF&E Replacements which
are or may be kept at each individual Mortgaged Property. Owner shall cause all
contractors and subcontractors to cooperate with Lender or Lender's
representatives or such other persons described above in connection with
inspections described in this Section 7(l), the completion of FF&E Replacements
pursuant to this Section 7(l) or in connection with the inspections described in
Section 7(m) below.
(m) If Lender has determined in its reasonable discretion that any FF&E
Replacements are not being completed in a timely and workmanlike manner (subject
in each instance to delays caused by Force Majeure) or in the event that the
amount disbursed for the completion of a single FF&E Replacement pursuant to a
prior disbursement from the FF&E Replacement Reserve Account exceeded Two
Hundred Thousand and No/100 Dollars ($200,000), Lender may require an inspection
of the applicable individual Mortgaged Property at Owner's expense prior to
making a monthly disbursement from the FF&E Replacement Reserve Account for such
FF&E Replacement in order to verify completion of such FF&E Replacements. Lender
may require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and/or may require a copy of a
certificate of completion by an independent qualified professional acceptable to
Lender prior to the disbursement of any such amounts from the FF&E Replacement
Reserve Account. Owner shall pay the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or such third party
(in no event to exceed $1,000).
(n) The FF&E Replacements and all materials, equipment, fixtures, or any
other item comprising a part of any FF&E Replacement shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other liens (except for those liens which have been approved in
writing by Lender).
(o) In the event that the prior request for disbursement included any
amount in excess of Two Hundred Thousand and No/100 Dollars ($200,000) for any
single FF&E Replacement requiring construction, installation or completion,
Lender may require Owner to provide Lender with a search of title to the
applicable individual Mortgaged Property prior to making any additional
disbursements from the FF&E Replacement Reserve Account for such FF&E
Replacement only, which search shows that no mechanic's or materialmen's liens
or other liens of any nature have been placed against the applicable individual
Mortgaged Property since the date of recordation of the related Mortgage and
that title to such individual Mortgaged Property is free and clear of all liens
(other than the lien of the related Mortgage and any other liens previously
approved in writing by the Lender, if any).
(p) All FF&E Replacements shall comply in all material respects with all
applicable Legal Requirements of all Governmental Authorities having
jurisdiction over the applicable individual Mortgaged Property and applicable
insurance requirements including, without limitation, applicable building codes,
special use permits, environmental regulations, and requirements of insurance
underwriters.
(q) In addition to any insurance required under the Loan Documents, Owner
shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with
<PAGE>
a particular FF&E Replacement. All such policies shall be in form and amount
reasonably satisfactory to Lender. All such policies which can be endorsed with
standard Lender clauses making loss payable to Lender or its assigns shall be so
endorsed. Certified copies of such policies or certificates thereof shall be
delivered to Lender.
(r) (i) It shall be an Event of Default under this Agreement if Owner (i)
fails to make the initial FF&E Replacement Reserve Monthly Deposit in accordance
with this Section 7 or (ii) fails to comply with any other provision of this
Section 7 and such failure is not cured within thirty (30) days after notice
from Lender provided that, if such default cannot reasonably be cured within
such 30 day period and Owner shall have commenced to cure such default within
such 30 days period and thereafter diligently and expeditiously proceeds to cure
the same, such thirty (30) day period shall be extended for so long as it shall
require Owner, in the exercise of due diligence to cure such default, it being
agreed that no such extension shall be for a period in excess of 60 days
(subject to Force Majeure). Upon the occurrence of an Event of Default, Lender
may use the FF&E Replacement Reserve Fund (or any portion thereof) for any
purpose, including but not limited to completion of the FF&E Replacements as
provided in Section 7(j), or for any other repair or replacement to any
individual Mortgaged Property or toward payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender's
right to withdraw and apply the FF&E Replacement Reserve Funds shall be in
addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.
(ii) Nothing in this Agreement shall obligate Lender to apply all or any
portion of the FF&E Replacement Reserve Fund on account of an Event of Default
to payment of the Debt or in any specific order or priority.
(t) The insufficiency of any balance in the FF&E Replacement Reserve
Account shall not relieve Owner from its obligation to fulfill all preservation
and maintenance covenants in the Loan Documents.
(u) Owner shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys fees and expenses) arising from or in any way connected with the
performance of the FF&E Replacements subject to the provisions of Section 41
hereof. Owner shall assign to Lender all rights and claims Owner may have
against all persons or entities supplying labor or materials in connection with
the FF&E Replacements; provided, however, that Lender may not pursue any such
right or claim unless an Event of Default has occurred and remains uncured.
(v) In the event Owner requests a disbursement from the FF&E Replacement
Reserve Account for labor or materials for FF&E Replacements other than FF&E
Replacements specified in Subsection (a) or the Approved Capital Budget, Owner
shall disclose in writing to Lender why funds in the FF&E Replacement Reserve
Account should be used to pay for such FF&E Replacements not specified in
Subsection (a) or the Approved Capital Budget. If Lender determines that: (i)
such FF&E Replacements are of the type intended to be covered by this Agreement;
(ii) such FF&E Replacement is not covered or of the type intended to be covered
by the Required Repairs Fund; (iii) costs for such FF&E Replacements are
reasonable; (iv) the funds in the FF&E Replacement Reserve Account are
sufficient to pay for such FF&E Replacements; and (v) all other conditions for
disbursement under this Agreement have been met, Lender may disburse funds from
the FF&E Replacement Reserve Account; provided, however, that Lender in its
discretion, may
<PAGE>
refuse to disburse funds from the FF&E Replacement Reserve Account for any item
other than a FF&E Replacement specified in Subsection (a) or on the Approved
Capital Budget.
(w) The following capitalized terms shall have the meanings set forth
below:
"Eligible Investments" shall mean any one or more of the following
investments:
(1) Securities that are (x) direct obligations of the United States of
America for the full and timely payment of which its full faith and credit is
pledged, which are not callable or redeemable at the option of the issuer
thereof and may include, but are not limited to, U.S. Treasury Obligations (All
direct or fully guaranteed obligations), Farmers Home Administration
Certificates of Beneficial Ownership, General Services Administration
Participation Certificates, U.S. Maritime Administration Guaranteed Title XI
Financing, Small Business Administration Guaranteed Participation Certificates,
Guaranteed Pool Certificates, U.S. Department of Housing and Urban Development
Local Authority Bonds, and Washington Metropolitan Area Transit Authority
Guaranteed Transit Bonds, or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality and not guaranteed as a
full faith and credit obligation of the United States of America, which are not
callable or redeemable at the option of the issuer thereof and may include, but
are not limited to, Federal Housing Administration Debentures, Federal Home Loan
Mortgage Corp. (FHLMC) Debt Obligations, Farm Credit System (formerly: Federal
Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated Systemwide Bonds and Notes, Federal Home Loan Banks (FHL Banks)
Consolidated Debt Obligations, Federal National Mortgage Association (FNMA) Debt
Obligations, Student Loan Marketing Association (SLMA) Debt Obligations;
Financing Corp. (FICO) Debt Obligations, and Resolution Funding Corp. (REFCORP)
Debt Obligations; which such obligations, in either case, if rated, should not
have an "r" highlighter affixed to its rating; interest thereon may accrue at a
fixed or variable rate, but must be tied to a single interest rate index plus a
single fixed spread (if any), and move proportionately with such index; which
obligations, in either case, shall have a predetermined fixed dollar amount of
principal due at maturity that shall not vary or change; and if, in either case,
such obligations may be liquidated prior to their maturity, additional
restrictions may be required by the Rating Agency or Lender, as determined in
their discretion ("Government Securities").
(2) certain federal funds, unsecured certificates of deposit, time
deposits, banker's acceptances and repurchase agreements having maturities of
not more than 365 days issued by any bank, the short-term debt obligations of
which shall have received a rating of at least A-1+ by S&P and such comparable
rating by the Rating Agency; such instrument should not have an "r" highlighter
affixed to its rating and its terms should have a predetermined fixed dollar
amount of principal due at maturity that shall not vary or change; interest on
such instruments may accrue at a fixed or a variable rate, but must be tied to a
single interest rate index plus a single fixed spread (if any), and move
proportionately with such index; and if the investments are permitted to be
liquidated prior to their maturity, additional restrictions may be necessary as
determined by the Rating Agency or Lender, in their discretion;
(3) commercial paper rated not less than A-1+ by S&P and such
comparable rating by the Rating Agency, maturing or redeemable in 365 days or
less; such commercial paper should not have an "r" highlighter affixed to its
rating and by its terms should have a predetermined fixed dollar amount of
principal due at maturity that shall not vary or change; interest on such
commercial paper may accrue at a fixed or variable rate, but must be tied to a
single
<PAGE>
interest rate index plus a single fixed spread (if any), and move
proportionately with such index; and if the investments are permitted to be
liquidated prior to their maturity to meet a certain yield, additional
restrictions may be necessary as determined by the Rating Agency or Lender, in
their discretion;
(4) units of taxable money market funds, which funds are regulated
investment companies, seek to maintain a constant net asset value per share and
have either been rated AAAm or AAAm-G by S&P and such comparable rating by the
Rating Agency or have been designated in writing by the Rating Agency as
Eligible Investments with respect to this definition; provided, however, that if
such taxable money market fund is not rated by the Rating Agency, the Rating
Agency confirms in writing that the investment of funds in such taxable money
market fund will not result in the downgrade, withdrawal or qualification of the
ratings then assigned to any class of certificates issued in connection with the
Securitization;
(5) certain deposits that are fully insured by the Federal Deposit
Insurance Corp. (FDIC) with repayment terms that have a predetermined fixed
dollar amount of principal due at maturity that shall not vary or change and if
rated, the deposit should not have an "r" highlighter affixed to its rating;
interest on such deposits may accrue at a fixed or variable rate, but must be
tied to a single interest rate index plus a single fixed spread (if any), and
move proportionately with that index; and if such investments may be liquidated
prior to their maturity to meet a certain yield, additional restrictions may be
necessary as determined by the Rating Agency or Lender, in their discretion;
(6) certain debt obligations maturing in 365 days or less that are
rated AA-or higher by S&P and such other comparable rating by the Rating Agency,
which debt obligations shall not have an "r" highlighter affixed to their rating
and by their terms shall have a predetermined fixed dollar amount of principal
due at maturity that shall not vary or change; interest on such obligations may
accrue at a fixed or variable rate, but must be tied to a single interest rate
index plus a single fixed spread (if any), and move proportionately with such
index; and if such investments may be liquidated prior to their maturity to meet
a certain yield, additional restrictions may be necessary as determined by the
Rating Agency or Lender, in their discretion;
(7) investments in certain short-term debt of issuers rated A-1 by S&P
and such other comparable rating by the Rating Agency may be permitted with the
following restrictions: the total amount of debt from A-1 issuers must be
limited to the investment of monthly principal and interest payments (assuming
fully amortizing collateral), the total amount of A-1 investments should not
represent more than 20% of the rated issue's outstanding principal amount and
each investment shall not mature beyond 30 days; the terms of such debt should
be a predetermined fixed dollar amount of principal due at maturity that shall
not vary or change; interest on such debt may accrue at a fixed or variable
rate, but must be tied to a single interest rate index plus a single fixed
spread (if any), and move proportionately with such index; and if the
investments may be liquidated prior to their maturity, to meet a certain yield,
additional restrictions may be necessary as determined by the Rating Agency or
Lender in their discretion; provided, however, such investments described in
this clause (vii) are not eligible for the Lockbox Account, if applicable;
(8) stripped securities, which are principal-only strips and
interest-only strips of noncallable obligations issued by the U.S. Treasury, and
REFCORP securities stripped by Federal Reserve Bank of New York; and
<PAGE>
(9) any other investment selected by Owner and approved by Lender and
which shall not result in a downgrading, withdrawal or qualification of the
then-current rating of securities issued pursuant the Securitization, as
evidenced by a confirmation in writing issued by the Rating Agency;
provided, however, that no instrument or security shall be an Eligible
Investment if such instrument or security (A) evidences either: (i) a right to
receive only interest payments with respect to the obligations underlying such
instrument; or (ii) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity greater than 120% of
the yield to maturity at par of the underlying obligations; or (B) has a
maturity date in excess of 365 days.
"Governmental Authority" shall mean any court, board, agency, commission, office
or authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city or otherwise) whether now or hereafter in
existence.
"Legal Requirements" shall mean, with respect to each individual Mortgaged
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting such individual Mortgaged Property or any
part thereof or the construction, use, alteration or operation thereof, or any
part thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Owner, at any time in force affecting such individual
Mortgaged Property or any part thereof, including, without limitation, any which
may (i) require repairs, modifications or alterations in or to such individual
Mortgaged Property or any part thereof, or (ii) in any way limit the use and
enjoyment thereof.
8. CONDEMNATION
(a) Owner shall promptly give Lender written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding (a
"Condemnation") and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Lender is hereby irrevocably appointed as
Owner's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for such Condemnation and to
make any compromise or settlement in connection with such proceeding, subject to
the provisions of this Agreement; provided, however, that Lender shall not
exercise such power of attorney unless and until there occurs an Event of
Default. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including, without limitation, any transfer
made in lieu of or in anticipation of the exercise of such taking), Owner shall
continue to pay the Debt at the time and in the manner provided for in the Note,
the Mortgage, this Agreement, the Assignment, the Environmental Agreement and
the other Loan Documents, and the Debt shall not be reduced until any award or
payment therefor shall have been actually received after expenses of collection
and applied by Lender to the discharge of the Debt. Lender shall not be limited
to the interest paid on the award by the condemning authority but shall be
entitled to receive out of the award interest at the rate or rates provided in
the Note.
(b) If the Mortgaged Property shall be the subject of a Condemnation, in
whole or in part, Borrower shall give prompt notice thereof to Lender.
<PAGE>
(i) In the case of a Condemnation, Lender may participate in the
settlement and adjustment of any claim; provided, however, that Owner may
adjust losses aggregating not in excess of $100,000.00 if such adjustment
is carried out in a competent and timely manner, and provided in any case
that Lender shall be, and is hereby, authorized to collect and receipt for
any such Condemnation award or proceeds. The expenses incurred by Lender in
the adjustment and collection of a Condemnation award or proceeds shall
become part of the Debt, shall be secured by the Mortgage and shall be
reimbursed by Borrower to Lender on demand.
(ii) In the event of any Condemnation affecting all or any portion of
the Mortgaged Property the award in respect of which is less than the
Threshold Amount such award shall be paid to Owner for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or the
part thereof subject to the Condemnation, as provided below, and Owner
hereby covenants and agrees forthwith to commence and diligently to
prosecute such restoring, repairing, replacing or rebuilding. In the event
of any Condemnation affecting all or any portion of the Mortgaged Property
the award in respect of which equals or exceeds the Threshold Amount and
the cost of the restoration is less than the Threshold Amount where: (A)
the Condemnation award or proceeds are sufficient to enable Owner to fully
restore the Mortgaged Property (or Owner deposits with Lender any shortfall
or provides evidence that such sums have been paid toward restoration of
the Mortgaged Property); (B) the term of, and proceeds derived from,
Owner's business interruption insurance (or other similar insurance) shall
be sufficient to fully cover the period that the Mortgaged Property is
undergoing restoration (or Owner deposits with Lender any shortfall or
provides evidence that such sums have been paid toward the operation of the
Mortgaged Property); (C) Lender determines that the restoration is
reasonably capable of being completed, at least 12 months prior to the
Maturity Date; (D) the Loan-to-Value Ratio upon completion of restoration
is estimated, by an appraiser acceptable to Lender, to be no greater than
.65:1.0; (E) the Franchise Agreement has not been, and cannot be,
terminated as a result of the Condemnation; (F) the restoration can be
completed within 12 months from the date that the Condemnation occurred, or
within such shorter time period as may be required by the Franchise
Agreement and shall be completed in accordance with all applicable federal,
state and local laws; (G) the restoration is permitted or required under
the Franchise Agreement; (H) the Aggregate Debt Service Coverage Ratio upon
completion is reasonably anticipated to be at least equal to the greater of
(1) 1.42:1.0 and (2) the Aggregate Debt Service Coverage Ratio in effect
immediately prior to the date of the condemnation; (I) Owner shall commence
the Restoration as soon as reasonably practicable (but in no event later
than forty-five (45) days after such damage or destruction occurs) and
shall diligently pursue the same to satisfactory completion; (J) the
Mortgaged Property and the use thereof after the Restoration will be in
compliance with all applicable zoning laws, ordinances, rules and
regulations; and (K) less than 25% of the land constituting the Mortgaged
Property is taken, then, if no Event of Default shall have occurred and be
continuing, the Condemnation award or proceeds shall be paid to Owner for
the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or the part thereof subject to the Condemnation, as provided for
below; and Owner hereby covenants and agrees forthwith to commence and
diligently to prosecute such restoring, repairing, replacing or rebuilding.
NOI for purposes of this calculation shall be NOI for the 12 calendar month
period immediately preceding the Condemnation, unless the appraiser
referenced in clause (D) above estimates that NOI after the restoration
will be more than ten (10%) percent less than NOI for such 12 calendar
month period, in which case the
<PAGE>
Aggregate Debt Service Coverage Ratio shall be calculated using the
appraiser's estimate of NOI.
(iii) Except as provided above, the award or proceeds collected upon
any Condemnation shall, at the option of Lender in its sole discretion, be
applied to the payment of the Debt or paid to Owner for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or the
part thereof subject to the Condemnation in the manner set forth below. In
no case shall any such application reduce or postpone any payments
otherwise required pursuant to the Note, other than the final payment on
the Note.
(iv) In the event that a Condemnation award or proceeds, if any, shall
be made available to Owner for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Owner hereby covenants to restore,
repair, replace or rebuild the Mortgaged Property to be of at least equal
value and of substantially the same character as prior to such
Condemnation, all to be effected in accordance with applicable law and
plans and specifications approved in advance by Lender; provided, however,
that Owner shall pay all costs (and if required by Lender, shall deposit
the total thereof with Lender in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net award or proceeds made
available pursuant to the terms hereof. The net condemnation awards held by
Lender shall be invested in Eligible Investments as directed by Owner
consistent with the completion of the restoration until disbursed in
accordance with this Section 8.
(v) In the event Owner is entitled to proceeds held by Lender, such
proceeds shall be disbursed from time to time upon Lender being furnished
with: (A) evidence satisfactory to it of the estimated cost of completion
of the restoration, repair, replacement and rebuilding; (B) funds, or, at
Lender's option, assurances satisfactory to Lender that such funds are
available, sufficient in addition to the Condemnation award or proceeds to
complete the proposed restoration, repair, replacement and rebuilding; and
(C) such architect's certificates, waivers of lien for work previously
performed or contemporaneously funded, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Lender may reasonably require and approve.
Lender may, in any event, require that all plans and specifications for
such restoration, repair, replacement and rebuilding be submitted to and
approved by Lender prior to commencement of work (which approval shall not
be unreasonably withheld). No payment made prior to the final completion of
the restoration, repair, replacement and rebuilding shall exceed ninety
(90%) percent of the value of the work performed from time to time. Funds
other than the Condemnation award or proceeds shall be disbursed prior to
disbursement of such proceeds, and at all times the undisbursed balance of
such proceeds remaining in Lender's possession, together with funds
deposited for that purpose or irrevocably committed to the satisfaction of
Lender by or on behalf of Owner for that purpose, shall be at least
sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free and
clear of all liens and claims of lien. Any surplus which may remain out of
a Condemnation award or proceeds held by Lender after payment of such costs
of restoration, repair, replacement or rebuilding shall be delivered to
Owner, provided such restoration was performed in accordance with the
provisions of this Section, and Owner is not then in default of its
obligations under the Loan Documents.
(vi) Notwithstanding anything to the contrary herein, the application
of any
<PAGE>
condemnation award as set forth in this Subsection 8(b) shall be subject to
the terms of any applicable Ground Lease.
9. LEASES AND RENTS
(a) In connection with the Loan, Owner has absolutely and unconditionally
assigned to Lender all of Owner's right, title and interest in all current and
future Leases and Rents, it being intended by Borrower that such assignment
constitutes a present, absolute assignment and not an assignment for additional
security only. Such assignment to Lender shall not be construed to bind Lender
to the performance of any of the covenants, conditions or provisions contained
in any such Lease or otherwise to impose any obligation upon Lender. Owner shall
execute and deliver to Lender such additional instruments, in form and substance
reasonably satisfactory to Lender, as may hereafter be requested by Lender to
further evidence and confirm such assignment. Nevertheless, subject to the terms
of this Section, Lender has granted to Owner a revocable license to operate and
manage the Mortgaged Property and to collect the Rents and the Accounts
Receivable. Owner shall hold the Rents and the Accounts Receivable, or a portion
thereof sufficient to discharge all current sums due on the Debt, in trust for
the benefit of Lender for use in the payment of such sums. Upon the occurrence
of an Event of Default, the license granted to Owner shall automatically be
revoked, and Lender shall immediately be entitled to possession of all Rents and
the Accounts Receivable, whether or not Lender enters upon or takes control of
the Mortgaged Property. Lender is hereby granted and assigned by Owner the
right, at its option, upon revocation of the license granted herein, to enter
upon the Mortgaged Property in person, by agent or by court-appointed receiver
to collect the Rents and the Accounts Receivable. Any Rents and the Accounts
Receivable collected after revocation of the license may be applied toward
payment of the Debt in such priority and proportions as Lender in its discretion
shall deem appropriate.
(b) Owner shall furnish Lender with executed copies of all Leases for space
in excess of 1,000 square feet at any hotel comprising the Mortgaged Property.
All renewals of Leases and all proposed Leases shall provide for rental rates
comparable to existing local market rates and shall be arms-length transactions.
All proposed Leases shall be subject to the prior approval of Lender except that
proposed Leases which: (i) are for less than 1,000 square feet in the aggregate
at each hotel comprising the Mortgaged Property; (ii) are the result of an
arms-length transaction with a bona fide, independent third-party; (iii) provide
for rental rates comparable to existing market rates; and (iv) do not contain
any terms which would materially affect Lender's rights under the Note, the
Mortgage, this Agreement, the Assignment, the Environmental Agreement or the
other Loan Documents, shall not be subject to the prior approval of Lender. All
Leases, except for the Ground Leases, shall provide that they are subordinate to
the Mortgage and that the lessee agrees to attorn to Lender. Owner shall: (A)
observe and perform in all material respects all the obligations imposed upon
the lessor under the Leases (except with respect to the Ground Leases, it shall
observe and perform all of the obligations imposed upon lessee) and shall not do
or permit to be done anything to impair the value of the Leases as security for
the Debt; (B) promptly send to Lender copies of all notices of default which
Owner shall send or receive thereunder; (C) enforce all of the terms, covenants
and conditions contained in the Lease on the part of the lessee thereunder to be
observed or performed, short of termination thereof, excluding the Ground Lease
(which shall not be effected without prior notice to Lender and otherwise in
accordance with the terms hereof or of the Assignment); (D) not collect any
Rents more than one month in advance, except as may be permitted in the
Assignment (and with respect to any Ground Lease, it shall pay all Ground Rent
to be paid by Owner as tenant pursuant to the terms of the Ground Lease); (E)
not execute any
<PAGE>
other assignment of the lessor's interest in the Leases or Rents; (F) other than
de minimis non-financial amendments, not alter, modify or change the terms of
the Leases without the prior written consent of Lender (which consent shall not
be unreasonably withheld), or, except if a lessee is in default, cancel or
terminate the Leases or accept a surrender thereof or convey or transfer or
suffer or permit a conveyance or transfer of the Mortgaged Property or of any
interest therein so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees thereunder; provided,
however, that any Lease may be canceled if at the time of the cancellation
thereof a new Lease is entered into with a bona fide, independent third-party on
substantially the same terms or more favorable terms as the canceled Lease; (G)
not alter, modify or change the terms of any guaranty of the Leases or cancel or
terminate such guaranty without the prior written consent of Lender; (H) not
consent to any assignment of or subletting under the Leases not in accordance
with their terms (or with respect to the Ground Lease, assign or sublet its
interest thereunder), without the prior written consent of Lender; and (I)
execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Mortgaged Property as
Lender shall from time to time request. Notwithstanding anything to the contrary
contained in subsection (b) of this Section, the provisions of clauses (B), (C),
(F), (G) and (H) of this subsection (b) shall not apply to any Lease the
rentable square footage of which is for less than 1,000 square feet (a "Material
Lease").
(c) All security deposits of lessees in excess $5,000.00, whether held in
cash or any other form, shall not be commingled with any other funds of Owner
and, if cash, shall be deposited by Owner at such commercial or savings bank or
banks as may be reasonably satisfactory to Lender. Any bond or other instrument
which Owner is permitted to hold in lieu of cash security deposits under any
applicable legal requirements shall be maintained in full force and effect
unless replaced by cash deposits as hereinabove described, shall be issued by an
institution reasonably satisfactory to Lender, shall, if permitted pursuant to
any legal requirements, name Lender as payee or mortgagee thereunder (or at
Lender's option, be fully assignable to Lender) and shall, in all respects,
comply with any applicable legal requirements and otherwise be reasonably
satisfactory to Lender. Owner shall, upon request, provide Lender with evidence
reasonably satisfactory to Lender of Owner's compliance with the foregoing.
Following the occurrence and during the continuance of any Event of Default,
Owner shall, upon Lender's request, if permitted by any applicable legal
requirements, turn over to Lender the security deposits (and any interest
theretofore earned thereon) with respect to all or any portion of the Mortgaged
Property, to be held by Lender subject to the terms of the Leases.
10. REPRESENTATIONS CONCERNING LOAN
Owner represents, warrants and covenants as follows:
(a) The Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement and the other Loan Documents are the legal, valid and
binding obligations of Owner, and are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor would the
operation of any of the terms of the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement and the other Loan Documents, or the
exercise of any right thereunder, render the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury.
<PAGE>
(b) To the best of Owner's knowledge after due inquiry, all certifications,
permits, licenses and approvals required for the legal use, occupancy and
operation of the Mortgaged Property as a hotel including, without limitation,
any applicable liquor license, certificate of completion and occupancy permit,
have been or will be obtained and are in full force and effect. The Mortgaged
Property is free of material damage and is in good repair, and there is no
proceeding pending or, to the best of Owner's knowledge, threatened for the
total or partial condemnation of, or affecting, the Mortgaged Property.
(c) Except as shown on the surveys furnished to Lender in connection with
the Loan, all of the Improvements which were considered in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, no improvements on
adjoining properties encroach upon the Mortgaged Property, and no easements or
other encumbrances upon the Premises encroach upon any of the Improvements, so
as to affect the value or marketability of the Mortgaged Property. The Mortgaged
Property is contiguous to and has access to a physically and legally open
all-weather public street, has all necessary permits and approvals for ingress
and egress, is adequately serviced by public water, sewer systems and utilities
and is on one or more separate tax parcels, all of which are separate and apart
from any other property owned by Owner or any other person. The Mortgaged
Property has all necessary access by public roads or easements which in each
case are not terminable and are not subordinate to any mortgage other than the
Mortgage. To the best of Owner's knowledge after due inquiry, all of the
Improvements comply with all requirements of applicable building codes, zoning
and subdivision laws and ordinances.
(d) To the best of Owner's knowledge after due inquiry, the Mortgaged
Property is not subject to any leases, licenses or other use or occupancy
agreements other than the Leases described in the rent roll delivered to Lender
in connection with this Agreement. No person has any possessory interest in the
Mortgaged Property or right to occupy any portion thereof except under and
pursuant to the provisions of the Leases or transient hotel guests in the
ordinary course of Owner's business.
(e) To the best of Owner's knowledge after due inquiry, the surveys of the
Mortgaged Property delivered to Lender in connection with this Agreement have
been performed by duly licensed surveyors or registered professional engineers
in the jurisdictions in which the Mortgaged Property are situated, and to the
best of Owner's knowledge after due inquiry, does not fail to reflect any
material matter affecting the Mortgaged Property or the title thereto.
(f) The financial statements, capital budgets, operating budgets and other
financial information (the "Financial Documents") heretofore furnished to Lender
are, as of the date specified therein, complete and correct in all material
respects and fairly present the financial condition of Owner, and are prepared
in accordance with the Uniform Systems of Accounts, consistently applied. Owner
does not have on the date hereof any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments which in each case are known to Owner
and which, in Owner's opinion, are reasonably likely to result in a material
adverse effect on the Mortgaged Property or the operation thereof as a hotel,
except as referred to or reflected or provided for in the Financial Documents
heretofore furnished to Lender or as otherwise disclosed to Lender herein. Since
the last date of such Financial Documents, there has been no material adverse
change in the financial
<PAGE>
condition, operations or business of Owner from that set forth in such financial
statements as of the dates thereof.
(g) The Franchise Agreement is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event (other than payments due but not yet delinquent) which, with the passage
of time or with notice and the expiration of any grace or cure period, would
constitute a default, breach or violation by any party thereunder.
(h) The Management Agreement is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event (other than payments due but not yet delinquent) which, with the passage
of time or with notice and the expiration of any grace or cure period, would
constitute a default, breach or violation by any party thereunder.
(i) Neither the execution and delivery of the Loan Documents, Owner's
performance thereunder, the recordation of the Mortgage, nor the exercise of any
remedies by Lender, will violate or conflict with the terms of (A) the Franchise
Agreement or the Management Agreement, (B) the licenses, registrations, permits,
certificates, authorizations and approvals necessary for the operation of the
Mortgaged Property as a hotel, (C) the provisions of any law, any order or
judgment of any court or governmental authority and (D) the articles of
incorporation, by-laws, partnership or trust agreement, articles of
organization, operating agreement, or other governing instrument of Owner.
(j) The current Leases are in full force and effect, there are no defaults
by Owner and to the best of Owner's knowledge, after due inquiry the tenant
thereunder, there are no conditions which with the passage of time and/or notice
would constitute defaults thereunder, there are no offsets or defenses under the
Leases, no Lease contains an option to purchase (other than in favor of the
Owner), right of first refusal or purchase or any similar provision, each Lease
(other than the Ground Lease) is subordinate to the lien of the Mortgage, none
of the Rents have been collected more than one (1) month in advance (except that
with respect to the Ground Lease, it has paid all Ground Rents and other sums
required to be paid by Owner under the Ground Lease), all security deposits
relating to the Leases reflected on the certified rent roll delivered to Lender
have been collected by Owner and all of the terms of the alterations,
modifications and amendments to the Leases are reflected in the certified
occupancy statement delivered to and approved by Lender.
(k) If requested by Lender from time to time, Owner shall cooperate with
Lender and permit Lender to obtain, at Lender's sole cost and expense, a current
MAI appraisal of the Mortgaged Property.
(l) Owner owns adequate Collateral, including, personal property, Licenses
(defined below) and Food and Beverage Inventory (defined below)) to maintain and
operate the Mortgaged Property as a hotel in accordance with the standards of
this Loan Agreement, the Management Agreement, and, the Franchise Agreement. The
Collateral is not subject to any liens, leases or financing arrangements other
than as previously approved by Lender and as otherwise set forth in Section 13
hereof. "Food and Beverage Inventory" shall mean food and beverages (including
liquor), utensils and china stored at the hotel on the Mortgaged Property for
service to hotel guests. "Licenses" shall mean all material franchises,
trademarks, tradenames, copyrights, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
the Mortgaged
<PAGE>
Property and its business as presently conducted, including without limitation,
liquor licenses, as applicable.
(m) There is no action, suit or proceeding, judicial, administrative or
otherwise (including any condemnation or similar proceeding), pending or, to the
best of Owner's knowledge, threatened or contemplated against, or affecting,
Owner or the Mortgaged Property other than those, if adversely determined, would
have no Material Adverse Effect.
(n) Each of the Mortgaged Properties is assessed for real estate tax
purposes as one or more wholly independent tax lot or lots, separate from any
adjoining land or improvements not constituting a part of such lot or lots, and
no other land or improvements is assessed and taxed together with the Mortgaged
Property or any portion thereof.
(o) (i)(A) Owner is solvent, and no bankruptcy, reorganization, insolvency
or similar proceeding under any state or federal law with respect to Owner has
been initiated, and (B) Borrower has received reasonably equivalent value for
the granting of the Mortgage.
(ii) Except as referenced in the substantive non-consolidation opinion
delivered in connection with the Loan, no petition in bankruptcy has ever been
filed by or against Owner, any Guarantor, any indemnitor or any related entity,
or any principal, general partner or member thereof, in the last seven (7)
years, and neither Owner, any Guarantor, any indemnitor nor any related entity,
or any principal, general partner or member thereof, in the last seven (7) years
has ever made any assignment for the benefit of creditors or taken advantage of
any insolvency act or any act for the benefit of debtors.
(p) Except as otherwise disclosed to Lender in writing, Owner, any
Guarantor and any indemnitor have filed all federal, state, county, municipal,
and city income and other tax returns required to have been filed by them and
have paid all taxes and related liabilities which have become due pursuant to
such returns or pursuant to any assessments received by them. Neither Owner, any
Guarantor nor any indemnitor knows of any basis for any additional assessment in
respect of any such taxes and related liabilities for prior years.
(q) Owner has disclosed to Lender all material facts and has not failed to
disclose any material fact that could cause any representation or warranty made
herein to be materially misleading.
(r) No portion of the Mortgaged Property has been or will be purchased,
improved, equipped or furnished with proceeds of any illegal activity and to the
best of Owner's knowledge, there are no illegal activities or activities
relating to any controlled substance at the Mortgaged Property.
(s) As of the date hereof , each Owner's respective principal place of
business is the address of the hotel property owned by such Owner, as set forth
on Schedule A attached.
(t) (i) As of the date hereof and throughout the term of this Mortgage, (A)
Borrower is not and will not be an "employee benefit plan" as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, and (B) the assets of
Borrower do not and will not constitute "plan assets" of one or more such plans
for purposes of Title I of ERISA;
<PAGE>
(ii) As of the date hereof and throughout the term of this Mortgage
(A) Owner is not and will not be a "governmental plan" within the meaning of
Section 3(32) of ERISA and (B) transactions by or with Owner are not and will
not be subject to state statutes applicable to Owner regulating investments of
and fiduciary obligations with respect to governmental plans;
(iii) No accumulated funding deficiency (as defined in Section 412 of
the Code or Section 302 of ERISA) or failure to make required contributions or
reportable event within the meaning of section 4043(c) of ERISA (the reporting
of which has not been waived by the Pension Benefit Guaranty Corporation
("PBGC")) has occurred with respect to any plan within the meaning of section
3(3) of ERISA ("Plan") as to which Owner or any member of its ERISA Controlled
Group has or may have any obligation or liability, direct or indirect. To the
best knowledge of Owner and its ERISA Controlled Group, no Plan which is a
Multiemployer Plan within the meaning of Section 4001(a)(3) of ERISA
("Multiemployer Plan") is or is likely to be in reorganization (within the
meaning of Section 424 of ERISA or Section 418 of the Code) or is insolvent (as
defined in Section 4245 of ERISA). No lien under Section 412(n) of the Code or
302(f) of ERISA or requirement to provide security under Section 401(a)(29) of
the Code or Section 307 of ERISA has been or is reasonably expected by Owner or
any member of its ERISA Controlled Group to be imposed on the assets of Owner or
any member of its ERISA Controlled Group. Owner and each member of its ERISA
Controlled Group have complied in all material respects with the requirements of
ERISA and the Code and plan documents for each Plan and any other applicable
federal or state law with respect to Plans and are not in default (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan;
(iv) Neither Owner nor any member of its ERISA Controlled Group, with
respect to any Plan, is subject to any present or potential liability or
withdrawal liability or annual withdrawal liability payments. No liability to
the PBGC (other than required premium payments), the Internal Revenue Service,
any Plan or any trust established under Title IV of ERISA has been, or is
expected by Owner or any member of its ERISA Controlled Group to be, incurred by
Owner, or any member of its ERISA Controlled Group. As of the Closing Date,
there are no Unfunded Benefit Liabilities. Owner does not have any contingent
liability with respect to any post-retirement benefit under any "welfare plan"
(as defined in Section 3(1) of ERISA) or exit fee or withdrawal fee for a
multiple employer welfare plan, other than liability to make available
continuation coverage under Part 6 of Title I of ERISA to be paid for solely by
covered individuals. Owner has not engaged in any transaction prohibited by
Section 406 of ERISA or Section 4975 of the Code for which there is no statutory
or regulatory exemption. Representations and warranties in this section 10(t)
shall be deemed to be breached only if one or more representations or warranties
is untrue or incorrect and, either individually or in the aggregate, this could
reasonably be expected to result in a material adverse effect to Owner. For
purposes of Sections 11(a)(xvi) and 40 and this section 10(t), material adverse
effect shall mean any condition which has a material adverse effect upon (i) the
business, operations, properties, assets, corporate structure or financial
condition of Owner or (ii) the validity or enforceability of, or the ability of
the Owner to meet any obligations under, any of the Note, this Mortgage or any
of the other Loan Documents; and
(v) For purposes of this Mortgage, "ERISA Controlled Group" means any
corporation or entity or trade or business or person that is a member of any
group described in Section 414(b), (c), (m) or (o) of the Code of which Owner is
a member; provided, that for purposes of Title IV of ERISA such term shall only
include Sections 414(b) and (c) of the Code, and "Unfunded Benefit Liabilities"
means, with respect to any Plan at any time, the amount (if any) by which (1)
the present value of all benefit liabilities under a plan as defined in Section
4001(a)(16) of ERISA, exceeds (2) the fair market value of all plan assets
allocable to such benefits, all
<PAGE>
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
(u) None of the Permitted Exceptions, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgage, the Loan Agreement and the other Loan Documents, materially and
adversely affect the value of the Mortgaged Property, impair the use or the
operation of the Mortgaged Property or impair Owner's ability to pay its
obligations in a timely manner.
(v) All material contracts, agreements, consents, waivers, documents and
writings of every kind or character, including, without limitation, the
Management Agreement, if any, at any time to which Owner is a party to be
delivered to Lender pursuant to any of the provisions of this Agreement are
valid and enforceable against Owner and, to the best knowledge of Owner, are
enforceable against all other parties thereto, and, to Owner's actual knowledge,
in all respects are what they purport to be and, to the best knowledge of Owner,
to the extent that any such writing shall impose any obligation or duty on the
party thereto or constitute a waiver of any rights which any such party might
otherwise have, said writing shall be valid and enforceable against said party
in accordance with its terms, except as such enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally or (ii) general principles of equity.
(w) Owner is not (a) an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended, (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (c) subject to any other federal or state law or
regulation that purports to restrict or regulate its ability to borrow money.
(x) Any reprogramming required to permit the proper functioning, in and
following the year 2000, of (i) the Owner's computer systems and (ii) equipment
containing embedded microchips (including systems and equipment supplied by
others or with which Owner's systems interface) and the testing of all such
systems and equipment, as so reprogrammed, will be completed by July 1, 1999.
The cost to the Owner of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Owner (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in an Event of Default. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Owner are and, with ordinary
course upgrading and maintenance, will continue for the term of the Loan to be,
sufficient to permit the Owner to conduct its business without material adverse
effect.
(y) Attached hereto as Schedule G is a full and complete list of all
properties previously owned by AMI Operating Partners L.P. (other than the
Mortgaged Property) which have been previously or shall be simultaneously
herewith conveyed to entities other than each of the entities compromising the
Owner.
(z) Attached hereto as Schedule H is a list of all of the Mortgaged
Properties subject to Property Improvement Plans ("PIP's") by the Franchisors.
Owner represents and warrants that it is not in default under any PIP and such
PIP's shall be completed on or before the completion dates set forth in the
applicable PIP.
<PAGE>
11. SINGLE PURPOSE ENTITY; AUTHORIZATION
(a) Owner covenants and agrees that it has not and shall not and agrees
that its general partner(s), or managing member(s), as the case may be (each, a
"Principal") shall not:
(i) with respect to each Owner, engage in any business or activity
other than the ownership, leasing, operation, use and maintenance of the
applicable Mortgaged Property, if any, and activities incidental thereto,
and with respect to each Principal, engage in any business or activity
other than the ownership of its interest in Owner and such activities as
are directly related to its acting as the Principal of Owner;
(ii) with respect to Owner, acquire or own any material assets other
than (A) the Mortgaged Property, if any, and (B) such incidental Personal
Property as may be necessary for or related to the operation of the
Mortgaged Property, if any, and with respect to each Principal, acquire or
own any material assets other than its ownership interest in the applicable
Owner and such incidental Personal Property as may be necessary in
connection therewith;
(iii) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose
of all or substantially all of its assets or change its legal structure,
without in each case Lender's consent;
(iv) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, or without the prior written
consent of Lender, (A) amend, modify, terminate or fail to comply with the
provisions of Owner's partnership agreement, articles or certificate of
incorporation, certificate of organization, operating agreement or similar
organizational documents, as the case may be, or of Principal's partnership
agreement, articles or certificate of incorporation, certificate of
organization, operating agreement or similar organizational documents, as
the case may be, whichever is applicable or (B) violate the assumptions
contained in that certain non-consolidation opinion dated the date hereof
and delivered by Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
to Lender and the Rating Agencies;
(v) own any subsidiary or make any investment in, any person or entity
without the consent of Lender;
(vi) except as set forth in Section 66(a)(i) hereof, commingle its
assets with the assets of any of its general partners, managing members,
affiliates, principals or of any other person or entity;
(vii) With respect to Owner, incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than
the Debt and the Permitted FF&E Financing except in the ordinary course of
its business of
<PAGE>
owning and operating the applicable Mortgaged Property, if any, provided
that such debt (A) is paid within 60 days of the date it is incurred, (B)
does not exceed four percent (4%) of the Allocated Loan Amount with respect
to each individual Mortgaged Property; and (C) is not evidenced by a note,
and with respect to the Principal, incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation) except the
obligations contained in the Guaranty;
(viii) become insolvent or fail to pay its debts and liabilities from
its assets as the same shall become due, other than such debts and
liabilities that Owner is contesting pursuant to and in accordance with the
provisions of Section 32;
(ix) fail to maintain its records, books of account and bank accounts
separate and apart from those of the partners, members, principals and
affiliates of Owner or of Principal, as the case may be, the affiliates of
a general partner or managing member of Owner or of Principal, as the case
may be, and any other person or entity;
(x) enter into any contract or agreement with any partner, member,
principal or affiliate of Owner or of Principal, as the case may be, any
partner, member, principal or affiliate thereof (other than the Management
Agreement), except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an
arms-length basis with third parties other than any partner, member,
principal or affiliate of Owner or of Principal, as the case may be, or any
partner, member, principal or affiliate thereof;
(xi) seek the dissolution or winding up in whole, or in part, of Owner
or of Principal, as the case may be;
(xii) fail to correct any known misunderstandings regarding the
separate identity of Owner or Principal, as the case may be, or any
partner, member, principal or affiliate thereof;
(xiii) hold itself out to be responsible for the debts of another
person;
(xiv) make any loans or advances to any third party, including any
partner, member, principal or affiliate of Owner or of Principal, as the
case may be, or any partner, member, principal or affiliate thereof;
(xv) fail to file its own tax returns except where combined or
consolidated returns are permitted or required by Applicable Law provided
that such combined or consolidated returns shall provide that such entities
are separate legal entities and pay their respective proportionate share of
the taxes shown on such returns;
(xvi) agree to, enter into or consummate any transaction which would
render Owner or Principal, as the case may be, unable to furnish the
certification or other evidence referred to in Section 40 hereof;
(xvii) fail either to hold itself out to the public as a legal entity
separate
<PAGE>
and distinct from any other entity or person or to conduct its business
solely in its own name in order not (A) to mislead others as to the
identity with which such other party is transacting business, or (B) to
suggest that Owner or Principal, as the case may be, is responsible for the
debts of any third party (including any partner, member, principal or
affiliate of Owner or of Principal, as the case may be, or any partner,
member, principal or affiliate thereof);
(xviii) reduce its capital below an amount which is adequate for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(xix) file or consent to the filing of any petition, either voluntary
or involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the
benefit of creditors;
(xx) share any common logo with or hold itself out as or be designated
as a department or division of (A) any partner, member, principal or
affiliate of Owner or of Principal, as the case may be, (B) any affiliate
of a partner or member of Borrower or of Principal, as the case may be, or
(C) any other person or entity;
(xxi) with respect to Owner, if Owner is a corporation, or Principal,
if Owner is a partnership or limited liability company, fail at any time to
have at least one independent director that is not and has not been for at
least five (5) years a director, officer, employee, shareholder or a trade
creditor who derives more than 10% of its gross revenues from the Persons
referred to in (A)-(D) below (or spouse, parent, sibling or child of the
foregoing) of (A) Owner, (B) Principal, (C) any partner, member, principal
or affiliate of Owner or of Principal, or (D) any affiliate of any partner
or member of Owner or of Principal, in each case, other than with respect
to such Person's services as an independent director of Owner or of
Principal, as the case may be, and such Person's service as an Independent
Director for affiliates of Owner or Principal as applicable;
(xxii) with respect to Owner, if Owner is a corporation or Principal,
if Owner is a partnership or limited liability company, cause or allow the
board of directors of Owner or Principal, as the case may be, to take any
action requiring the unanimous affirmative vote of 100% of the members of
the board of directors unless an independent director shall have
participated in such vote; or
(xxiii) file, without the unanimous consent of all of the partners,
directors or members, as applicable, a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial
ownership interest.
(b) If Owner or Principal is a partnership, (1) its partnership agreement
must provide that the partnership will only dissolve upon the withdrawal,
dissolution or bankruptcy of the last remaining general partner or the
occurrence of any other event that causes the last general partner to cease to
be a general partner of the partnership, but the partnership will not be
dissolved if all of the remaining partners, within ninety (90) days, elect to
continue the partnership and appoint a new general partner, (2) at least one of
its
<PAGE>
general partners must at all times be a single purpose entity as described in
Subsection 11(a), (3) its partnership agreement must provide that the
dissolution and winding up or insolvency filing of such partnership requires the
unanimous consent of all general partners, and its partnership agreement must
include provisions substantially similar to those contained in Subsection 11(a).
If Owner or Principal is a limited liability company, (i) its certificate of
organization, operating agreement and other organizational documents must
provide that the limited liability company will only dissolve upon the
withdrawal, dissolution or bankruptcy of the last remaining managing member, but
the limited liability company will not be dissolved if the personal
representative of the last remaining member within ninety (90) days, elects to
continue the limited liability company and appoint a new managing member, and if
such personal representative fails to elect to continue the limited liability
company, the consent of the Investors (defined below) in the Securities (defined
below) shall be required prior to the liquidation of any assets of the limited
liability company, (ii) at least one of its managing members must at all times
be a single purpose entity as described in Subsection 11(a), (iii) its
certificate of organization, operating agreement and other organizational
documents must provide that the dissolution and winding up or insolvency filing
of such limited liability company requires the unanimous consent of all members,
and (iv) its certificate of organization, operating agreement and other
organizational documents must include provisions substantially similar to those
contained in Subsection 11(a). If Owner or Principal is a corporation, such
entity's articles of incorporation must include provisions substantially similar
to those contained in this Subsection 11(a). Any other entity seeking to qualify
as a single purpose entity as described in this Subsection 11(a) shall have
adopted provisions in its governing documents that are substantially similar to
the provisions contained in this Section 11 and described above for partnerships
and corporations.
12. MAINTENANCE OF MORTGAGED PROPERTY
Owner shall cause the Mortgaged Property to be maintained in a good and
safe condition and repair. The Improvements and the Equipment shall not be
removed, demolished or materially altered (except for normal replacement of the
Equipment). Owner shall promptly comply with all laws, orders and ordinances
affecting the Mortgaged Property, or the use thereof, except breaches or
violations which, individually or in the aggregate, shall not cause a material
adverse effect on (i) the Mortgaged Property, (ii) the business, profits,
prospects, management, operations or condition (financial or otherwise) of
Owner, (iii) the enforceability, validity, perfection or priority of the lien of
the Loan Documents, or (iv) the ability of the Owner to perform its obligations
under the Loan Documents. Owner shall promptly repair, replace or rebuild any
part of the Mortgaged Property which may be destroyed by any casualty, or become
damaged, worn or dilapidated, or which may be affected by any proceeding of the
character referred to in Section 8 hereof, and shall complete and pay for any
structure at any time in the process of construction or repair on the Mortgaged
Property; provided, however, that if Lender exercises its right to apply
insurance proceeds other than for repair and restoration, Owner shall have no
independent obligation to fund the cost thereof or to make such repair or
restoration. Except as expressly permitted in writing by Lender, Owner shall not
initiate, join in, acquiesce in, or consent to any change in any private
restrictive covenant, zoning law or other public or private restriction limiting
or defining the uses which may be made of the Mortgaged Property or any part
thereof. If under applicable zoning provisions the use of all or any portion of
the Mortgaged Property is or shall become a nonconforming use, Owner will not
cause or permit such nonconforming use to be discontinued or abandoned without
the prior written consent of Lender. Owner shall not: (a) change the use of the
<PAGE>
Mortgaged Property as currently configured and utilized; (b) permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof; or
(c) take any steps whatsoever to convert the Mortgaged Property, or any portion
thereof, to a condominium or cooperative form of ownership. Notwithstanding
anything to the contrary herein, this Section 12 shall be subject to the terms
of any Ground Lease.
13. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY
(a) Owner acknowledges that Lender has examined and relied on the
creditworthiness and experience of Owner and its general partners, principals
and (if Owner is a trust) beneficial owners in owning and operating properties
such as the Mortgaged Property in agreeing to make the loan secured by the
Mortgage, and that Lender will continue to rely on Owner's ownership of the
Mortgaged Property as a means of maintaining the value of the Mortgaged Property
as security for repayment of the Debt. Owner acknowledges that Lender has a
valid interest in maintaining the value of the Mortgaged Property so as to
ensure that, should Owner default in the repayment of the Debt, Lender can
recover the Debt by a sale of the Mortgaged Property. Except as permitted in
Section 61 hereof or otherwise in accordance with the terms of the Loan
Documents, Owner shall not, without the prior written consent of Lender, sell,
convey, alienate, mortgage, encumber, pledge or otherwise transfer the Mortgaged
Property or any part thereof, or permit the Mortgaged Property or any part
thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section shall be deemed to include: (i) an
installment sales agreement wherein Owner agrees to sell the Mortgaged Property
or any part thereof for a price to be paid in installments; (ii) an agreement by
Owner leasing all or a substantial part of the Mortgaged Property for other than
actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Owner's right, title and
interest in and to any Leases or any Rents; (iii) if Owner, any Guarantor, or
any general partner of Owner or any Guarantor is a corporation, the voluntary or
involuntary sale, conveyance, pledge or transfer of such corporation's stock (or
the stock of any such corporation directly or indirectly controlling such
corporation by operation of law or otherwise) or the creation or issuance of new
voting stock in one or a series of transactions, where such shares of stock are
not held by parties who are currently shareholders in the same manner and
proportion as such parties currently hold shareholder interests; (iv) if Owner,
any Guarantor or any indemnitor or any general or limited partner or member of
Owner, any Guarantor or any indemnitor is a limited or general partnership or
joint venture, the change, removal or resignation of a general partner or
managing partner or the transfer or pledge of the partnership interest of any
general partner or managing partner or any profits or proceeds relating to such
partnership interest or the voluntary or involuntary sale, conveyance, transfer
or pledge of limited partnership interests (or the limited partnership interests
of any limited partnership directly or indirectly controlling such limited
partnership by operation of law or otherwise), or the creation or issuance of
new limited partnership interests, where such limited partnership interests are
not held by parties who are currently limited partners in the same manner and
proportion as such parties currently hold limited partnership interests; (v) if
Owner, any Guarantor, any indemnitor or any general or limited partner or member
of Owner, any Guarantor or any indemnitor is a limited liability company, the
change, removal or resignation of a managing member or the transfer of the
membership interest of any managing member or any profits or proceeds relating
to such membership interest or the voluntary or involuntary sale, conveyance,
transfer or pledge of
<PAGE>
membership interests (or the membership interests of any limited liability
company directly or indirectly controlling such limited liability company by
operation of law or otherwise), or the creation or issuance of new membership
interests where such membership interests are not held by parties who are
currently members in the same manner and proportion as such parties currently
hold membership interests; and (vi) if Owner is not wholly owned and controlled
directly or indirectly by Servico, Inc. (other than Servico Centre Associates
Limited Partnership ("SCALP") which shall be wholly owned and controlled
directly or indirectly by Palm Beach Hotel Enterprises, Inc., the general
partner of SCALP and (vii) if Servico, Inc. is not wholly owned and controlled
directly or indirectly by Lodgian, Inc.
(c) Lender reserves the right to condition the consent required under
Section 13(a) upon a modification of the terms hereof (which such modification
shall not modify or amend the material economic terms hereof) and on assumption
of the Note, the Mortgage, this Loan Agreement and the other Loan Documents as
so modified by the proposed transferee, payment of all of Lender's out-of-pocket
expenses actually incurred in connection with such transfer, the approval by
each of the Rating Agencies that have assigned a rating to the Securities of the
proposed transferee, the proposed transferee's continued compliance with the
covenants set forth in Section 11 and Section 40 hereof, or such other
conditions as Lender shall determine in its sole discretion to be in the
interest of Lender. Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Owner's sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Mortgaged Property without Lender's consent. This provision shall apply to every
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Mortgaged Property regardless of whether voluntary or not, or
whether or not Lender has consented to any previous sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer of the Mortgaged
Property.
(d) Notwithstanding the foregoing, Lender's consent shall not be required
in connection with the transfer of (i) the publically traded shares of stock in
Lodgian, Inc., or (ii) limited partnership interests in Servico Centre
Associates Limited Partnership (which are not directly or indirectly owned by
Servico, Inc.); provided such limited partners shall never hold equity interests
in Servico Centre Associates Limited Partnership in excess of 50%.
(e) Lender acknowledges that Owner, KDS Corporation, and Servico, Inc. have
each pledged certain Collateral relating to certain of the Mortgaged Properties
to certain leasing and/or financial companies listed on Part I of Schedule I
attached hereto in connection with certain FF&E financings in the respective
original and outstanding principal amounts set forth on Schedule I (the
"Existing FF&E Financing"), which loans shall mature or equipment lease
agreements shall expire on those dates set forth on Schedule I. Owner covenants
and agrees to fully perform or to cause Servico, Inc. and KDS Corporation, as
applicable, to fully perform its obligations under the loan documents and/or
equipment lease agreement, as applicable, evidencing and serving the Existing
FF&E Financing.
(f) Notwithstanding anything contained in this Section 13 to the contrary,
Lender's consent shall not be required for the granting of a security interest
by Owner and/or Servico, Inc. in television sets, washers, dryers, cubers,
dispensers, door locks, air conditioners, filter systems, impress ironers,
refrigerators, microwaves, dish and glass washing machines, vans, phone systems,
microfridges, or computer systems ("Pledged FF&E"), provided Lender has received
prior written notification of such Borrower's and/or Servico, Inc's intent to
pledge such
<PAGE>
Pledged FF&E, and provided, further, that (i) any such security agreement or
equipment lease agreement is subject to commercially prudent terms and
conditions, (ii) the Pledged FF&E is readily replaceable without material
interference or interruption to the operation of the Mortgaged Property as
required pursuant to the provisions of the Mortgage and this Loan Agreement, and
(iii) the aggregate annual payments pursuant to the Existing FF&E Financing and
any note(s) secured by the security agreement(s) or equipment lease agreement(s)
relating to the Pledged FF&E located on or used in connection with each
Mortgaged Property is less than $50,000 (the "FF&E Annual Payment Cap"), except
with respect to Property Nos. 13 (Omni West Palm Beach), 39 (Quality Hotel
Metairie), 50 (Holiday Inn St. Paul), 57 (Omni Albany Hotel), and 81 (Holiday
Inn Austin South), the FF&E Annual Payment Cap shall be the amount set forth
under the column entitled "Allocated Annual Payments" on Part II of Schedule I
(collectively; the "Permitted FF&E Financing").
(g) Notwithstanding anything to the contrary in this Section 13, Lender
shall permit the mortgage dated June 8, 1992 and recorded in Official Records
Book 3739, Page 506 of the Public Records of Palm Beach County, Florida, as
modified, amended and assigned (the "Subordinate Mortgage") relating to the
Mortgage Property described as Property No. 13 on Schedule A attached (Omni
Hotel -West Palm Beach) provided simultaneously herewith, (i) Owner executes and
delivers to Lender's form of Subordination and Intercreditor Agreement
acceptable to Lender in all respects and (ii) the holder of the Subordinate
Mortgage pledges and collaterally assigns to Lender the Subordinate Mortgage as
additional collateral for the Loan.
(h) Notwithstanding anything to the contrary contained in this Section 13,
Lender's consent shall not be required pursuant to this Section 13 with respect
to the Condominium Conversion described in Section 61 provided the terms and
provisions of Section 61(l) are satisfied.
(i) Lender's consent to a sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Lender's right to require such consent in the future. Any sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property made in contravention of this Section shall be null and void
and of no force or effect.
(j) Owner agrees to bear and shall pay or reimburse Lender on demand for
all reasonable expenses (including, without limitation, Lender's out-of-pocket
attorney's fees and disbursements (including on appeal), title search costs and
title insurance endorsement premiums) incurred by Lender in connection with the
review, approval or disapproval, and documentation of any such sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer.
(k) Anything herein to the contrary notwithstanding, transfers and partial
releases of the Mortgaged Property shall be permitted in accordance with the
terms of Section 61 hereof.
14. ESTOPPEL CERTIFICATES; AFFIDAVITS
(a) Within ten (10) days after request, Owner and Lender shall furnish the
other with a statement, duly acknowledged and certified, setting forth: (i) the
amount of the original principal amount of the Note; (ii) the then outstanding
principal balance of the Note; (iii) the rate of interest of the Note; (iv) the
date on which installments of interest and/or principal were last paid; (v) any
offsets or defenses to the payment of the Debt; and (vi) that the Note, the
Mortgage, this
<PAGE>
Agreement, the Assignment, the Environmental Agreement and the other Loan
Documents are valid, legal and binding obligations, which have not been modified
or if modified, giving particulars of such modification; provided, however, that
neither Owner nor Lender shall be required to provide a statement hereunder more
frequently than once in a calendar quarter.
(b) Within ten (10) days after request by Lender, but in no event more
frequently than once in any 12-month period, Owner shall furnish Lender with a
certificate reaffirming all representations and warranties of Owner set forth
herein and in the other Loan Documents as of the date requested by Lender or, to
the extent of any changes to any such representations and warranties, so stating
such changes.
(c) Owner shall deliver to Lender upon request, tenant estoppel
certificates from each tenant under a Lease for more than 1,000 square feet in
form and substance reasonably satisfactory to Lender; provided, however, that
Owner shall not be required to deliver such certificates more frequently than
two times in any calendar year.
(d) Owner upon any transfer or proposed transfer pursuant contemplated by
Section 21(b), at Lender's request, Owner shall provide an estoppel certificate
to the Investor (defined in Subsection 21(b)) or prospective Investor in such
form, substance and detail required pursuant to Section 21.
(e) Owner shall, promptly upon request of Lender, deliver an estoppel
certificate from Manager stating that (i) the Management Agreement, the FF&E
Replacement Management Agreement or such other franchise agreement relating to
the Mortgaged Property is in full force and effect and has not been modified,
amended or assigned, (ii) neither Manager or Qualified Manager, as applicable,
nor, to Manager's or Qualified Manager's knowledge, as applicable, Owner is in
default under any of the terms, covenants or provisions of the Management
Agreement or FF&E Replacement Management Agreement, as applicable, and Manager
or Qualified Manager, as applicable, knows of no event which, but for the
passage of time or the giving of notice or both, would constitute an event of
default under the Management Agreement or FF&E Replacement Management Agreement,
as applicable, (iii) neither Manager or Qualified Manager, as applicable, nor,
to Manager's or Qualified Manager's knowledge, as applicable, Owner has
commenced any action or given or received any notice for the purpose of
terminating the Management Agreement or the FF&E Replacement Management
Agreement, as applicable, and (iv) all sums due and payable to Manager or
Qualified Manager, as applicable, under the Management Agreement or FF&E
Replacement Management Agreement, as applicable, have been paid in full.
15. CHANGES IN THE LAWS REGARDING TAXATION
If any law is enacted, adopted or amended after the date of this Agreement
which deducts the Debt from the value of the Mortgaged Property for the purpose
of taxation, or which
<PAGE>
imposes a tax, either directly or indirectly, on the Debt or Lender's interest
in the Mortgaged Property, Owner will pay such tax, with interest and penalties
thereon, if any. In the event Lender or its counsel determines that the payment
of such tax or interest and penalties by Owner would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury, then in any
such event, Lender shall have the option, by written notice of not less than 180
days, to declare the Debt immediately due and payable, which prepayment shall
not include Default Consideration (as defined in the Note).
16. NO CREDITS ON ACCOUNT OF THE DEBT
Owner will not claim, demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes or Other Charges assessed against
the Mortgaged Property, or any part thereof, and no deduction shall otherwise be
made or claimed from the assessed value of the Mortgaged Property, or any part
thereof, for real estate tax purposes by reason of the Mortgage or the Debt. In
the event such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than 180 days, to declare the
Debt immediately due and payable.
17. DOCUMENTARY STAMPS
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps (including,
without limitation, any documentary stamps and mortgage filing privilege tax) to
be affixed to the Note or the Mortgage, or shall impose any other tax or charge
on the same, Owner will pay for the same, with interest and penalties thereon,
if any.
18. CONTROLLING AGREEMENT
It is expressly stipulated and agreed to be the intent of Owner and Lender
at all times to comply with applicable state law or applicable United States
federal law (to the extent that it permits Lender to contract for, charge, take,
reserve, or receive a greater amount of interest than under state law) and that
this Section shall control every other covenant and agreement in this Agreement
and the other Loan Documents. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for under the
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved, or received with respect to the Debt, or if Lender's exercise
of the option to accelerate the maturity of the Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower's and Lender's express intent
that all excess amounts theretofore collected by Lender shall be credited on the
principal balance of the Note and all other Debt (or, if the Note and all other
Debt have been or would thereby be paid in full, refunded to Borrower), and the
provisions of the Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder. All sums paid or agreed to
be paid to Lender for the use, forbearance, or detention of the Debt shall, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Debt until
<PAGE>
payment in full so that the rate or amount of interest on account of the Debt
does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
19. BOOKS AND RECORDS
(a) Owner will keep and maintain or cause to be kept and maintained on a
calendar year basis proper books of record and account separate and apart from
any other person or entity, in which accurate and complete entries shall be made
of all dealings or transactions of or in relation to the Mortgaged Property, in
accordance with then applicable United States generally accepted accounting
principles (as in effect from time to time) (the "Uniform System of Accounts").
Lender and its authorized representatives shall have the right at reasonable
times and upon reasonable notice to examine the books and records of Owner
and/or Manager relating to the operation of the Mortgaged Property and to make
such copies or extracts thereof as Lender may reasonably require.
(b) (i) Not later than fifty (50) days following the end of each calendar
quarter of Owner's operations, Owner will deliver to Lender unaudited financial
statements of Owner (on an individual and a consolidated basis) prepared in
accordance with the Uniform System of Accounts (together with reconciliation
schedules setting forth actual cash flow of the Mortgaged Property) on an
accrual basis, including an average daily rate statement for such quarter, a
balance sheet as of the end of such quarter, a statement of revenues and
expenses for such quarter and operating statements of the Mortgaged Property,
detailing the Gross Income received for the Mortgaged Property operations,
including, all Rents and Accounts Receivable, the Expenses incurred at the
Mortgaged Property level and the NOI derived at the Mortgaged Property before
and after debt service (principal and interest) and major capital improvements
for that quarter and containing appropriate year to date information, including
a comparison for such quarter with the annual budget delivered pursuant to
Subsection 19(e). Such statements for each quarter shall be accompanied by a
certificate of Owner signed by a financial officer of Owner or one of its
general partners or members and attesting that, to the signer's actual
knowledge, (A) such statements fairly represent the financial condition and
results of operations of Owner and the Mortgaged Property in accordance with the
Uniform System of Accounts (subject to year end adjustments), (B) as of the date
of such certificate of Owner, no Event of Default exists or, if so, specifying
each such Event of Default and the nature and status thereof and the action then
being taken by Owner or proposed to be taken to remedy such Event of Default,
and (C) the Aggregate Debt Service Coverage Ratio for such calendar quarter.
(ii) Not later than ninety-five (95) days after the end of each
calendar year of Owner's operations, Owner will deliver to Lender audited
financial
<PAGE>
statements of Owner (on an individual and a consolidated basis) prepared and
certified by a nationally recognized, independent public accounting firm of
certified public accountants, which firm shall either be a "Big Six" firm or
otherwise acceptable to Lender in its sole discretion (an "Independent
Accountant") in accordance with the Uniform System of Accounts (together with
reconciliation schedules setting forth actual cash flow of the Mortgaged
Property), including an average daily rate statement for such year, a balance
sheet as of the end of such year and a statement of Gross Income and Expenses
relating to the Mortgaged Property for such year and operating statements of the
Mortgaged Property, detailing the Gross Income received, the Expenses incurred
and the NOI derived at the Mortgaged Property before and after debt service
(principal and interest) and major capital improvements for that year and
containing appropriate year to date information, including a comparison for such
year with the annual budget delivered pursuant to Subsection 19(e). Such annual
financial statements shall also be accompanied by a certificate of Owner in the
form required pursuant to Subsection 19(b)(i) and a current monthly rent roll
which satisfies the requirements of Section 19(d) below for the calendar month
immediately previous to the date of the delivery of the financial statements
required by this Subsection.
(c) Not later than thirty (30) days following each calendar month, Owner
will deliver to Lender unaudited monthly operating statements of the Mortgaged
Property (on an individual and a consolidated basis), detailing the Gross Income
received for Mortgaged Property operations, including Rents and Accounts
Receivable, the Expenses incurred at the Mortgaged Property level and the NOI
derived at the Mortgaged Property before and after debt service (principal and
interest) and major capital improvements for that month and containing
appropriate year to date information, including a comparison of such month with
the Approved Capital Budget delivered pursuant to Subsection 19(e). Such
statements for each month shall be accompanied by a certificate of Owner signed
by a financial officer of Owner or one of its general partners or members and
certifying that, to the signer's actual knowledge, (A) such statements fairly
represent the financial condition and results of operations of Owner in
accordance with The Uniform System of Accounts (subject to year end
adjustments), (B) as of the date of such certificate of Owner, no Event of
Default exists or, if so, specifying each such Event of Default and the nature
and status thereof and the action then being taken by Owner or proposed to be
taken to remedy such Event of Default, and (C) the Aggregate Debt Service
Coverage Ratio for such calendar month.
(d) At the written request of Lender, Owner will deliver to Lender a rent
roll for the Mortgaged Property with respect to each Material Lease, dated as of
the end of such calendar month, containing (i) a list of the original tenants
and current tenant, subtenant, licensee or other occupant under each Lease, (ii)
the gross leasable square feet leased by each tenant and the location thereof,
(iii) the annual fixed rent and additional rent currently payable by each tenant
and the date on which each payment thereof is due, (iv) the commencement and the
expiration date of each of the Leases and the renewal terms thereof, (v) the
date through which all Rent has been paid, the amount of any prepaid Rents and
the amount of any delinquencies under each Lease, (vi) the amount of all
concessions, abatements, credits and allowances to which each tenant is entitled
under each Lease, (vii) the amount of security deposits given under each Lease
and the amount of the accrued
<PAGE>
interest thereon, (viii) all options and renewal rights that each tenant has
under each Lease, (ix) any guaranty or other security given under any Lease, (x)
any obligations of Owner under the Lease for tenant improvements, construction
and unpaid obligations for brokerage fees and commissions, and (xi) any
termination rights or options contained in each Lease or in such form as may
otherwise be required by Lender; and such rent roll shall be accompanied by a
certificate of Owner certifying that, to Owner's knowledge, such rent roll is
true, correct and complete in all material respects and stating whether Owner,
within the past calendar quarter, has issued a notice of default with respect to
any Material Lease which has not been cured, and the nature of such default.
Owner may deliver the information required under clauses (v)-(xi) above on a
separate schedule, certified by Owner, as true, complete and correct in all
material respects, to Owner's knowledge. Upon request by Lender (such request to
be made no more often than once each calendar quarter), Owner shall deliver to
Lender a certified copy of any Material Lease entered into during the calendar
quarter to which such current report relates, which certification shall include
a statement that each such Lease complies with the provisions of Section 9.
Borrower hereby represents and warrants that the rent roll delivered to Lender
as of the date hereof is true, correct and complete in all material respects.
(e) For each fiscal year commencing on January 1, 1999, and for each fiscal
year thereafter, Owner shall submit to Lender for Lender's written approval an
annual operating budget (a "Capital Budget") not later than thirty (30) days
prior to the commencement of such fiscal year, in form satisfactory to Lender
setting forth in reasonable detail budgeted monthly operating expenses for the
Mortgaged Properties, including all planned capital expenditures in respect of
the Mortgaged Properties for such fiscal year. Notwithstanding the foregoing,
Owner shall submit to Lender for Lender's approval the Capital Budget for the
fiscal year commencing January 1, 1999 on or before January 31, 1999. Lender
shall have the right to approve such Capital Budget and in the event that Lender
objects to the proposed Capital Budget submitted by Owner, Lender shall advise
Borrower of such objections within fifteen (15) days after receipt thereof (and
deliver to Owner a reasonably detailed description of such objections) and
Owner, shall promptly revise such Capital Budget and resubmit the same to
Lender. Lender shall advise Owner of any objections to such revised Capital
Budget within ten (10) days after receipt thereof (and deliver to Owner a
reasonably detailed description of such objections) and Owner, shall promptly
revise the same in accordance with the process described in this subparagraph
until the Lender approves a Capital Budget. Together with the submission of each
Capital Budget, Owner shall deliver to Lender a certification by a third party
engineer, acceptable to Lender, verifying the cost estimates for each repair or
replacement item required (i) pursuant to a PIP or (ii) as a result of a
structural deficiency and the cost of such repair or replacement is in excess of
$500,000. Each such Capital Budget approved by Lender in accordance with terms
hereof shall hereinafter be referred to as an "Approved Capital Budget". Until
such time that Lender approves a proposed Approved Capital Budget, the most
recently Approved Capital Budget shall apply; provided that, such Approved
Capital Budget shall be adjusted to reflect actual increases in real estate
taxes, insurance premiums and utilities expenses. In the event that the Owner
must incur an extraordinary operating expense or capital expense not set forth
in the Approved Capital Budget (each, an "Extraordinary Expense"), then Owner
shall promptly deliver to Lender a reasonably detailed explanation of such
proposed Extraordinary Expense for the Lender's approval.
(f) Owner shall deliver to Lender as soon as reasonably available but in no
<PAGE>
event later than thirty (30) days after such items become available to Owner in
final form:
(i) copies of any final engineering or environmental reports prepared
for Owner with respect to the Mortgaged Property;
(ii) notice in the event of any (A) material change in a policy or any
insurance coverage, (B) material tort action against Owner relating to the
Mortgaged Property and not wholly covered by insurance (other than any
deductible thereunder, not to exceed the maximum deductible permitted under
this Loan Agreement), (C) Event of Default under this Loan Agreement, (D)
material casualty to the Mortgaged Property, (E) change in the Manager, or
Qualified Manager, as the case may be, or (F) taking or threatened taking;
(iii) a copy of any notice received by Owner from any environmental
authority having jurisdiction over the Mortgaged Property with respect to a
condition existing or alleged to exist or emanate from or at the Mortgaged
Property; and
(iv) if requested by Lender, a summary report listing only tenants and
square footage occupied by such tenants pursuant to Material Leases.
(g) Owner shall deliver to Lender:
(i) a quarterly comparison of the budgeted total income and total
expenses to the actual total income and total expenses for the subject
quarter with a detailed explanation of any variances of five percent (5%)
or more between budgeted and actual amounts for such quarter and a report
of occupancy for the subject quarter including an average daily room rate,
within fifty (50) days after the end of each fiscal quarter; and
(ii) an annual comparison of the budgeted total income and total
expenses to the actual total income and total expenses with a detailed
explanation of any variances of five percent (5%) or more between budgeted
and actual amounts for such year and an annual occupancy report including
an average daily room rate, within ninety-five (95) days after the close of
each fiscal year of Owner.
(h) Owner shall, at any and all times, within a reasonable time after
written request by Lender, furnish or cause to be furnished to Lender, in such
manner and in such detail as may be reasonably requested by Lender, additional
reasonable information with respect to the Mortgaged Property.
20. PERFORMANCE OF OTHER AGREEMENTS
Owner shall observe and perform each and every term to be observed or
performed by Owner pursuant to the terms of any material agreement or recorded
instrument affecting or pertaining to the Mortgaged Property. Nothing herein
shall operate in derogation of any obligation of Owner under the Loan Documents.
<PAGE>
21. FURTHER ASSURANCES; RIGHT TO SPLIT THE LOAN
(a) Owner will, at the cost of Owner, and without expense to Lender, do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, Uniform Commercial
Code financing statements or continuation statements, transfers and assurances
as Lender shall, from time to time, require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, pledged, assigned and hypothecated or intended now or
hereafter so to be, or which Owner may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement or for filing, registering or
recording the Mortgage. Owner, on demand, will execute and deliver and hereby
authorizes Lender , upon the occurrence of an Event of Default, to execute in
the name of Owner or without the signature of Owner to the extent Lender may
lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Mortgaged Property. Owner grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to Lender at law and in equity, including
without limitation such rights and remedies available to Lender pursuant to this
Section; provided, however, that so long as Owner is in compliance with the
terms and conditions of this Agreement, Lender will first seek Owner's
assistance in exercising and perfecting such rights and remedies.
(b) Owner acknowledges that Lender intends to either (i) sell, assign or
transfer the Loan evidenced by the Note and the Loan Documents with or without
novation to one or more Co-Lenders (a "Syndication"), (ii) sell, assign or
transfer the Loan to a party who may pool the Loan with a number of other loans
and the holder of such loans may issue one or more classes of Mortgage Backed,
Pass-Through Certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (the "Securities");
provided, however, that nothing herein shall require that Owner act as issuer or
depositor, or execute any registration statement, offering circular or
memorandum in connection with the offering of Securities (a "Securitization") or
(iii) grant participations in the Loan (a "Participation"). The Securities may
be rated by one or more national Rating Agencies. Owner agrees to make available
to Lender, at Owner's sole cost and expenses (but Lender shall pay for Lender's
counsel fees), all information concerning its business and operations and the
Mortgaged Property which Lender reasonably requests in connection with a
Syndication, a Securitization or a Participation (provided, however, Owner shall
be responsible for the cost of only one (1) update on the appraisals, the
Environmental Reports and the building condition reports prepared and delivered
in connection with this Loan if requested by Lender in connection with a
Syndication, Securitization or Participation). Lender may share such information
with the investors, participants, investment banking firms, rating agencies,
accounting firms, law firms and other third-party advisory firms involved with
the Loan or the Securities (collectively, the "Investor"). Owner shall cooperate
with Lender in connection with a Syndication, a Securitization or a
Participation, including, without limitation, Owner agrees to deliver an
estoppel certificate required pursuant to Section 14(d) hereof, the necessary
franchisor comfort letters and such other documents reasonably requested by
Lender. In connection with a Securitization, it is understood that the
information provided by Owner to Lender may ultimately be incorporated into the
offering documents for the Securities and thus such information may be disclosed
to various Investors. Anything herein to the contrary notwithstanding, Owner
shall have no liability by reason of the offering or issuance of the Securities;
provided, however, that nothing
<PAGE>
herein shall operate in derogation of any obligation of Owner under the Loan
Documents. The terms and provisions of this Section 21(b) are expressly subject
to the terms and provisions of that certain cooperation letter dated the date
hereof.
(c) Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan and any guaranties executed in
connection therewith resulting in (i) a first and second mortgage on each
Mortgage Property, (ii) individual (uncrossed) mortgage loans, or (iii) subpools
of cross collateralized mortgage loan pools, or any combination of the
foregoing. Owner shall execute and deliver all such instruments, documents and
other papers, and do or cause to be done all such acts and things as Lender may
reasonably request in order to effect such splitter and severance. In no event
shall any such splitter and severance expand or increase Owner's liability or
obligations hereunder, and Owner shall pay all costs and expenses in connection
with this Subsection 21(c), including Owner's attorneys' fees and expenses, but
Lender agrees to pay for Lender's legal counsel costs. Notwithstanding the
foregoing, Owner shall not be obligated to amend or modify any Loan Documents if
same would change the effective Applicable Interest Rate (as defined in the
Note), the Maturity Date, the effective amortization of principal as set forth
in the Note, or otherwise amend or modify any other material economic term of
the Loan Documents.
22. RECORDING OF MORTGAGE
Owner forthwith upon the execution and delivery of this Agreement and
thereafter, from time to time, will cause the Mortgage, and any security
instrument creating a lien or security interest or evidencing the lien thereof
upon the Mortgaged Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien or security interest thereof upon, and the interest of Lender
in, the Mortgaged Property. Owner will pay all filing, registration or recording
fees, taxes, and all expenses incident to the preparation, execution and
acknowledgment of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property and any instrument of further
assurance, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property or any instrument of further
assurance, except where prohibited by law so to do. Owner shall hold harmless
and indemnify Lender, its successors and assigns, against any liability incurred
by reason of the imposition of any tax on the making and recording of the
Mortgage.
23. REPORTING REQUIREMENTS
Owner agrees to give prompt notice to Lender of the insolvency or
bankruptcy filing of Owner or any constituent thereof, or the death, insolvency
or bankruptcy filing of any Guarantor. Owner covenants and agrees to give Lender
written notice of a change of the principal place of business of Owner within 30
days of the change of the principal place of business set forth in Subsection
10(s) above.
24. EVENTS OF DEFAULT
The term "Event of Default" as used herein shall mean the occurrence or
<PAGE>
happening, at any time and from time to time, of any one or more of the
following:
(a) if any portion of the Debt is not paid prior to the date such
payment is due or if the entire Debt is not paid on or before the Maturity Date
pursuant to the Note and the other Loan Documents;
(b) subject to Owner's right to contest as provided herein, if any of
the Taxes are not paid when due and payable, or if any Other Charges are not
paid prior to delinquency;
(c) if the Policies are not kept in full force and effect, or if the
Policies or certificates thereof are not delivered to Lender upon request;
(d) if Owner transfers or encumbers any portion of the Mortgaged
Property in a manner inconsistent with the terms of Section 13 of this Agreement
or if Owner does not comply with the provisions of Sections 7(r), 9, 11 and
64(d) hereof;
(e) if any representation or warranty of Owner, or of any Guarantor,
made herein, in any Loan Document, any guaranty, including the Guaranty, or in
any certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material respect
when made;
(f) if Owner or any Guarantor shall make an assignment for the benefit
of creditors, or if Borrower shall generally not be paying its debts as they
become due;
(g) if a receiver, liquidator or trustee of Owner or of any Guarantor
shall be appointed, or if Owner or any Guarantor shall be adjudicated a bankrupt
or insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Owner or any
Guarantor or if any proceeding for the dissolution or liquidation of Owner or of
any Guarantor shall be instituted; provided, however, that such appointment,
adjudication, petition or proceeding, if involuntary and not consented to by
Owner or such Guarantor, shall constitute an Event of Default only if not being
discharged, stayed or dismissed within 90 days;
(h) if Owner shall be in default under any Ground Lease or if Owner or
Guarantor shall be in default under any other mortgage or security agreement
including, without limitation the loan documents evidencing the Permitted FF&E
Financing or the Subordinate Mortgage or the Subordination and Intercreditor
Agreement executed in connection therewith, covering any part of the Mortgaged
Property, whether it be superior or junior in lien to the Mortgage, which
default continues beyond applicable notice and grace periods, if any;
(i) subject to Owner's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's or other
lien except a lien for local real estate taxes and assessments not then due and
payable and not bonded or dismissed within 30 days;
(j) if Owner fails to cure promptly or to proceed diligently and in
accordance with prudent business practices to cure any violations of laws or
ordinances affecting the Mortgaged
<PAGE>
Property, except violations which, individually or in the aggregate, shall not
cause a material adverse effect on (i) the Mortgaged Property, (ii) the
business, profits, prospects, management, operations or condition (financial or
otherwise) of Owner, (iii) the enforceability, validity, perfection or priority
of the lien of the Loan Documents, or (iv) the ability of the Borrower to
perform its obligations under the Loan Documents (a "Material Adverse Effect");
(k) except as permitted in this Agreement, the alteration,
improvement, demolition or removal of any of the Improvements without the prior
written consent of Lender;
(l) if there shall occur any damage to the Mortgaged Property in any
manner which is not covered by insurance solely as a result of Owner's failure
to maintain insurance required in accordance with this Agreement, which damage
is not promptly repaired to Lender's satisfaction at Owner's cost and expense;
(m) if without Lender's prior written consent: (i) the manager under
the Management Agreement (or any succeeding FF&E Replacement Management
Agreement) resigns or is removed; (ii) except as permitted hereunder, the
ownership, management or control of such manager is transferred to any person or
entity; or (iii) there is any material change in or termination of the
Management Agreement (or any succeeding FF&E Replacement Management Agreement);
(n) if without Lender's prior written consent, there is any material
adverse change in the Franchise Agreement (or any succeeding FF&E Replacement
Franchise Agreement);
(o) if a default has occurred and continues beyond any applicable cure
period under the Management Agreement if such default permits a party to
terminate or cancel the Management Agreement or such Management Agreement
expires pursuant to its terms and is not replaced with a FF&E Replacement
Management Agreement in accordance with the terms hereof;
(p) if a default has occurred and continues beyond any applicable cure
period under the Franchise Agreement if such default permits a party to
terminate or cancel the Franchise Agreement, and the franchisor thereunder has
initiated some affirmative action with respect to such default or such Franchise
Agreement expires pursuant to its terms and is not replaced with a FF&E
Replacement Franchise Agreement in accordance with the terms hereof;
(q) if Owner ceases to operate a hotel on the Mortgaged Property or
terminates such business for any reason whatsoever (other than temporary
cessation in connection with any renovations to the Mortgaged Property or
restoration of the Mortgaged Property after casualty or condemnation);
(r) if Owner owns a leasehold interest in the Mortgaged Property, if
Owner shall fail in the payment of any rent, additional rent or other charge
mentioned in or made payable by the Ground Lease when said rent or other charge
is due and payable;
(s) if Owner owns a leasehold interest in the Mortgaged Property, if
there shall occur any default by Owner, as tenant under the Ground Lease, in the
observance or performance of any term, covenant or condition of the Ground Lease
on the part of Owner to be observed or performed and said default is not cured
following the expiration of any applicable grace and notice periods therein
provided, or if the leasehold estate created by the Ground Lease shall be
surrendered or the Ground Lease shall be terminated or cancelled for any reason
or under any circumstances whatsoever, or if any of the terms, covenants or
conditions of the Ground Lease shall in any manner
<PAGE>
be modified, changed, supplemented, altered, or amended without the consent of
Lender;
(t) if Owner terminates or cancels the Franchise Agreement or operates
the Mortgaged Property under the name of any hotel chain or system other than
the respective franchises set forth on Schedule A hereto, without Lender's prior
written consent;
(u) if there shall be a breach or a default under the terms and
provisions of the Guaranty or the Canadian Loan Documents;
(v) if a foreclosure action or such other enforcement action is
commenced with respect to the mechanic's liens filed as of the date hereof by
Hospitality Restoration and Builders, Inc. ("HRB") against the following
Mortgaged Properties in the following respective amounts: (i) the Clarion
Property in the amount of $1,641,038, (ii) the Property shown as No. 58 on
Schedule A (the "Jamestown Property") in the amount of $1,137,006, (iii) the
Property shown as No. 61 on Schedule A ("Grand Island Property') in the amount
of $1,773,349.00, (iv) the Property shown as No. 60 on Schedule A (the "HI
Niagara") in the amount of $2,022,060, (v) the Property shown as No. 83 on
Schedule A ("Ramada Houston") in the amount of $1,590,782 and (vi) the Property
shown as No. 29 on Schedule A ("HI Rolling Meadows") in the amount of $970,930
(collectively, the "Mechanic's Liens") unless such Mechanic's Liens are released
from the applicable Mortgaged Property by bonding or otherwise on or prior to
the commencement of such foreclosure action or enforcement action;
(w) if there shall be a default under the Lehman Note and Mortgage
relating to the Cedar Rapids Property; or
(x) if for more than 30 days after receipt of notice from Lender,
Owner shall continue to be in default under any term, covenant, or condition of
this Agreement, the Assignment, the Mortgage, the Environmental Agreement or any
of the other Loan Documents other than as specified in any of subsections (a)
through (v) of this Section; provided, however, that if the cure of any such
default cannot reasonably be cured within such 30 day period and Owner shall
have promptly and diligently commenced to cure such default within such 30 day
period, then the period to cure shall be deemed extended for up to an additional
60 days from Lender's default notice so long as Owner diligently and
continuously proceeds to cure such default to Lender's satisfaction.
Notwithstanding anything to the contrary herein, (i) an Event of Default
under any Note and any Mortgage relating to the Mortgaged Properties (other than
the Clarion Note (defined in Section 72) and the Clarion Mortgage (defined in
Section 72)) shall not trigger an Event of Default under the Clarion Note and
the Clarion Mortgage, (ii) an Event of Default under any Note and any Mortgage
relating to the Mortgaged Properties (other than the Omni Note and the Mortgage
encumbering the Mortgaged Property shown as Property No. 13 on Schedule A (the
"Omni West Palm Beach Mortgage")) shall not trigger an Event of Default under
the Omni Note and the Omni West Palm Beach Mortgage; (iii) an Event of Default
under any Note and any Mortgage relating to the Mortgaged Properties (other than
the Town Center Note and the Mortgage secured thereby encumbering the Mortgaged
Property shown as Property No. 41 on Schedule A (the "Town Center Mortgage"),
shall not trigger an Event of Default under the Town Center Note and the Town
Center Mortgage; further, provided, however, (iv) Lender shall be entitled to
all rights and remedies under the Note, the Mortgage and the Loan Agreement
(other than the Omni Note and the Omni West Palm Beach Mortgage and the Town
Center Note and the Town Center Mortgage) due to an Event
<PAGE>
of Default under the Clarion Note and the Clarion Mortgage, (v) Lender shall be
entitled to all rights and remedies under the Note, the Mortgage and the Loan
Agreement (other than the Clarion Note and the Clarion Mortgage and the Town
Center Note and the Town Center Mortgage) due to an Event of Default under the
Omni Note and the Omni West Palm Beach Mortgage, and (vi) Lender shall be
entitled to all rights and remedies under the Note, the Mortgage and the Loan
Agreement (other than the Clarion Note and the Clarion Mortgage and the Omni
Note and the Omni West Palm Beach Mortgage) due to an Event of Default under the
Town Center Note and the Town Center Mortgage and no default under any other
note, deed of trust or Additional Security Instruments (as defined in the Town
Center Mortgage) or any loan agreement (other than a breach or default in the
representations and covenants contained in this Loan Agreement which pertain to
the Town Center Property) shall be considered a default under the Town Center
Note and Town Center Mortgage.
25. LATE PAYMENT CHARGE; SERVICING FEES
(a) If any portion of the Debt is not paid on or prior to the date such
payment is due (but not including the payment of the principal balance due on
the Maturity Date) other the Debt which is evidenced by the Note listed as
number 18 on Schedule C (the "North Carolina Note"), in which case, if any
portion of the Debt evidenced by the North Carolina Note is not paid prior to
the fifteenth (15th) day after the date such payment is due, Borrower shall pay
to Lender upon demand an amount equal to five (5%) percent of such overdue
portion of the Debt, to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment, and such amount shall be secured by the
Mortgage, the Assignment, the Environmental Agreement and the other Loan
Documents.
(b) Owner shall pay all fees to the Servicer in respect of servicing the
Loan not to exceed eight (8) basis points of the Loan.
26. RIGHT TO CURE DEFAULTS
Upon the occurrence of any Event of Default or, upon notice, if Owner fails
to make any payment or to do any act as herein provided, Lender may, but without
any obligation to do so and without releasing Owner from any obligation
hereunder, take such action as Lender may deem necessary to protect its security
for the Loan. Lender is authorized to enter upon the Mortgaged Property for such
purposes or to appear in, defend, or bring any action or proceeding to protect
its interest in the Mortgaged Property or to foreclose the Mortgage or collect
the Debt, and the cost and expense thereof (including Lender's attorneys' fees
(including on appeal) to the extent permitted by law), with interest at the
Default Rate for the period after notice from Lender that such cost or expense
was incurred to the date of payment to Lender, shall constitute a portion of the
Debt, shall be secured by the Mortgage, the Assignment, the Environmental
Agreement and the other Loan Documents and shall be due and payable to Lender
upon demand. Notwithstanding anything to the contrary herein, this Section 26
shall be subject to the provisions of any applicable Ground Lease.
<PAGE>
27. REMEDIES
(a) Upon the occurrence of any Event of Default, Lender may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Owner and in and to the Mortgaged Property by Lender itself
or otherwise including, without limitation, the following actions, each of which
may be pursued concurrently or otherwise, at such time and in such order as
Lender may determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or nonjudicial, by
advertisement or otherwise, for the complete foreclosure of the Mortgage in
which case the Mortgaged Property or any interest therein may be sold for cash
or otherwise in one or more parcels or in several interests or portions and in
any order or manner;
(iii) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the partial
foreclosure of the Mortgage for the portion of the Debt then due and payable,
subject to the continuing lien of the Mortgage for the balance of the Debt not
then due;
(iv) sell for cash or otherwise the Mortgaged Property or any part thereof
and all estate, claim, demand, right, title and interest of Owner therein and
rights of redemption thereof, pursuant to the power of sale contained herein or
otherwise, at one or more sales, as an entity or in parcels, at such time and
place, upon such terms and after such notice thereof as may be required or
permitted by law;
(v) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Assignment, the Environmental Agreement, the other Loan Documents or in the
Note;
(vi) recover judgment on the Note and/or the Guaranty either before, during
or after any proceedings for the enforcement of the Mortgage;
(vii) apply for the appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without notice and without regard for the
adequacy of the security for the Debt and without regard for the solvency of
Owner, any Guarantor or of any person, firm or
<PAGE>
other entity liable for the payment of the Debt;
(viii) revoke the license granted to Owner to collect the Rents and other
sums due under the Leases and enforce Lender's interest in the Leases and Rents
and enter into or upon the Mortgaged Property, either personally or by its
agents, nominees or attorneys and dispossess Owner and its agents and servants
therefrom, and thereupon Lender may to the maximum extent permitted, or not
restricted, under applicable law: (A) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the
Mortgaged Property and conduct the business thereat; (B) complete any existing
or ongoing construction on the Mortgaged Property in such manner and form as
Lender deems advisable; (C) make alterations, additions, renewals, replacements
and improvements to or on the Mortgaged Property; (D) exercise all rights and
powers of Owner with respect to the Mortgaged Property, whether in the name of
Owner or otherwise including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect
and receive all earnings, revenues, rents, issues, profits and other income of
the Mortgaged Property and every part thereof; and (E) apply the receipts from
the Mortgaged Property to the payment of the Debt, after deducting therefrom all
expenses (including Lender's attorneys' fees (including on appeal)) incurred in
connection with the aforesaid operations and all amounts necessary to pay the
taxes, assessments insurance and other charges in connection with the Mortgaged
Property, as well as just and reasonable compensation for the services of
Lender, its counsel, agents and employees;
(ix) require Owner to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the use
and occupancy of any portion of the Mortgaged Property occupied by Owner and
require Owner to vacate and surrender possession of the Mortgaged Property to
Lender or to such receiver and, in default thereof, evict Owner by summary
proceedings or otherwise;
(x) require a Lockbox Account pursuant to Section 66 hereof and apply all
sums in the Lockbox Account to the payment of the Debt, in such order and
priority as determined by Lender in Lender's sole discretion; and
(xi) pursue such other rights and remedies as may be available at law or in
equity or under the Uniform Commercial Code.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, the Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this Section,
together with any other sums which then may be held by Lender under this
Agreement, whether under the provisions of this Section or otherwise, shall be
applied by Lender to the payment of the Debt in such priority and proportion as
Lender in its sole discretion shall deem proper.
(c) Lender may adjourn from time to time any sale by it to be made under or
by virtue of the Mortgage by announcement at the time and place appointed for
such sale or for such adjourned sale or sales; and, except as otherwise provided
by any applicable provision of law, Lender, without further notice or
publication, may make such sale at the time and place to which such sale shall
be so adjourned.
<PAGE>
(d) Upon the completion of any sale or sales pursuant hereto, Lender or an
officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. Lender is hereby
irrevocably appointed the true and lawful attorney-in-fact of Owner, to act in
its name and stead (such power of attorney being coupled with an interest, and
irrevocable), to make all necessary conveyances, assignments, transfers and
deliveries of the Mortgaged Property and rights so sold and for that purpose
Lender may execute all necessary instruments of conveyance, assignment and
transfer, and may substitute one or more persons with like power, Borrower
hereby ratifying and confirming all that its attorney or such substitute or
substitutes shall lawfully do by virtue hereof. Any sale or sales made under or
by virtue of this Section, whether made under the power of sale herein granted
or under or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Owner in
and to the properties and rights so sold, and shall be a perpetual bar both at
law and in equity against Owner and against any and all persons claiming or who
may claim the same, or any part thereof from, through or under Owner.
(e) Upon any sale made under or by virtue of this Section, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Lender may bid
for and acquire the Mortgaged Property or any part thereof and in lieu of paying
cash therefor may make settlement for the purchase price by crediting upon the
Debt the net sales price after deducting therefrom the expenses of the sale and
costs of the action and any other sums which Lender is authorized to deduct
under the Mortgage.
(f) No recovery of any judgment by Lender and no levy of an execution under
any judgment upon the Mortgaged Property or upon any other property of Owner
shall affect in any manner or to any extent the lien of the Mortgage upon the
Mortgaged Property or any part thereof, or any liens, rights, powers or remedies
of Lender hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired as before.
(g) Lender may terminate or rescind any proceeding or other action brought
in connection with its exercise of the remedies provided in this Section at any
time before the conclusion thereof, as determined in Lender's sole discretion
and without prejudice to Lender.
(h) Lender may resort to any remedies and the security given by the Note,
the Mortgage, this Agreement, the Assignment, the Environmental Agreement or the
other Loan Documents in whole or in part, and in such portions and in such order
as determined by Lender's sole discretion. No such action shall in any way be
considered a waiver of any rights, benefits or remedies evidenced or provided by
the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents. The failure of Lender to exercise any
right, remedy or option provided in the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents shall not be
deemed a waiver of such right, remedy or option or of any covenant or obligation
secured by the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents. No acceptance by Lender of
any payment after the occurrence of any Event of Default and no payment by
Lender of any obligation for which Owner is liable hereunder shall be deemed to
waive or cure any Event of Default with respect to Owner, or Owner's liability
to pay such obligation. No sale of all or any portion of the Mortgaged Property,
no forbearance on the part of Lender, and no extension of time for the payment
of the whole or any portion of the Debt or any other indulgence given by Lender
to Owner, shall operate to release or in any manner affect the interest of
Lender
<PAGE>
in the remaining Mortgaged Property or the liability of Owner to pay the Debt.
No waiver by Lender shall be effective unless it is in writing and then only to
the extent specifically stated.
(i) The interests and rights of Lender under the Note, the Mortgage, this
Agreement, the Assignment, the Environmental Agreement or the other Loan
Documents shall not be impaired by any indulgence, including: (i) any renewal,
extension or modification which Lender may grant with respect to any of the
Debt; (ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender may grant with respect to the Mortgaged Property or
any portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, guarantor or surety of any of the Debt.
(j) Anything herein to the contrary notwithstanding, if any of the
foregoing remedies conflict or are otherwise inconsistent with any remedies
available under the Mortgage affecting any portion of the Mortgaged Property (or
as a matter of law in the jurisdiction governing such Mortgage), then to the
extent permitted as a matter of law in the jurisdiction in which any such remedy
is being sought such inconsistency shall be resolved in favor of the
interpretation that would grant Lender the broadest possible remedies.
28. RIGHT OF ENTRY
Lender and its agents shall have the right to enter and inspect the
Mortgaged Property during normal business hours upon reasonable notice.
29. SECURITY AGREEMENT
This Agreement is a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Owner in the Mortgaged Property. By executing and delivering this Agreement,
Owner has granted and thereby grants to Lender, as security for the Debt, a
security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (such portion
of the Mortgaged Property so subject to the Uniform Commercial Code being called
in this Section the "Collateral"). Owner hereby agrees with Lender to execute
and deliver to Lender, in form and substance satisfactory to Lender, such
financing statements and such further assurances as Lender may from time to
time, reasonably consider necessary to create, perfect or preserve Lender's
security interest therein granted. The Mortgage shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code. All or part of the
Mortgaged Property are or are to become fixtures. If an Event of Default shall
occur, Lender, in addition to any other rights and remedies which they may have,
shall have and may exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under the Uniform
Commercial Code including, without limitation, the right to take possession of
the Collateral or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender, Owner shall at its expense assemble the
Collateral and make it available to Lender at a convenient place acceptable to
Lender. If Lender retains counsel to enforce its rights hereunder, Owner shall
pay to Lender on demand any and all expenses, including Lender's attorneys' fees
(including on appeal), incurred or paid by Lender in protecting the interest in
the Collateral and in enforcing the rights hereunder with respect to the
Collateral. Any notice of sale, disposition or other intended action by Lender
with respect to the Collateral sent to Owner in accordance with the provisions
hereof at least 10 days prior to such action, shall constitute commercially
reasonable notice to Owner. The proceeds of any disposition of the Collateral,
or any part thereof, may be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper. In the
event of
<PAGE>
any change in name, identity or structure of any Owner, such Owner shall notify
Lender thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Lender's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If Lender
shall require the filing or recording of additional Uniform Commercial Code
forms or continuation statements, Owner shall, promptly after request, execute,
file and record such Uniform Commercial Code forms or continuation statements as
Lender shall deem necessary, and shall pay all expenses and fees in connection
with the filing and recording thereof, it being understood and agreed, however,
that no such additional documents shall increase Owner's obligations under the
Note, the Mortgage, this Agreement, the Assignment, the Environmental Agreement
and the other Loan Documents. Owner hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Lender, as
secured party, in connection with the Collateral covered by the Mortgage.
30. ACTIONS AND PROCEEDINGS
Lender has the right to appear in and defend any action or proceeding
brought with respect to the Mortgaged Property upon an Event of Default or in
which Owner fails to appear or defend, and upon an Event of Default, to bring
any action or proceeding, in the name and on behalf of Owner, which Lender, in
its discretion, decides should be brought to protect its interest in the
Mortgaged Property. Lender shall, at its option, be subrogated to the lien of
any mortgage or other security instrument discharged in whole or in part by the
Debt, and any such subrogation rights shall constitute additional security for
the payment of the Debt.
31. WAIVER OF SETOFF AND COUNTERCLAIM
All amounts due under the Mortgage, the Note and the other Loan Documents
shall be payable without setoff, counterclaim or any deduction whatsoever. Owner
hereby waives the right to assert a counterclaim (other than compulsory
counter-claims) in any action or proceeding brought against it by Lender, or
arising out of or in any way connected with this Agreement, the Mortgage, the
Note, any of the other Loan Documents, or the Debt.
32. CONTEST OF CERTAIN CLAIMS
Notwithstanding the provisions of Sections 5 and 24(i) hereof, Owner shall
not be in default for failure to pay or discharge Taxes, Other Charges or a
mechanic's or materialman's lien asserted against the Mortgaged Property if, and
so long as: (a) Owner shall have notified Lender of such nonpayment and the
reasons therefor within 10 days of obtaining knowledge thereof; (b) Owner shall
diligently and in good faith contest such Taxes, Other Charges or lien by
appropriate legal proceedings which shall operate to prevent the enforcement or
collection thereof and the sale of the Mortgaged Property or any part thereof,
in satisfaction thereof; (c) Owner shall have furnished to Lender a cash
deposit, or an indemnity bond satisfactory to Lender with a surety satisfactory
to Lender, in the amount of the Taxes, other Charges or mechanic's or
materialman's lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Mortgaged Property or any part thereof (which sums shall be
<PAGE>
deposited into an interest-bearing account); (d) Owner shall promptly upon final
determination thereof pay the amount of any such Taxes, Other Charges or claim
so determined, together with all costs, interest and penalties which may be
payable in connection therewith; and (e) the failure to pay the Taxes, Other
Charges or mechanic's or materialman's lien claim does not constitute a default
under any other deed of trust, mortgage or security interest covering or
affecting any part of the Mortgaged Property. Notwithstanding the foregoing,
Owner shall immediately upon request of Lender pay (and if Owner shall fail so
to do, Lender may, but shall not be required to, pay or cause to be discharged
or bonded against) any such Taxes, Other Charges or claim notwithstanding such
contest, if in the reasonable opinion of Lender, the Mortgaged Property or any
part thereof or interest therein may be in danger of being sold, forfeited,
foreclosed, terminated, canceled or lost. Lender may pay over any such cash
deposit or part thereof to the claimant entitled thereto at any time when, in
the judgment of Lender, the entitlement of such claimant is established.
33. RECOVERY OF SUMS REQUIRED TO BE PAID
Lender shall have the right from time to time to take action to recover any
sum or sums which constitute a part of the Debt as they become due, without
regard to whether or not the balance of the Debt shall be due, and without
prejudice to the right of Lender thereafter to bring an action of foreclosure,
or any other action, for a default or defaults by Owner existing at the time
such earlier action was commenced.
34. MARSHALLING AND OTHER MATTERS
(a) Owner hereby waives, to the extent permitted by law, the benefit of all
appraisement, valuation, stay and extension laws now or hereafter in force, and
all rights of marshalling in the event of any sale hereunder of the Mortgaged
Property or any part thereof or any interest therein. Further, to the extent
permitted by applicable law, Owner hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of the Mortgage on
behalf of Owner, and on behalf of each and every person acquiring any interest
in or title to the Mortgaged Property subsequent to the date of this Agreement
and on behalf of all persons to the extent permitted by applicable law.
(b) With respect to the Mortgaged Properties located in South Carolina
only:
Waiver of Appraisal Rights. The laws of the State of South Carolina provide
that in any real estate foreclosure proceeding, a defendant against whom a
personal judgment is taken or asked may within thirty (30) days after the sale
of the Premises apply to the court for an order of appraisal. The statutory
appraisal value as approved by the court would be substituted for the high bid
and may decrease the amount of any deficiency owing in connection with the
transaction. THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY
APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE PREMISES.
<PAGE>
35. INTENTIONALLY OMITTED
36. INTENTIONALLY OMITTED
37. INTENTIONALLY OMITTED
38. MANAGEMENT OF THE HOTEL
Owner further covenants and agrees with Lender as follows:
(a) Owner shall cause each hotel located on the Mortgaged Property to be
operated pursuant to the applicable Franchise Agreement. The Mortgaged Property
will be operated at all times by the Manager or by a Qualified Manager (defined
below) pursuant to a Management Agreement or a Replacement Management Agreement
(defined below) as in accordance with the Franchise Agreement, Owner's standards
and practices as of the date hereof, and at a minimum in accordance with the
prevailing standards for hotel properties of similar age, site, construction in
the metropolitan area where such hotel is located. For purposes hereof, a
"Qualified Manager" shall mean a reputable and experienced professional
management organization (i) which manages, together with its affiliates, (A) at
least ten (10) full-service hotels, exclusive of the Mortgaged Property, and
(ii) prior to whose employment as manager of the Mortgaged Property (x) such
employment shall have been approved by Lender, and (y) the Owner shall have
obtained and delivered to Lender written confirmation from the Rating Agencies
that the employment of such manager will not result in a downgrade, withdrawal
or qualification of the ratings then assigned to the Securities. Without
limitation of the foregoing, if (i) the Manager shall become insolvent, (ii) the
Manager shall default under the terms of the Management Agreement, (iii) an
Event of Default shall occur and be continuing or (iv) the Aggregate Debt
Service Coverage Ratio shall be equal to or less than the ratio of 1.35 to 1.00,
then Lender, at its option, may require Owner, to terminate the Management
Agreement and to engage a bona-fide, independent third party Qualified Manager
approved by Lender to manage the Mortgaged Property. The Qualified Manager shall
be engaged by Owner pursuant to a written management agreement that complies
with the terms hereof and is otherwise reasonably satisfactory to Lender in all
respects (a "Replacement Management Agreement"), and the Qualified Manager,
Owner shall execute a Conditional Assignment of Management Agreement in the form
then used by Lender.
(b) Owner shall:
(i) pay all sums required to be paid by Owner under the Franchise Agreement
and the Management Agreement and promptly perform and/or observe all of the
covenants and agreements required to be performed and observed by it under the
Franchise Agreement and the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder;
(ii) promptly notify Lender of any default under the Franchise Agreement or
the Management Agreement of which it is aware and provide Lender with copies of
any notices delivered in connection therewith;
(iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, notice, report and estimate received
by it under the Franchise
<PAGE>
Agreement or the Management Agreement;
(iv) promptly enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by the
franchisor under the Franchise Agreement and the manager under the Management
Agreement;
(v) assign to Lender any right it may have to modify the Franchise
Agreement (to the extent such rights are assignable) or the Management
Agreement;
(vi) grant Lender the right, but Lender shall be under no obligation, upon
an Event of Default (or otherwise upon notice from Lender) to pay any sums and
to perform any act or take any action as may be appropriate to cause all the
terms, covenants and conditions of the Franchise Agreement on the part of Owner
to be performed or observed to be promptly performed or observed on behalf of
Owner, to the end that the rights of Owner in, to and under the Franchise
Agreement shall be kept unimpaired and free from default;
(vii) shall, from time to time, use its best efforts to obtain from the
Manager or the Franchisor, as applicable, under the Management Agreement or
Franchise Agreement, as applicable, such certificates of estoppel with respect
to compliance by Owner with the terms of the Management Agreement or the
Franchise Agreement, as applicable, as may be reasonably requested by Lender;
(viii) exercise each individual option, if any, to extend or renew the term
of the Franchise Agreement upon demand by Lender made at any time within one
year of the last day upon which any such option may be exercised, and Owner
hereby expressly authorizes and appoints Lender its attorney-in-fact to
exercise, upon an Event of Default, any such option in the name of and upon
behalf of Owner, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest.
(c) Owner shall not, without Lender's prior written consent: (i) surrender,
terminate or cancel the Franchise Agreement or the Management Agreement; (ii)
reduce or consent to the reduction of the term of the Franchise Agreement or the
Management Agreement; (iii) increase or consent to the increase of the amount of
any charges under the Franchise Agreement or the Management Agreement; (iv)
otherwise modify, change, supplement, alter or amend, or waive or release any of
its rights and remedies under the Franchise Agreement or the Management
Agreement in any material respect; or (v) operate the Mortgaged Property under
the name of any hotel chain or system other than as set forth on Schedule A with
respect to each hotel comprising the Mortgaged Property. Notwithstanding
foregoing, Owner may replace the Franchisor with a Qualified Franchisor (defined
below) pursuant to a franchise agreement which is otherwise in compliance with
the requirements of this Section 38 and provided that Owner shall have obtained
and delivered to Lender written confirmation from the Rating Agencies that the
employment of such franchisor will not result in a downgrade, withdrawal or
qualification of the ratings then assigned to the Securities (a "Replacement
Franchise Agreement"). For purposes hereof, a "Qualified Franchisor" shall mean
a nationally recognized franchisor under whose flag there are at least fifty
(50) full-service hotels, exclusive of the Mortgaged Property which has been
approved by Lender.
(d) Except as set forth in the Management Agreement, Owner shall not,
without Lender's prior written consent, enter into transactions with any
affiliate including, without limitation, any arrangement providing for the
management of the hotel on the Mortgaged Property,
<PAGE>
the rendering or receipt of services or the purchase or sale of inventory,
except any such transaction in the ordinary course of business of Owner if the
monetary or business consideration arising therefrom would be substantially as
advantageous to Owner as the monetary or business consideration which would
obtain in a comparable transaction with a person not an affiliate of Owner.
(e) Owner irrevocably authorizes and directs Franchisor, from and after an
Event of Default, to deliver to Lender: (i) all operating information concerning
the Mortgaged Property submitted by Owner to Franchisor; (ii) the written
results of all quality assurance inspections of the Mortgaged Property performed
by Franchisor's Quality Assurance Directors; and (iii) such other information
that Lender or Lender's agents may reasonably request, from time to time,
including any information in the possession of Franchisor relating to Owner not
included in the reports referred to above; provided, however, that in the
absence of an Event of Default Lender shall obtain any such information only
from Owner.
(f) Notwithstanding anything to the contrary in this Section 38, Lender
acknowledges that the Mortgaged Property listed on Schedule A as Property No. 41
is currently not operated by a Franchisor pursuant to a Franchise Agreement.
Borrower covenants and agrees to enter into a franchise agreement with Crowne
Plaza Hotels, Doubletree Hotels, Radisson Hotels or Sheraton Hotels on or before
March 31, 1999, which franchise agreement and franchisor shall be acceptable to
Lender in all respects and shall otherwise meet the criteria set forth above in
Subsection (c).
(g) Notwithstanding the foregoing, Lender acknowledges that the hotels on
Property Nos. 59, 60 and 83 listed on Schedule A, are currently being converted
into hotels which shall operate under the "flags" listed on Schedule A under the
heading "Franchisor". Owner covenants that such conversion of the respective
hotels shall occur on or before the following dates: (i) Property No. 59, March
31, 1999 (provided during the conversion period, the current "flag" (Clarion)
remains in place until March 31, 1999), (ii) Property No. 60, December 31, 1998,
and (iii) Property No. 83, March 31, 1999 (provided during the conversion period
the current "flag" (Ramada) remains in place until March 31, 1999).
39. HANDICAPPED ACCESS
(a) Owner agrees that the Mortgaged Property shall at all times strictly
comply to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "Access
Laws"). Notwithstanding the foregoing, Lender acknowledges that Property No. 41
on Schedule A is not currently in compliance with the Access Laws, but shall
commence the necessary work in order to bring such Mortgaged Property into
compliance with the Access Laws, including without limitation, the creation of
seven (7) ADA compliant rooms and three (3) roll-in showers as set forth on
Schedule D attached hereto on or before October 1, 1999, which work shall be
acceptable to Lender in all respects.
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged Property,
Owner shall not alter the
<PAGE>
Mortgaged Property in any manner which would increase Owner's responsibilities
for compliance with the applicable Access Laws without the prior written
approval of Lender. The foregoing shall apply to tenant improvements constructed
by Borrower or by any of its tenants. Lender may condition any such approval
upon receipt of a certificate of Access Law compliance from an architect,
engineer or other person acceptable to Lender.
(c) Owner agrees to give prompt notice to Lender of the receipt by Owner of
any complaints related to violation of any Access Laws and of the commencement
of any proceedings or investigations which relate to compliance with applicable
Access Laws.
40. ERISA
(a) Owner covenants and agrees that it shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, the Mortgage, this
Agreement and the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974 (or any successor legislation thereto),
as amended ("ERISA").
(b) Owner further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of this
Agreement, as requested by Lender in its sole discretion, that: (i) Owner is not
an "employee benefit plan" as defined in Section 3(3) of ERISA, which is subject
to Title I of ERISA, or a "governmental plan" within the meaning of Section
3(32) of ERISA; (ii) Owner is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(iii) one or more of the following circumstances is true:
(A) Equity interests in Owner are publicly offered securities, within the
meaning of 29 C.F.R. ss. 2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of equity interests in
Owner are held by "benefit plan investors" within the meaning of 29 C.F.R. ss.
2510.3-101(f)(2); or
(C) Owner qualifies as an "operating company" or a "real estate operating
company" within the meaning of 29 C.F.R. ss. 2510.3-101(c) or (e) or an
investment company registered under The Investment Company Act of 1940.
41. INDEMNIFICATION
(a) In addition to any other indemnifications provided herein, in the
Assignment, the Environmental Agreement or in the other Loan Documents, Owner
shall protect,
<PAGE>
defend, indemnify and save harmless Lender from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including, without limitation, out-of-pocket
attorneys' fees and expenses (including on appeal)), imposed upon or incurred by
or asserted against Lender by reason of: (i) ownership of the Mortgage, the
Mortgaged Property or any interest therein or receipt of any Rents; (ii) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (iii) any use, nonuse or condition in, on or about the Mortgaged
Property or any part thereof or on adjoining sidewalks, curbs, adjacent property
or adjacent parking areas, streets or ways; (iv) any failure on the part of
Owner to perform or comply with any of the terms of this Agreement; (v)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Mortgaged Property or any part thereof; (vi) the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release, or threatened release of any Hazardous Substance or Asbestos on, from,
or affecting the Mortgaged Property or any other property; (vii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Substance or Asbestos; (viii) any lawsuit
brought or threatened, settlement reached, or government order relating to such
Hazardous Substance or Asbestos; (ix) any violation of the Environmental Laws,
which are based upon or in any way related to such Hazardous Substance or
Asbestos including, without limitation, the costs and expenses of any remedial
action, out-of-pocket attorney's and consultant's fees (including on appeal),
investigation and laboratory fees, court costs, and litigation expenses; (x) any
failure of the Mortgaged Property to comply with any Access Laws; (xi) any
representation or warranty made in the Note, the Mortgage, this Agreement, the
Environmental Agreement or the other Loan Documents being false or misleading in
any material respect, or otherwise in any respect if made willfully or
knowingly, as of the date such representation or warranty was made; (xii) any
claim by brokers, finders or similar persons claiming to be entitled to a
commission in connection with any Lease or other transaction involving the
Mortgaged Property or any part thereof under any legal requirement or any
liability asserted against Lender with respect thereto; (xiii) the claims of any
lessee of all or any portion of the Mortgaged Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; (xiv) correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in Lender's sole discretion) that
Lender may incur, directly or indirectly, as a result of a default under
Sections 10(t) or 40; and (xv) any tax in the making and/or recording of the
Mortgage, the Note or the other Loan Documents. Any amounts payable to Lender by
reason of the application of this Section shall be immediately due and payable,
shall be secured by the Mortgage and shall bear interest at the Default Rate
from the date loss or damage is sustained by Lender until paid. The obligations
and liabilities of Owner under this Section shall survive any termination,
satisfaction or assignment of this Agreement or the entry of a judgment of
foreclosure, sale of the Mortgaged Property by nonjudicial foreclosure sale, or
delivery of a deed in lieu of foreclosure. The indemnification provided for
herein shall not apply to liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses imposed upon or
incurred by or asserted against Lender by reason of Lender's willful acts or
Lender's gross negligence or for any matters arising from a state of facts first
coming into existence after Lender's succession to possession of the Mortgaged
Property.
(b) Any indemnitee making a claim for indemnification hereunder shall
notify Owner of the claim in writing promptly after receiving written notice of
any action, lawsuit, proceedings, investigation or other claim against it
describing the claim, the amount thereof (if known and quantifiable) and the
basis thereof.
<PAGE>
(c) Owner shall be entitled to participate in the defense of the action,
lawsuit, proceeding, investigation or other claim giving rise to such claim of
indemnification at its expense and at its option and shall be entitled to
appoint counsel in such defense with such counsel reasonably acceptable to
Lender.
(d) Lender shall be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose, the fees and expenses of
such separate counsel to be borne by Lender. Owner shall obtain the prior
written consent of Lender (not to be unreasonably withheld) before entering into
any settlement of a claim or ceasing to defend such claim, if pursuant to or as
a result of such settlement or cessation, injunction or other equitable relief
will be imposed against Lender or if such settlement does not expressly
unconditionally release Lender from all liabilities and obligations with respect
to such claim.
(e) In the event Owner elects not to participate in the defense of such
claim Lender shall have the right to control the defense of such claim and make
any compromise or settlement thereof, which in the sole judgment of Lender is
exercised in a commercially reasonable manner, which shall be binding upon Owner
following Owner's receipt of notice of such settlement and Owner's consent to
such settlement, which shall not be unreasonably withheld.
42. NOTICE
Any notice, demand, statement, request or consent made hereunder shall be
in writing and shall be deemed given on the next business day if sent by Federal
Express or other reputable overnight courier and designated for next business
day delivery, or on the third day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, addressed to the address, as set forth above, of the party to whom
such notice is to be given, or to such other address or additional party as
Owner or Lender, as the case may be, shall in like manner designate in writing.
43. AUTHORITY
Owner represents and warrants that: (a) it has full power, authority and
right to execute, deliver and perform its obligations pursuant to this
Agreement, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm, warrant, pledge, hypothecate and assign the Mortgaged Property pursuant
to the terms hereof and to keep and observe all of the terms of this Agreement
on Owner's part to be performed; (b) Owner is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,
and the related Treasury Department regulations, including temporary regulations
and (c) Owner (i) is duly organized, validly existing and in good standing under
the laws of its state of organization or incorporation, (ii) is duly qualified
to transact business and is in good standing in the state where the Mortgaged
Property is located and (iii) has all of the necessary approvals, governmental
and otherwise, and full power and authority to own and operate the Mortgage
Property. Lender represents and warrants that it has full power, authority and
right to execute, deliver and perform its obligations pursuant to this
Agreement.
44. WAIVER OF NOTICE
Owner shall not be entitled to any notices of any nature whatsoever from
Lender
<PAGE>
except with respect to matters for which this Agreement specifically and
expressly provides for the giving of notice by Lender to Owner and except with
respect to matters for which Lender is required by applicable law to give
notice, and Owner hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement does not specifically
and expressly provide for the giving of notice by Lender to Owner.
45. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender has acted
unreasonably or has unreasonably delayed acting in any case where by law or
under the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents, it has an obligation to act reasonably or
promptly, Lender shall not be liable for any monetary damages, and Owner's
remedies shall be limited to specific performance, injunctive relief or
declaratory judgment.
46. SOLE DISCRETION OF LENDER
Wherever pursuant to this Agreement Lender exercises any right given to it
to approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
47. NON-WAIVER
The failure of Lender to insist upon strict performance of any term hereof
shall not be deemed to be a waiver of any term of this Agreement. Owner shall
not be relieved of Owner's obligations hereunder by reason of: (a) the failure
of Lender to comply with any request of Owner or any Guarantor to take any
action to foreclose the Mortgage or otherwise to enforce any of the provisions
hereof or of the Note, the Assignment, the Guaranty, the Environmental Agreement
or the other Loan Documents; (b) the release, regardless of consideration, of
the whole or any part of the Mortgaged Property, or of any person liable for the
Debt or any portion thereof; or (c) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or supplementing the terms
of the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents. Lender may resort for the payment of the
Debt to any other security held by Lender in such order and manner as Lender, in
its discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclosure the Mortgage. The rights and remedies
of Lender under this Agreement shall be separate, distinct and cumulative and
none shall be given effect to the exclusion of the others. No act of Lender
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. Lender shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
48. NO ORAL CHANGE
<PAGE>
This Agreement, and any provisions hereof, may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by any act or
failure to act on the part of Owner or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
49. LIABILITY
If Owner consists of more than one person, the obligations and liabilities
of each such person hereunder shall be joint and several, and any reference to
the "Mortgaged Property" shall refer to each of the individual hotels comprising
the Mortgaged Property, and to all of such hotels, collectively, as the context
may require. Subject to the provisions hereof requiring Lender's consent to any
transfer of the Mortgaged Property, this Agreement shall be binding upon and
inure to the benefit of Owner and Lender and their respective successors and
assigns forever.
50. INAPPLICABLE PROVISIONS
If any term, covenant or condition of the Note, the Mortgage or this
Agreement is held to be invalid, illegal or unenforceable in any respect, the
Note, the Mortgage and this Agreement shall be construed without such provision.
51. SECTION HEADINGS
The headings and captions of the various Sections of this Agreement are for
convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
52. COUNTERPARTS
This Agreement may be executed in any number of counterparts and each such
duplicate original shall be deemed to be an original.
53. CERTAIN DEFINITIONS
Unless the context clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used in this Agreement may be used
interchangeably in singular or plural form and the word "Owner" shall mean "each
Owner, and each constituent party of Owner, individually, as the context may
require, and any subsequent owner or owners of the Mortgaged Property or any
part thereof or any interest therein", the word "Lender" shall mean "Lender and
any subsequent holder of the Note", the word "Debt" shall mean "the Note and any
other evidence of indebtedness secured by the Mortgage", the word "person" shall
include an individual,
<PAGE>
corporation, partnership, trust, unincorporated association, government,
governmental authority and any other entity, and the words "Mortgaged Property"
shall include any portion of the Mortgaged Property and any interest therein,
and shall refer to each and every property comprising the Mortgaged Property, as
the context may require, and the words "attorneys' fees" shall include any and
all attorneys' fees, paralegal and law clerk fees including, without limitation,
fees at the pretrial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Mortgaged Property and Collateral and enforcing
its rights hereunder. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
54. HOMESTEAD
Owner hereby waives and renounces all homestead and exemption rights
provided by the constitution and the laws of the United States and of any state,
in and to the Premises as against the collection of the Debt, or any part
thereof.
55. ASSIGNMENTS
Lender shall have the right to assign or transfer its rights under this
Agreement without limitation. Any assignee or transferee shall be entitled to
all the benefits afforded Lender under this Agreement. In no event shall any
such assignment release Lender from its obligations hereunder.
56. INTENTIONALLY OMITTED
57. AGENT FOR RECEIPT OF PROCESS
Owner hereby irrevocably appoints Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A. with an address at Museum Tower, Suite 2200, 150 West Flagler
Street, Miami, FL 33130, Attn: Robert I. Weissler, Esq., as its authorized agent
to accept and acknowledge, on behalf of Owner, service of any and all process
which may be served in any suit, action or proceeding of the nature referred to
in Section 60(b) hereof in any State or Federal court within the State of New
York as more particulary set forth in Subsection 60(b) or any County and State
where each of the Mortgaged Properties are located. If such agent shall cease so
to act, Owner shall irrevocably designate and appoint without delay another such
agent satisfactory to Lender, and shall promptly deliver to Lender written
evidence of such other agent's acceptance of such appointment.
58. SERVICE OF PROCESS
To the extent permitted by applicable law, process in any suit, action or
proceeding may be served: (a) by registered or certified mail, postage prepaid,
to Owner at the address set forth above or to such other address of which Owner
shall have given Lender written notice; or (b) if Owner shall not have made an
appearance within 21 days after service in accordance with clause
<PAGE>
(a) of this Section, by hand delivery to the agent identified in Section 57
hereof, or such successor agent as shall have been identified in accordance with
Section 57 hereof. Nothing in this Section shall affect the Lender's right to
serve process in any manner permitted by law, or limit Lender's right to bring
proceedings against Owner in the courts of any other jurisdiction.
59. WAIVER OF JURY TRIAL
OWNER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE,
THE MORTGAGE, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY OWNER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY OWNER.
60. CHOICE OF LAW
(a) This Agreement shall be deemed to be a contract entered into pursuant
to the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York, provided however, that with respect to the creation, perfection, priority
and enforcement of the lien of the Mortgage and the Lockbox Account, and the
determination of deficiency judgments, the laws of the State where the related
Mortgaged Property and the Lockbox Account is located shall apply.
(b) Any legal action or proceeding with respect to this Agreement or any
other Loan Document and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, Owner hereby accepts, each for itself and in respect
of its property, generally and unconditionally, the non-exclusive jurisdiction
of the aforesaid courts and appellate courts from any thereof. Owner irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to Owner at its address set forth on the first
page of this Agreement. Owner hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of Lender, to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Owner in any other jurisdiction.
<PAGE>
61. PROPERTY RELEASES
Subject to the terms and conditions set forth herein, Owner shall have the
right, from time to time, on any Payment Date (as defined in the Note) to obtain
a release (a "Property Release") of a Mortgaged Property from the lien of the
related Mortgage (i) provided that no Event of Default under this Agreement, the
Note, the Mortgage or any other Loan Document has occurred and is continuing and
(ii) subject to compliance with the provisions set forth below in this Section
61, legal, record, economic and beneficial ownership of the Mortgaged Property
for which a Property Release is being requested (the "Release Premises") is
simultaneously with the granting of the Property Release transferred (a "Release
Premises Transfer") to and shall be owned immediately after such Property
Release by a person(s), party(ies) or entity(ies) other than Owner or any
general partner or managing member of Owner or any affiliate of Owner ("Release
Premises Transferee"). In the event that the Owner seeks to release a Mortgaged
Property from the lien of the related Mortgage, Lender shall release such
Mortgaged Property from the lien of the related Mortgage and the Loan Documents,
but only upon receipt by Lender of the following:
(a) At least thirty (30) days but no more than ninety (90) days prior
written notice of Owner's request to obtain a release of the Release Premises;
(b) A certificate of Owner certifying the requirements set forth in
Paragraph 61(h) of this Loan Agreement shall be true after giving effect to such
transfer;
(c) At least three (3) Business Days' prior to such Property Release an
irrevocable notice of prepayment and the Certification from Owner in the form
attached hereto as Exhibit C;
(d) Intentionally Omitted;
(e) A wire transfer of immediately available federal funds in an amount
equal to the sum of (i) the Release Price (defined below) and (ii) all accrued
and unpaid interest with respect to the Note and any other amounts owing to
Lender in connection with the Release Premises pursuant to this Agreement, the
Note, the Mortgage or the other Loan Documents, including without limitation,
the Breakage Costs, the Exit Fee and the Shortfall Interest Payment (each as
defined in the Note);
(f) If applicable, all proposed documents related to the Release Premises
Transferee and such documents, certificates and assurances that Lender shall
reasonably request to evidence and confirm that the Release Premises is
simultaneously with the Property Release being transferred to a Release Premises
Transferee;
(g) Payment of all Lender's costs and expenses, including due diligence
review costs and reasonable counsel fees and disbursements incurred in
connection with the Property Release and the review and approval of the
documents and information required to be delivered in connection therewith
("Property Release Expenses");
(h) Evidence satisfactory to Lender that the Aggregate Debt Service
Coverage Ratio for the twelve (12) month period immediately preceding the
Property Release with respect to the Mortgaged Properties remaining encumbered
by the liens of the Mortgage after giving effect to the Property Release shall
be equal to or greater than the greater of (i) the Aggregate Debt Service
Coverage Ratio with respect to all of the Mortgaged Properties for the twelve
(12) months
<PAGE>
immediately preceding the date hereof (1.42 to 1.00; the "Origination DSCR") or
(ii) the Aggregate Debt Service Coverage Ratio with respect to all of the
Mortgaged Properties then encumbered by the liens of the Mortgage immediately
prior to such release for the twelve (12) months immediately preceding the
calendar month prior to the date of the proposed Property Release (the "Current
DSCR"); and
(i) If Securities are then rated by the Rating Agencies, the written
confirmation of the Rating Agencies that the Property Release shall not result
in a downgrade, withdrawal or qualification of the then current ratings by the
applicable Rating Agencies of the Securities and otherwise in form and substance
reasonably satisfactory to Lender and its counsel.
(j) Definitions:
(i) The term "Release Price" shall mean the greater of : (A) the
"Release Price" for the Release Premises as set forth on Schedule A
attached and (B) 100% of the Net Refinancing/Sales Proceeds (defined below)
relating to the Release Premises.
(ii) The term "Net Refinancing/Sales Proceeds shall mean (A) in the
event of a Sale, the Sales Price or (B) in the event of a refinancing of a
portion of the Loan equal to the Allocated Loan Amount applicable to the
Release Premises, the original principal balance of the loan to be made by
the take-out lender with respect to such Release Premises, less customary
and reasonable expenses incurred, or arms-length origination fees and
expenses paid by the Owner, if applicable.
(iii) The term "Sale" shall mean any bona fide, arms length sale,
transfer, assignment, conveyance or encumbrance of the Release Premises
(including, without limitation, any of the events or transfers described in
Section 13 of this Loan Agreement), provided, however, that in no event
shall a "Sale" be deemed to refer to a sale, transfer or conveyance of the
Release Premises pursuant to: (a) a foreclosure of the Mortgage; (b) a deed
in lieu of such foreclosure (to either Lender, a nominee of Lender or an
independent third party); (c) a sale pursuant to a power of sale; (d) a
sale or other disposition of the Mortgaged Property pursuant to Sections
363, 725 or 1129 of the Bankruptcy Code; or (f) a taking or condemnation of
the Release Premises by any public or quasi-public authority through
eminent domain or otherwise.
(iv) The term "Sale Price" shall mean all consideration paid for the
Sale, including, without limitation, the stated purchase price, cash,
notes, any indebtedness assumed or taken subject to (whether directly or
indirectly), and all other consideration (direct or indirect) to whomever
paid, less customary proration, reasonable arms-length brokerage
commissions and reasonable arms-length selling expenses, including
reasonable attorneys' fees and disbursements and any and all transfer
and/or gains taxes (but in no event to include any income taxes) actually
paid by the seller in connection with the Sale.
<PAGE>
(v) Notwithstanding the foregoing, in the event of a refinancing of a
Mortgaged Property, the Release Price shall always be calculated pursuant
to Subsection 61(j)(i)(B) above.
(k) The Allocated Loan Amounts set forth on Schedule A attached shall not
be reduced as a result of any principal prepayments made in accordance with this
Section 61.
(l) Notwithstanding anything to the contrary in this Section 61 or Section
13 hereof, Owner may (1) convert the Mortgaged Property identified as Property
No. 46 on Schedule A attached hereto to a condominium (the "Condominium
Conversion) pursuant to and in accordance with Condominium Documents delivered
to and approved by Lender in its sole and absolute discretion, and the
Condominium Act and (2) request a release of a portion of the Mortgaged Property
described as the Office Unit in the Declaration (the "Release"); provided the
conditions of this Subsection 61(l) are met. Lender shall consent to the
Condominium Conversion and the Release provided:
(i) Owner has delivered to Lender at least thirty (30) days' prior
written notice of the date of the Condominium Conversion (the "Conversion
Date") and the Release;
(ii) prior to the Conversion Date and the Release, Owner delivers to
Lender, at Owner's cost and expense (A) an endorsement to the existing
title policy insuring the Mortgaged Property as a condominium subject to no
exceptions other than the Permitted Exceptions and the Condominium
Documents, (B) executed Condominium Documents, (C) a proxy by Owner
appointing Lender to vote on its behalf on all matters in the Declaration,
(D) any other documentation reasonably requested by Lender in connection
with the Condominium Conversion and the Release, (E) such other evidence of
Owner's compliance with the Condominium Act, and (F) if a Securitization
has occurred, written confirmation from the Rating Agencies that the
Condominium Conversion and the Release shall not result in a withdrawal,
downgrade or qualification of the then current ratings by the applicable
Rating Agencies of the Securities and otherwise in form and substance
satisfactory to Lender and its counsel;
(iii) no Event of Default exists;
(iv) ingress to and egress from all portions of the Mortgaged Property
of which the Office Unit forms a part remaining after the Release (the
"Remaining Property") shall be over fully dedicated public roads;
(v) Owner shall have obtained: (1) (x) subdivision, zoning, building
and all other governmental approvals necessary or required so that the
Office Unit and the Remaining Property, shall, upon such Release, together
and separately, satisfy and comply, in all material respects and so that
any immaterial non-compliance does not adversely affect the lien of the
Mortgage or the value or utility of the Mortgaged Property as hotel, with
all the applicable subdivision, zoning, building, environmental protection
and all other applicable laws, rules, regulations and federal, state or
local
<PAGE>
requirements, including sewer capacity requirements, or (y) a legal opinion
by counsel reasonably satisfactory to Lender, that the Office Unit and the
Remaining Property are each entitled to be used and occupied as of right
without reference to or reliance on the other parcel (other than the Common
Elements as set forth in the Declaration), and (2) either a legal opinion
by counsel reasonably satisfactory to Lender stating that, or an
endorsement to the title insurance policy insuring the lien of the related
Mortgage insuring that, the Office Unit has been designated, assessed and
taxed as a separate tax lot independent from the Remaining Property;
(vi) prior to the Release, Owner shall prepare and provide to Lender:
(1) condominium plats of all those portions of the Mortgaged Property which
are approved by all governmental and quasi-governmental authorities having
jurisdiction over the Office Unit and/or the Remaining Property, whose
approval as to such plans and maps is required; and (2) copies of each and
all proposed easements and cross-easements and mutual or non-exclusive
easements for ingress, egress, access, pedestrian walkways, parking,
traffic flow, utilities and services and utilities shared by the Remaining
Property and the Office Unit and the like which may be required by any
governmental or quasi-governmental authority having jurisdiction or which
are necessary or advisable;
(vii) such condominium plats shall show such parking structures and
parking layouts as will afford, to the Improvements located on the
Remaining Property, the equivalent of the exclusive use of the aggregate
number of parking spaces to be provided on the Property under all Leases,
if any, affecting the Remaining Property, and the number of parking spaces
required by the then applicable zoning requirements for the Remaining
Property or an opinion of counsel regarding the matters set forth in this
(vii) acceptable to Lender and its counsel in all respects in its
discretion;
(viii) Owner shall provide Lender with such surveys, drawings, plans,
specifications, proposed easements and consents, certificates and
agreements, such legal opinions from attorneys acceptable to Lender and
such other evidence as Lender may reasonably request or require to
determine that the foregoing conditions have been satisfied;
(ix) all Leases, if any, demising any part of the Remaining Property
shall remain in full force and effect and unaffected in any manner as a
result of the Release;
(x) all operating agreements affecting all or any part of the
Remaining Property or the Office Unit shall remain in full force and effect
and remain otherwise unaffected as a result of the Release;
(xi) The applicable Owner shall simultaneously with the Release
transfer title to the Office Unit to a Release Premises Transferee and such
Release Premises Transferee shall assume all obligations and liabilities
(other than those related to the Note, which the Office Unit is being
<PAGE>
released from) related to the Office Unit, if any, from and after the date
of such transfer and such third party Release Premises Transferee shall
erect and operate additional structures whose use is integrated and
consistent with the use of the Office Unit;
(xii) Owner shall pay all of Lender's costs and expenses (including
reasonable counsel fees and disbursements) incurred in connection with
Lender's review of the foregoing items, the determination of the
satisfaction of such conditions and otherwise incurred in connection with
the Release and the Condominium Conversion; and
(xiii) Lender shall release such Office Unit from the lien of the
related Mortgage, promptly after: (1) all such easements, consents and
rights as described above shall have been obtained; and (2) all of the
requirements of this paragraph 61(k) have been satisfied.
All instruments of release shall be in duly recordable form and contain
such covenants, conditions and restrictions and shall reserve such rights and
easements with respect to the Office Unit as are necessary to protect and
preserve Lender's interests in the Remaining Property after any such release.
62. INTENTIONALLY OMITTED
63. INTENTIONALLY OMITTED
64. REQUIRED REPAIRS; REQUIRED REPAIR FUNDS
(a) Owner shall perform the repairs at its Mortgaged Properties, including,
without limitation, capital improvements, tenant improvements and leasing
commissions incurred in connection therewith as more particularly set forth on
Schedule D hereto (such repairs hereinafter referred to as "Property Required
Repairs"). Owner shall spend the sums set forth under the column entitled
"Allocated Amount" contained under the headings "Special FF&E Reserve Account"
and "$23,000,000 Escrow Account for Deferred Maintenance" on Schedule D and
complete all of the Property Required Repairs on the following dates (the
"Required Repairs Completion Date"): (1) on or before the earlier of (A)
September 1, 1999 and (B) the required completion date for such work as set
forth in the applicable PIP, if any, with respect to all Mortgaged Properties
(except the Town Center Property) and (2) on or before the Maturity Date, or if
the Loan is extended pursuant to the terms of the Note, March 1, 2000, with
respect to the Town Center Property . On the date hereof, Owner shall deposit
with Lender an amount equal to $23,000,000, representing a portion of the cost
to perform the Property Required Repairs for each Mortgaged Property as set
forth on Schedule D hereto (the "Initial Deposit"). Additionally, upon the
earlier of June 1, 1999 and the first day of the calendar month immediately
following the date Owner commences the renovations at Property No. 41 listed on
Schedule A attached hereto (the "Town Center Property"), as required by the
Franchisor (the "Monthly Deposit Commencement Date"), Owner shall make (i) three
(3) monthly deposits in the amount of $1,300,000 each, commencing on the Monthly
Deposit Commencement Date and on the first day of each calendar month thereafter
through and including the month which is two (2) months after the Monthly
Deposit Commencement Date and (ii) a monthly deposit in the amount of $1,400,000
on the first day of the calendar month which is three (3) months after the
Monthly Deposit Commencement Date (collectively, the "Required Repairs
<PAGE>
Monthly Deposits"). The Initial Deposit together with the Required Repairs
Monthly Deposits shall hereinafter be referred to as the "Required Repair Fund".
Notwithstanding the foregoing, Owner acknowledges that it shall spend from its
own funds in order to complete the Property Required Repairs on or before the
Required Repairs Completion Date the positive difference between (1) the sum of
the Required Repair Fund and the Special FF&E Repair Deposit, and (2) the
aggregate amount of the cost estimates for all of the Mortgaged Properties set
forth on Schedule D. Lender will maintain the Required Repair Fund in a
segregated account (the "Required Repair Account"), which shall be an Eligible
Account, and the Required Repair Fund shall be invested and reinvested by
Lender, at Owner's direction, in one or more Eligible Investments, subject to
the following restrictions: (A) such Eligible Investments and the proceeds
thereof shall be deemed a part of the Required Repair Fund; (B) each such
Eligible Investment shall be made in the name of Lender (in its capacity as
such) or in the name of a nominee of Lender under its complete and exclusive
dominion and control or, if applicable law provides for perfection of pledges of
an instrument not evidenced by a certificate or other instrument through
registration of such pledge on books maintained by or on behalf of the issuer of
such investment, such pledge may be so registered; (C) Lender shall have the
sole control over such investment, the income thereon and the proceeds thereof;
(D) other than investments described in clause (B) above, any certificate or
other instrument evidencing such investment shall be delivered directly to
Lender or its agent; (E) the proceeds of each investment shall be remitted by
the purchaser thereof directly to Lender and (F) Lender shall not be liable for
any loss sustained on the investment of any funds constituting a part of the
Required Repair Fund (except for losses resulting from Lender's gross negligence
or wilful misconduct).
(b) Owner hereby grants a first priority security interest to Lender, as
security for payment of all sums due under the Loan and the performance of all
other terms, conditions and covenants on Owner's part to be paid and performed,
in all of Owner's right, title and interest in and to the Required Repair Fund
and the Required Repair Account and shall execute and deliver to Lender such
UCC-1 Financing Statements and other documents or instruments as Lender may
request in order to grant and perfect such security interest. Owner shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in the Required Repair Fund or the Required Repair
Account or permit any lien or encumbrance to attach thereto, or any levy to be
made thereon, or any UCC-1 Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto. Upon the occurrence of an
Event of Default, Lender may apply any sums then present in the Required Repair
Fund to the payment of the Debt in any order in its sole discretion. Until
expended or applied as herein provided, the Required Repair Fund shall
constitute additional security for the Debt.
(c) After Owner's Initial Deposit into the Required Repair Account pursuant
to paragraph (a) hereof, Lender shall disburse to Owner the Required Repair
Funds from the Required Repair Account from time to time upon satisfaction by
Owner of each of the following conditions: (a) Owner shall submit a written
request for payment to Lender at least ten (10) days prior to the date on which
Owner requests such payment be made and specifies the Property Required Repairs
to be paid; (b) the request for disbursement for funds for an individual
Mortgaged Property together with all prior disbursements for such individual
Mortgaged Property shall not exceed the aggregate "Allocated Amount" for such
individual Mortgaged Property set forth on Schedule D under the headings
"Special FF&E Reserve Account" and "$23,000,000 Escrow Account for Deferred
Maintenance"; (c) on the date such request is received by Lender and on the date
such payment is to be made, no Event of Default shall exist and remain uncured;
(d) Lender shall have received a certificate from Owner (i) stating that all
Property Required Repairs at the applicable Mortgaged Property funded by the
prior requested disbursement have been completed in
<PAGE>
good and workmanlike manner and in accordance with all applicable federal, state
and local laws, rules and regulations, (ii) any license, permit or other
approval by any Governmental Authority required to commence and/or complete the
Property Required Repairs to be funded by the requested disbursement have been
obtained, (iii) identifying each person that will supply materials, labor or
service in connection with the Property Required Repairs to be performed at such
Mortgaged Property and to be funded by the requested disbursement and including
copies of invoices or statements from each such person or entity setting forth
the costs for such materials or labor, and (iv) stating that each person or
entity that supplied materials or labor in connection with the Property Required
Repairs performed at a Mortgaged Property and funded by the prior requested
disbursement has been paid all amounts to be paid to such person or entity as
set forth in the written request with respect to such prior requested
disbursement and setting forth the amount paid to each such person and, if such
requested disbursement includes amounts constituting the final payment to any
person on account of any Property Required Repairs, such certificate shall be
accompanied by lien waivers or other evidence of payment satisfactory to Lender;
(e) at Lender's option if the amount disbursed for Property Required Repairs
with respect to an individual Mortgaged Property under the prior requested
disbursement exceeded a total of Two Hundred Thousand and No/100 Dollars
($200,000), a title search for any such Mortgaged Property indicating that such
Mortgaged Property is free from all liens, claims and other encumbrances not
previously approved by Lender, and (f) Lender shall have received copies of paid
invoices for amounts disbursed to Owner for its previous advance, together with
such other evidence as Lender shall reasonably request that the Property
Required Repairs at any Mortgaged Property funded by the prior requested
disbursement have been completed and the related costs and expenses have been
paid. Lender shall not be required to make disbursements from the Required
Repair Account with respect to any such Mortgaged Property more frequently than
twice per calendar month and unless such requested disbursement is in an amount
greater than Fifteen Thousand and No/100 Dollars ($15,000) (or a lesser amount
if the total amount in the Required Repair Account is less than Fifteen Thousand
and No/100 Dollars ($15,000), in which case only one disbursement of the amount
remaining in the account shall be made) and such disbursement shall be made only
upon satisfaction of each condition contained in this paragraph (c). Prior to
Owner's initial deposit of funds into the Required Repair Fund in accordance
with paragraph (b) hereof or thereafter with respect to any calendar month
during which a request for payment from the Required Repair Fund is not
submitted to Lender pursuant to this paragraph (c), Owner shall deliver to
Lender, as a part of the monthly reports to be delivered pursuant to Section 19
of the Mortgage, a certificate setting forth the amounts paid during the
preceding calendar month for Property Required Repairs and setting forth each
person to whom such amounts were paid, the amount paid to each such person or
entity and the related Property Required Repairs performed by each such person.
Notwithstanding anything contained to the contrary in this Agreement, (i) Owner
shall be entitled to request disbursements for funds for an individual Mortgaged
Property provided (A) the subject request together with all prior disbursements
for such individual Mortgaged Property shall not exceed the aggregate "Allocated
Amount" for such individual Mortgaged Property set forth under both of the
headings "Special FF&E Reserve Account" and "$23,000,000 Escrow Account for
Deferred Maintenance" irrespective of whether the FF&E Replacement Reserve Fund
is applied at the time of the subject request to the disbursement to Owner, and
(B) the disbursement request for certain Property Required Repairs for a
Mortgaged Property is no more than the cost estimate for such Property Required
Repair as set forth in the budget line item for the applicable Mortgaged
Property on Schedule D; (ii) in the event that the Special FF&E Repairs have
been completed and the "Allocated Amount" set forth under the heading "Special
FF&E Reserve Account" has been disbursed to Borrower from the Required Repairs
Fund and spent by Borrower in accordance with this Section 64, Borrower may
reallocate a portion of the FF&E Replacement Reserve Fund earmarked for the
Special FF&E Repairs as set
<PAGE>
forth in Section 7 in the amount of the applicable "Allocated Amount" for such
Mortgaged Property to Property Required Repairs set forth on Schedule D for
other Mortgaged Properties, as reasonably approved by Lender, (iii) in the event
that Owner delivers evidence, reasonably satisfactory to Lender, indicating that
the actual cost to complete the Property Required Repairs is less than the cost
set forth under the column "Allocated Amount" under the heading "$23,000,000
Escrow Account for Deferred Maintenance", Owner may reallocate such cost savings
to another Property Required Repair item set forth on Schedule D for such other
Mortgaged Property, (iv) Owner shall not be permitted to request disbursements
from the Required Repair Fund for the Town Center Property until the Owner
deposits the Required Repairs Monthly Deposits into the Property Required Repair
Fund, in which case the Owner may request disbursements from the Property
Required Repair Fund in an amount not to exceed the amount of the Required
Repairs Monthly Deposits deposited to date (less any prior disbursements to
Owner for the Town Center Property).
(d) It shall be an Event of Default under this Agreement if (i) Owner does
not exercise diligent efforts to complete the Property Required Repairs at each
Mortgaged Property by the required deadline for each repair as set forth on
Schedule D or (ii) Owner does not make the Initial Deposit or the Required
Repairs Monthly Deposits into the Required Repair Fund in accordance with
paragraph (a) hereof. Upon the occurrence of an Event of Default, Lender, at its
option, may withdraw all Required Repair Funds from the Required Repair Account
and Lender may apply such funds either to completion of the Property Required
Repairs at one or more of the Mortgaged Properties or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Repair Funds shall be
in addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.
65. SPECIAL CONDOMINIUM RIDER. (a) This Condominium Rider applies, as of
the date hereof, or with respect to the Mortgaged Property identified as
Property No. 46 attached hereto, as of the Condominium Conversion, to the
following Mortgaged Properties listed on Schedule A attached hereto:
(i) Town Center, Silver Spring, Maryland, Property No. 41;
(ii) Holiday Inn Washington, D.C., Silver Spring, Maryland, Property No.
46;
(iii) Comfort Inn Roseville, Roseville, Minnesota, Property No. 51; and
(iv) Four Points Hotel, Hilton Head, South Carolina, Property No. 73.
In the event of any inconsistency between the terms and conditions of this
Section 65 of this Loan Agreement and any other terms of this Loan Agreement,
the terms of this Section 65 shall control.
(b) Section 5 of this Loan Agreement entitled "PAYMENT OF TAXES" is hereby
deleted in its entirety and the following language is hereby inserted as Section
5:
Owner shall pay all taxes and assessments now or hereafter levied, assessed
or imposed against the Mortgaged Property or any part thereof (collectively, the
"Taxes"), all ground rents, maintenance charges, water rates and sewer rents,
other governmental impositions, and other charges including, without limitation,
vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied, assessed or imposed against the
Mortgaged Property or any part thereof (collectively, the "Other Charges"), and
all common charges, assessments and special assessments imposed pursuant to the
Condominium Documents
<PAGE>
(collectively, the "Condominium Charges") as they become due and payable. If
requested by Lender, Borrower will deliver to Lender evidence satisfactory to
Lender that the Taxes, Other Charges and Condominium Charges have been so paid,
or are not then delinquent. Owner shall not suffer, and shall promptly cause to
be paid and discharged, any lien or charge whatsoever which may be or become a
lien or charge against the Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property. If requested by Lender,
Owner shall furnish to Lender or its designee receipts for the payment of the
Taxes and/or Condominium Charges prior to the date that such obligations shall
become delinquent. Owner shall be entitled to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount of any Taxes, Other Charges or Condominium Charges.
Notwithstanding the preceding sentence, during the pendency of any such contest
Owner shall pay or cause to be paid all Taxes, Other Charges and Condominium
Charges as and when due and payable, or otherwise in accordance with Section 32
hereof.
(c) Subject to any provisions of the Condominium Documents with respect
hereto, Lender may apply any condemnation award or payment in accordance with
Section 8 of this Loan Agreement entitled "CONDEMNATION." Notwithstanding
anything to the contrary herein, with respect to the Town Center Property only,
the application of any condemnation award shall be subject to the terms of the
applicable Ground Lease.
(d) The following language is hereby inserted at the end of Section 14 of
this Loan Agreement entitled "ESTOPPEL CERTIFICATES; AFFIDAVITS" as subsection
14(f):
(f) Owner shall use its best efforts to cause to be delivered to
Lender upon request, an estoppel certificate from the Condominium
Association in form and substance reasonably satisfactory to Lender, which
shall include without limitation (i) the amount of the unpaid Condominium
Charges, if any, accrued against the Mortgaged Property, (ii) that the
Condominium Documents have not been modified or amended, (iii) that all
payments due and payable by Owner under the Condominium Documents have been
paid in full, and (iv) that neither Owner nor the Association is in default
under the Condominium Documents.
(e) Section 20 of this Loan Agreement entitled "PERFORMANCE OF OTHER
AGREEMENTS" is hereby deleted in its entirety and the following language is
hereby inserted as Section 20:
Owner shall observe and perform each and every term to be observed or
performed by Owner pursuant to the terms of any material agreement or recorded
instrument affecting or pertaining to the Mortgaged Property, including without
limitation, the Condominium Documents. Nothing herein shall operate in
derogation of any obligation of Owner under the Loan Documents.
(f) The following language is hereby inserted at the end of Section 24 of
this Loan Agreement entitled "EVENTS OF DEFAULT":
(x) if any of the Condominium Charges imposed pursuant to the
Condominium Documents are not paid when the same are due and payable;
<PAGE>
(y) if the Condominium Association fails, in accordance with the terms
of the Condominium Documents (a) to maintain the Common Elements and/or the
Mortgaged Property, as applicable, in good condition and repair, (b) to
promptly comply with all laws, orders, and ordinances affecting the Common
Elements and/or the Mortgaged Property, as applicable, or the use thereof,
(c) to promptly repair, replace or rebuild any part of the Common Elements
and/or the Mortgaged Property, as applicable, which may be damaged or
destroyed by any casualty or which may be affected by any proceeding of the
character referred to in Section 8 hereof, (d) to complete and pay for,
within a reasonable time, any structure at any time in the process of
construction or repair on the Common Elements, all to the extent that the
Condominium Association is authorized to so maintain, repair, replace,
rebuild and complete the Common Elements by the Condominium Documents and
such default shall continue for a period of sixty (60) days after written
notice thereof specifying such default and requiring the same to be
remedied shall have been given to the person designated from time to time
in accordance with the Condominium Documents to receive service of process,
(except with respect to a Condominium where Owner does not have control of
the Condominium Association only, excluding such failures in (a) -(d) above
which shall not cause a Material Adverse Effect and which Owner has
promptly commenced an action against the Condominium Association to cause
the Condominium Association to cure such failure);
(z) if the Condominium Association fails in accordance with the terms
of the Condominium Documents, (a) to keep the Common Elements and/or the
Mortgaged Property, as applicable, insured against the hazards specified in
the Condominium Documents in the amounts and pursuant to policies in the
form specified therein, and (b) to pay, as and when the same becomes due
and payable, any charge or encumbrance which, if unpaid, might become a
lien against the Mortgaged Property or any part thereof prior to or on a
parity with the lien of the Mortgage, if such failure shall result in the
imposition of a lien against the Mortgaged Property and such lien shall not
be discharged, dismissed or bonded within 30 days of such imposition;
(aa) if any provision of the Condominium Act or any section, sentence,
clause, phrase or word, or the application thereof in any circumstance is
held invalid wholly or partially and, in the sole judgment of Lender, such
invalidity shall adversely affect the lien of the Mortgage or the rights of
Lender thereunder;
(bb) if, without the prior written consent of Lender, any of the
material terms or provisions of the Condominium Documents are modified,
amended or terminated;
(cc) if, without the prior written consent of Lender, Owner fails to
comply with any terms of the Condominium Documents and the Condominium Act;
(dd) if the Condominium shall become subject to any action for
partition by any unit owner and the action is not dismissed within thirty
(30) days;
(ee) if, without the prior written consent of Lender, the Declarant,
such other party as may in writing be designated by Declarant, or any other
party, as the case may be, expands or causes the expansion of the
Condominium and annexes to the land covered by the Condominium additional
land and improvements thereon;
(ff) if the Condominium Association shall fail to allow Lender to
examine the
<PAGE>
books, records and receipts of the Condominium in accordance with the
Condominium Documents; or
(gg) if the Mortgaged Property is withdrawn from the condominium
regime established by the Condominium Act in connection with any
Condemnation, any casualty or otherwise, in accordance with the Condominium
Act.
(g) CONDOMINIUM COVENANTS
(i) Owner shall promptly deliver to Lender a true and full copy of all
notices of default received by the Owner with respect to any obligation or
duty of the Owner under the Condominium Documents.
(ii) Owner shall not, except with the prior written consent of the
Lender (a) institute any action or proceeding for partition of the
Mortgaged Property; (b) vote for or consent to any modification of,
amendment to or relaxation in the enforcement of the Condominium Documents
or the termination of the Condominium; (c) expand or cause the expansion of
the Condominium and annex to the land covered by the Condominium additional
land and improvements thereon; and (d) in the event of damage to or
destruction of the Common Elements or other portions of the Condominium
other than the Mortgaged Property, vote not to repair, restore or rebuild
the Common Elements or other portions of the Condominium other than the
Mortgaged Property if Owner shall have such a voting right.
(h) DEFINED TERMS
The following terms shall have the following meanings, provided, however,
unless the context clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used herein which are defined in the
Condominium Act shall have the meanings set forth therein:
(i) "Condominium" shall have the meaning ascribed to it in
Declaration.
(ii) "Condominium Act" shall mean (1) the provisions of Title 11 of
the Real Property Article of the Annotated Code of Maryland (1996), as the
same may hereafter be amended, (2) the Minnesota Uniform Condominium Act,
as the same may hereafter be amended, or (3) the Horizontal Property Act of
the State of South Carolina, Title 27, Chapter 31, Code of Laws of South
Carolina, 1976, as the same may hereafter be amended, as the case may be.
(iii) "By-laws" shall mean (1) the By-laws of the Council of Unit
Owners of Colesville Roeder Condominium, (2) the By-laws of the Council of
Unit Owners of Silver Spring Plaza Condominium in the form and on the terms
of those certain By-laws attached hereto as Exhibit D, (3) the By-laws of
Rosedale Corporate Condominium, Inc., or (4) the By-laws of Oceanwalk Two
Horizontal Owners' Association, as the case may be.
(iv) "Declaration" shall mean (1) that certain Declaration for
Colesville Roeder Condominium dated February 18, 1998, (2) that certain
Declaration for Silver Spring Plaza Condominium in the form and on the
terms approved by Lender in accordance with this Agreement, (3) that
certain Declaration of Rosedale Corporate Condominium, Inc. dated August 3,
1997, as amended by that certain First Amendment of the Declaration dated
<PAGE>
October 2, 1997 or (4) that certain Master Deed of Oceanwalk Two Horizontal
Property Regime dated February 19, 1991, as amended by that certain First
Amendment to the Master deed dated December 17, 1997, as the case may be.
(v) "Condominium Association" shall mean the organization managing the
Mortgaged Property by virtue of the Condominium Act and the Condominium
Documents, on behalf of all the owners of the units comprising the
Mortgaged Property.
(vi) "Condominium Documents" shall mean collectively the "Declaration"
and the "By-laws".
(vii) "Common Elements" shall have the meaning ascribed to them in the
Declaration.
(viii) "Declarant" shall have the meaning ascribed to it in the
Declaration.
(i) Term Center
Notwithstanding anything to the contrary herein, with respect to the Town
Center Property only, this Section 65 shall be subject to the terms and
conditions of the Condominium Documents and the Ground Lease.
66. LOCK-BOX ACCOUNT.
(a) (i) The parties agree and acknowledge that Servico, Inc., Manager and
the participants listed on Schedule E attached hereto (the "Participants"),
which include the Borrower Participants (which shall include in each instance
when used herein, Canadian Guarantor) and the Non-Borrower Participants,
maintain, and intend to continue to maintain a single cash management system
under which cash receipts of the Participants and credit card receivables from
the operations of the properties listed on Schedule F attached hereto (the
"Properties") and other receipts of Manager and Servico, Inc. are deposited into
accounts in the name of Servico, Inc., which accounts are Eligible Accounts; and
thereafter required disbursements are made on behalf of the Participants,
Manager and Servico, Inc. ("the Cash Management System"); provided, however,
that amounts due pursuant to this Loan Agreement, the Note and the Mortgage
shall be transferred by Servico, Inc. and Manager, as due, to the respective
Owner by deposit into accounts in the names of each respective Owner from which
such required payments to Lender shall be made, which accounts in the name of
the Owner are Eligible Accounts. Upon the occurrence of a Triggering Event
(defined below), the Owner will cease to participate in the Cash Management
System. The Cash Management System shall not be modified or amended by the
Participants in a manner which affects the rights and/or obligations of the
Borrower Participants in any manner whatsoever without the prior written consent
of Lender.
<PAGE>
(ii) The parties agree and acknowledge that the use of funds in the Cash
Management System shall not be restricted and no interest is or shall be charged
or collected by or from any Participant or Servico, Inc. or any of their
respective affiliates with respect to funds aggregated in the Cash Management
System.
(iii) Servico, Inc. shall prepare and maintain complete and accurate
accounting records with respect to all transactions under the Cash Management
System, including, without limitation, the deposit of all cash receipts, the
electronic transmittal of credit card receivables, the payment of all expenses,
any earnings on invested funds and amounts disbursed to the Owner for the
payment of amounts due under the Loan Agreement and shall prepare and maintain
for each Participant a running balance of deposits to, withdrawals from and
amounts owing to and from each Participant in the Cash Management System.
(iv) The parties agree and acknowledge that the cash receipts from each
hotel owned by a Owner or a non-Borrower Participant beyond the immediate
on-site petty cash needs of the Owner are first deposited into a bank account in
the name of such hotel, which account is an Eligible Account, and thereafter
such amounts may be transferred to a bank account, which is an Eligible Account,
in the name of Servico, Inc. (the "Concentration Account"). Receipts from charge
cards are deposited directly into the Concentration Account.
(v) All checks issued in payment of any Owner's expenses shall indicate by
printed or typed identification that Owner is the entity for which payment is
made.
(vi) Whenever a Participant shall have paid or contributed more to the Cash
Management System than had been withdrawn or paid on its behalf (an "Overpaying
Participant"), such Overpaying Participant shall be a creditor of Servico, Inc.
for the amount of the overpayment and every Participant that has withdrawn or
has paid on its behalf more than it paid or contributed to the Cash Management
System (an "Underpaying Participant") shall be obligated to Servico, Inc. for
the amount of such Underpaying Participant's underpayment.
(vii) The parties agree and acknowledge that the Cash Management System
constitutes a lending arrangement between Owner and Servico, Inc., and a
financial accommodation between Owner and Servico, Inc., and that upon any
Triggering Event or if a receiver, liquidator or trustee shall be appointed for
Servico, Inc., Manager or a Non-Borrower Participant or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against Servico, Inc.,
Manager or a Non-Borrower Participant at Lender's option upon notice from
Lender, the Owner shall immediately cease to participate in the Cash Management
System and shall reconcile in cash any underpayments or overpayments existing at
that time and Lender may cause the cash receipts and credit card receivables of
Owner to be paid directly to Lender as if a Triggering Event shall have
<PAGE>
occurred until Lender is reasonably satisfied that Owner is no longer
participating in the Cash Management System.
(viii) Claims held against Servico, Inc. pursuant to paragraph (vi) hereof
by a Owner that is an Overpaying Participant and claims held by Servico, Inc.
against a Participant that is an Underpaying Participant shall become
immediately due and payable upon the earlier to occur of: (A) a demand for
payment thereof, (B) the withdrawal by the Owner from the Cash Management System
pursuant to paragraph (vii) hereof or (C) an Event of Default; provided,
however, that any obligation of any Owner hereunder upon such events shall be
paid only from available net income of the Owner, after payment of debt service,
the funding of any required reserves required hereunder and the payment of
Owner's operating expenses in accordance with the terms of this Loan Agreement.
(ix) Lender, and its successors and assigns, shall be a third-party
beneficiary hereto with the ability to enforce same for its own benefit and on
behalf of each Owner.
(x) Any wholly-owned Affiliate of Servico, Inc. may be made a party to this
Cash Management Agreement as a Non-Borrower Participant or, in the case of any
Affiliate that has granted a mortgage to Lender, as a Owner, by a written
amendment executed by such Affiliate, Servico, Inc. and Manager. This Section 66
may not be amended with respect to the rights of any Owner hereunder without the
prior written consent of Lender.
(xi) This Section 66 shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and upon any entity or
person becoming a participant in the Cash Management System subsequent to the
date hereof.
(xii) In the event of any inconsistency between this Section 66 and any
prior cash management agreement executed by the Participants, this Section
controls with respect to Borrower Participants.
(b) (i) Upon the occurrence and continuance of an Event of Default, or (ii)
if at any time the Aggregate Debt Service Coverage Ratio for the twelve (12)
month period immediately preceding the date of the calculation is less than or
equal to 1.35 to 1.0, as tested monthly by Lender (collectively, the "Triggering
Events"), Owner shall establish and maintain a segregated Eligible Account (the
"Lockbox Account") to be held by Lender, pursuant to the Cash Management
Agreement attached hereto as Exhibit E and made a part hereof, which Lockbox
Account shall be under the sole dominion and control of Lender. Owner hereby
grants to Lender a first priority security interest in the Lockbox Account and
all deposits at any time contained therein and the proceeds thereof and will
take all actions
<PAGE>
necessary to maintain in favor of Lender a perfected first priority security
interest in the Lockbox Account, including, without limitation, executing and
filing UCC-1 Financing Statements and continuations thereof. Owner will not in
any way alter or modify the Lockbox Account and will notify Lender of the
account number thereof. Lender shall have the sole right to make withdrawals
from the Lockbox Account and all costs and expenses for establishing and
maintaining the Lockbox Account shall be paid by Owner.
(c) Upon the establishment of the Lockbox Account, Owner shall deposit, or
shall cause to be deposited, the Rent and Accounts Receivable directly into the
Lockbox Account, and Owner shall, or shall cause each Manager to deliver written
instructions to all tenants under Leases and credit card companies to deliver
all Rents and Accounts Receivable payable thereunder directly to the Lockbox
Account in the forms attached hereto as Exhibit F and made in part hereof. Owner
shall, and shall cause each Manager, to deposit all amounts received by Owner or
Manager constituting Rents and Accounts Receivable into the Lockbox Account
within one (1) Business Day of receipt thereof. Owner agrees that the fully
executed Cash Management Agreement attached as Exhibit E shall become effective
upon the Triggering Events.
(d) All funds on deposit in the Lockbox Account shall be applied by Lender
to the payment of any amounts then due and payable under the Loan Documents in
accordance with the terms of the Cash Management Agreement.
(e) The insufficiency of funds on deposit in the Lockbox Account shall not
absolve Owner of the obligation to make any payments, as and when due pursuant
to this Agreement and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or circumstance
whatsoever.
67. GROUND LEASES. Further supplementing the terms, conditions and
provisions of the Mortgage:
(a) Owner shall (i) pay all rents, additional rents and other sums required
to be paid by Owner, as tenant under and pursuant to the provisions of the
Ground Lease, (ii) diligently perform and observe all of the terms, covenants
and conditions of the Ground Lease on the part of Owner, as tenant thereunder,
and (iii) promptly notify Lender of the giving of any notice by the landlord
under the Ground Lease to Owner of any default by Owner, as tenant thereunder,
and deliver to Lender a true copy of each such notice. Owner shall not, without
the prior consent of Lender, surrender the leasehold estate created by the
Ground Lease or terminate or cancel the Ground Lease or modify, change,
supplement, alter or amend the Ground Lease, in any respect, either orally or in
writing, and if Owner shall default in the performance or observance of any
term, covenant or condition of the Ground Lease on the part of Owner, as tenant
thereunder, Lender shall have the right, but shall be under no obligation, to
pay any sums and to perform any act or take any action as may be appropriate to
cause all of the terms, covenants and conditions of the Ground Lease on the part
of Owner to be performed or observed on behalf of Owner, to the end that the
rights of Owner in, to and under the Ground Lease shall be kept unimpaired and
free from default. If the
<PAGE>
landlord under the Ground Lease shall deliver to Lender a copy of any notice of
default under the Ground Lease, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender, in good faith, in
reliance thereon. Owner shall exercise each individual option, if any, to extend
or renew the term of the Ground Lease upon demand by Lender made at any time
within one (1) year prior to the last day upon which any such option may be
exercised, and Owner hereby expressly authorizes and appoints Lender its
attorney-in-fact to exercise any such option in the name of and upon behalf of
Owner, which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest.
(b) Notwithstanding anything contained in the Ground Lease to the contrary,
subject to Section 9 hereof, Owner shall not further sublet any portion of the
Mortgaged Property without prior written consent of Lender. Each such
Lender-approved sublease hereafter made shall provide that, (a) in the event of
the termination of the Ground Lease, the lease shall not terminate or be
terminable by the lessee; (b) in the event of any action for the foreclosure of
this Mortgage, the lease shall not terminate or be terminable by the subtenant
by reason of the termination of the Ground Lease unless the lessee is
specifically named and joined in any such action and unless a judgment is
obtained therein against the lessee; and (c) in the event that the Ground Lease
is terminated as aforesaid, the lessee shall attorn to the lessor under the
Ground Lease or to the purchaser at the sale of the Mortgaged Property on such
foreclosure, as the case may be. In the event that any portion of the Premises
shall be sublet pursuant to the terms of this Subsection, such sublease shall be
deemed to be included in the Mortgaged Property.
68. CONTRIBUTION.
(a) Contribution. As a result of the transactions contemplated by this
Agreement, each Owner will benefit, directly and indirectly, from the
Obligations and in consideration therefor desire to enter into an allocation and
contribution agreement among themselves as set forth in this Section 68 to
allocate such benefits among themselves and to provide a fair and equitable
agreement to make contributions among the entities comprising the Owner in the
event any payment is made by any Owner hereunder to the Lender (such payment
being referred to herein as a "Contribution," and for purposes of this
Agreement, includes any exercise of recourse by the Lender against any Mortgaged
Property of a Owner and application of proceeds of such Mortgaged Property in
satisfaction of such Owner's obligations, to the Lender under this Agreement).
The Owner hereby agrees as follows:
(b) Limit of Liability. Each Owner shall be liable under this Agreement
with respect to the Debt only for such total maximum amount (if any) that would
not render its Obligations hereunder or under any of the Loan Documents subject
to avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law.
(c) Calculation of Contribution. In order to provide for a fair and
equitable contribution among the entities comprising the Owner in the event that
any Contribution is made by a Owner (a "Funding Owner"), such Funding Owner
shall be entitled to a reimbursement Contribution ("Reimbursement Contribution")
from all other Owners for all payments, damages and expenses incurred by that
Funding Owner in discharging any of the Obligations, in the manner and to the
extent set forth in this Section. The amount of any Reimbursement Contribution
under this Agreement shall be equal to the payment made by the Funding Owner to
the Lender or any other beneficiary pursuant to this Agreement and shall be
determined as of the date on which such payment is made.
<PAGE>
(d) Benefit Amount Defined. For purposes of this Agreement, the "Benefit
Amount" of any Owner as of any date of determination shall be the net value of
the benefits to such Owner and its affiliates from extensions of credit made by
the Lender to (A) such Owner and (B) to the other entities comprising the Owner
under this Agreement and the Loan Documents to the extent such other entities
comprising the Owner have guaranteed or mortgaged their Mortgaged Properties to
secure the Obligations of such Owner to the Lender.
(e) Reimbursement Contribution Obligation. Each Owner shall be liable to a
Funding Owner in an amount equal to the greater of (A) the (i) ratio of the
Benefit Amount of such Owner to the total amount of Obligations, multiplied by
(ii) the amount of Obligations paid by such Funding Owner, or (B) 95% of the
excess of the fair saleable value of the property of such Owner over the total
liabilities of such Owner (including the maximum amount reasonably expected to
become due in respect of contingent liabilities) determined as of the date on
which the payment made by a Funding Owner is deemed made for purposes of this
Agreement (giving effect to all payments made by other Funding Owners as of such
date in a manner to maximize the amount of such Contributions).
(f) Allocation. In the event that at any time there exists more than one
Funding Owner with respect to any Contribution (in any such case, the
"Applicable Contribution"), then Reimbursement Contributions from other entities
comprising the Owner pursuant to this Agreement shall be allocated among such
Funding Owners in proportion to the total amount of the Contribution made for or
on account of the other Owners by each such Funding Owner pursuant to the
Applicable Contribution. In the event that at any time any Owner pays an amount
under this Agreement in excess of the amount calculated pursuant to Subsection
(c) above, that Owner shall be deemed to be a Funding Owner to the extent of
such excess and shall be entitled to a Reimbursement Contribution from the other
Owners in accordance with the provisions of this Section.
(g) Asset of Party to Which Reimbursement Contribution is Owing. Each Owner
acknowledges that the right to Reimbursement Contribution hereunder shall
constitute an asset in favor of the Owner to which such Reimbursement
Contribution is owing.
(h) Subordination. No Reimbursement Contribution payments payable by a
Owner pursuant to the terms of this Section 68 shall be paid until all amounts
then due and payable by all of the Owners to the Lender, pursuant to the terms
of the Note, this Agreement and the other Loan Documents, are paid in full in
cash. Nothing contained in this Section 68 shall limit or affect in any way the
Obligations of any Owner to Lender under this Agreement or any other Loan
Documents.
69. RECOURSE.
The Loan, the Obligations and the Other Obligations shall be with full
recourse to the Borrower, Canadian Guarantor and the Guarantor.
70. CONFIDENTIALITY.
Each party hereto shall treat the transactions contemplated hereby and all
financial and other information furnished to it about Owner, Guarantor and the
Mortgaged Properties, as confidential; provided, however, that such confidential
information may be disclosed (a) as required by law or upon request or demand of
any Governmental Authority or pursuant to generally accepted
<PAGE>
accounting procedures, (b) to officers, directors, employees, agents, partners,
attorneys, accountants, engineers and other consultants of the parties hereto
who need to know such information, provided such Persons are instructed to treat
such information confidentially, (c) by Agent to any Participant, Co-Lender,
servicer, or assignee ("Transferee"), which disclosure to Transferees and
prospective Transferees may include any and all information which has been
delivered to Agent or by Owner pursuant to this Agreement or the other Loan
Documents or which has been delivered to Agent in connection with Agent's or the
Co-Lenders' credit evaluation of Owner prior to entering into this Agreement,
(d) upon the written consent of the party whose otherwise confidential
information would be disclosed, (e) in response to any order of any court, (f)
if requested or required to do so in connection with any litigation or similar
proceeding, (g) to the National Association of Insurance Commissioners or any
similar organization or any Rating Agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender or (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document.
71. SYNDICATION.
(a) Syndication. The provisions of this Section 71 shall only apply in the
event that the Loan is syndicated in accordance with the provisions of this
Section 71 set forth below.
(b) Sale of Loan, Co-Lenders, Participations and Servicing.
(i) Lender and any Co-Lender may, at their option, without Owner's consent,
sell with novation all or any part of their right, title and interest in, and
to, and under the Loan, to one or more additional Co-Lenders. Each additional
Co-Lender shall enter into an assignment and assumption agreement (the
"Assignment and Assumption") assigning a portion of Lender's or Co-Lender's
rights and obligations under the Loan, and pursuant to which the additional
Co-Lender accepts such assignment and assumes the assigned obligations. From and
after the effective date specified in the Assignment and Assumption (i) each
Co-Lender shall be a party hereto and to each Loan Document to the extent of the
applicable percentage or percentages set forth in the Assignment and Assumption
and, except as specified otherwise herein, shall succeed to the rights and
obligations of Lender and the Co-Lenders hereunder and thereunder in respect of
the Loan, and (ii) Lender, as lender and each Co-Lender, as applicable, shall,
to the extent such rights and obligations have been assigned by it pursuant to
such Assignment and Assumption, relinquish its rights and be released from its
obligations hereunder and under the Loan Documents.
(ii) The liabilities of Lender and each of the Co-Lenders shall be several
and not joint, and Lender's and each Co-Lender's obligations to Owner under this
Agreement shall be reduced by the amount of each such Assignment and Assumption.
Neither Lender nor any Co-Lender shall be responsible for the obligations of any
other Co-Lender. Lender and each Co-Lender shall be liable to Owner only for
their respective proportionate shares of the Loan. If for any reason any of the
Co-Lenders shall fail or refuse to abide by their obligations under this
Agreement, Lender and the other Co-Lenders shall not be relieved of their
obligations, if any, hereunder, including their obligations to make their pro
rata share of any advance; notwithstanding the foregoing, Lender and the
Co-Lenders shall have the right, but not the obligation, at their sole option,
to make the defaulting Co-Lender's pro rata share of such advance pursuant to
the terms of the Intercreditor Agreement.
<PAGE>
(iii) Subject to Subsection 21(b) hereof, Owner agrees that it shall, in
connection with any sale of all or any portion of the Loan, whether in whole or
to an additional Co-Lender or Participant, within ten (10) business days after
requested by Agent, furnish Agent with the certificates required under Section
14(d) hereof and such other information as reasonably requested by any
additional Co-Lender or Participant in performing its due diligence in
connection with its purchase of an interest in the Loan.
(iv) Lender (or an Affiliate of Lender) shall act as administrative agent
for itself and the Co-Lenders (together with any successor administrative agent,
the "Agent") pursuant to this Section 71(b). Owner acknowledges that Lender, as
Agent shall have the sole and exclusive authority to execute and perform this
Agreement and each Loan Document on behalf of itself, as Lender and as agent for
itself and the Co-Lenders subject to the terms of the Intercreditor Agreement.
Except as otherwise provided herein, Owner shall have no obligation to recognize
or deal directly with any Co-Lender, and no Co-Lender shall have any right to
deal directly with Owner with respect to the rights, benefits and obligations of
Owner under this Agreement, the Loan Documents or any one or more documents or
instruments in respect thereof. Owner may rely conclusively on the actions of
Lender as Agent to bind Lender and the Co-Lenders, notwithstanding that the
particular action in question may, pursuant to this Agreement or the
Intercreditor Agreement be subject to the consent or direction of the
Co-Lenders. Lender may resign as Agent of the Co-Lenders, in its sole
discretion, without the consent of Owner; provided however, that Lender may only
resign as Agent (i) after an Event of Default has occurred or (ii) if required
to by the Co-Lenders. Upon any such resignation, a successor Agent shall be
determined pursuant to the terms of the Intercreditor Agreement. The term Agent
shall mean any successor Agent.
Notwithstanding any provision to the contrary in this Agreement, the Agent
shall not have any duties or responsibilities except those expressly set forth
herein (and in the Intercreditor Agreement) and no covenants, functions,
responsibilities, duties, obligations or liabilities of Agent shall be implied
by or inferred from this Agreement, the Intercreditor Agreement, or any other
Loan Document, or otherwise exist against Agent.
(v) Except to the extent its obligations hereunder and its interest in the
Loan have been assigned pursuant to one or more Assignments and Assumption,
Secore Financial Corporation, as Agent, shall have the same rights and powers
under this Agreement as any other Co-Lender and may exercise the same as though
it were not Agent, respectively. The term "Co-Lender" or "Co-Lenders" shall,
unless otherwise expressly indicated, include Secore Financial Corporation in
its individual capacity. Lender and the other Co-Lenders and their respective
affili ates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Owner, or any
Affiliate of Owner and any person or entity who may do business with or own
securities of Owner or any Affiliate of Owner or any Affiliate thereof, all as
if they were not serving in such capacities hereunder and without any duty to
account therefor to each other.
(vi) Intentionally Deleted.
(vii) Lender, as Agent, shall maintain at its domestic lending office or at
such other location as Lender, as Agent, shall designate in writing to each
Co-Lender and Owner a copy of each Assignment and Assumption delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Co-Lenders, the amount of each Co-Lender's proportionate share of the
Facility Amount and the Loan and the name and address of each
<PAGE>
Co-Lender's agent for service of process (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and Owner, Lender, as Agent, and the Co-Lenders may treat each person or
entity whose name is recorded in the Register as a Co-Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection and
copying by Owner or any Co-Lender during normal business hours upon reasonable
prior notice to the Agent. A Co-Lender may change its address and its agent for
service of process upon written notice to Lender, as Agent, which notice shall
only be effective upon actual receipt by Lender, as Agent, which receipt will be
acknowledged by Lender, as Agent, upon request.
(viii) Notwithstanding anything herein to the contrary, any financial
institution or other entity may be sold a participation interest in the Loan by
Lender or any Co-Lender without Owner's consent (such financial institution or
entity, a "Participant") (x) if such sale is without novation and (y) if the
other conditions set forth in this paragraph are met. No Participant shall be
considered a Co-Lender hereunder or under the Note or the Loan Documents. No
Participant shall have any rights under this Agreement, the Note or any of the
Loan Documents and the Participant's rights in respect of such participation
shall be solely against Lender or Co-Lender, as the case may be, as set forth in
the participation agreement executed by and between Lender or Co-Lender, as the
case may be, and such Participant. The terms of any participation agreement
between Lender or Co-Lender, as the case may be, and its Participant shall not
grant the Participant any consent rights except for consent to (i) changes in
the interest rate and term of the Loan, (ii) increase in the principal amount of
the Loan (except for protective advances and increases made in accordance with
this Agreement), (iii) release of collateral (except in accordance with Section
61), (iv) release of any party liable for repayment of the Loan, (v)
forbearance, (vi) consents to subordinate financing of the Mortgaged Property
(except in accordance with the terms hereof), (vii) the acceleration of the Loan
or commencement of foreclosure, (viii) the acquisition of foreclosed property
and (ix) the management of, and ultimate sale of, real estate owned. No
participation shall relieve Lender or Co-Lender, as the case may be, from its
obligations hereunder or under the Note or the Loan Documents and Lender or
Co-Lender, as the case may be, shall remain solely responsible for the
performance of its obligations hereunder.
(ix) Notwithstanding any other provision set forth in this Agreement, the
Lender or any Co-Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation,
amounts owing to it in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System), provided
that no such security interest or the exercise by the secured party of any of
its rights thereunder shall release Lender or Co-Lender from its funding
obligations hereunder.
(c) Owner's Assignment. Owner may not assign its rights or obligations
hereunder without the prior written consent of Agent and all of the Co-Lenders.
(d) Payment of Agent's, and Co-Lender's Expenses, Indemnity, etc. Owner
shall:
(i) whether or not the transactions hereby contemplated are consummated,
pay all reasonable out-of-pocket costs and expenses (A) of Agent, Lender and all
Co-Lenders in connection with Agent's and such Co-Lender's due diligence review
of the Mortgaged Property, the negotiation, preparation, execution and delivery
of the Note, this Agreement, the Mortgage, and the other Loan Documents and the
documents and instruments referred to therein, the creation, perfection or
protection of Lender's and Co-Lender's liens on the Mortgaged Property
(including,
<PAGE>
without limitation, fees and expenses for title insurance, property inspections,
appraisals, consultants, surveys, lien searches, filing and recording fees, and
escrow fees and expenses), all internal valuations and appraisals of the
Mortgaged Property made by Agent in connection with the administration of the
Loan and any amendment, waiver or consent relating to any of the Loan Documents
including releases, and the addition of new mortgaged properties (but Agent and
the Co-Lender's shall pay their own respective counsel fees) and (B) of Agent
and Co-Lenders in connection with the preservation of rights under, any
amendment, waiver or consent relating to, and enforcement of, the Loan Documents
and the documents and instruments referred to therein or in connection with any
restructuring or rescheduling of the Obligations (including, without limitation,
the reasonable fees and disbursements of counsel for Agent and the Co-Lenders);
(ii) pay, and hold Agent and each Co-Lender harmless from and against, any
and all present and future stamp, excise and other similar taxes with respect to
the foregoing matters and hold Agent and each Co-Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to Agent or such Co-Lender) to
pay such taxes; and
(iii) indemnify Agent, (in its capacity as Lender and as Agent), and each
Co-Lender, its officers, directors, employees, representatives and agents and
any persons or entities owned or Controlled by, owning or Controlling, or under
common Control or Affiliated with Agent, Agent, or each Co-Lender (each an
"Indemnitee") from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitee in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
asserted against or incurred by any Indemnitee as a result of, or arising in any
manner out of, or in any way related to or by reason of, (i) the execution,
delivery or performance of any Loan Document, (ii) the breach of any of Owner's
or Guarantor's representations and warranties or of any of Owner's Obligations,
(iii) a default under Sections 10(x) or 40, including, without limitation,
attorneys' fees and costs incurred in the investigation, defense, and settlement
of losses incurred in correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, and (iv) the exercise by Agent and
the Co-Lenders of their rights and remedies (including, without limitation,
foreclosure) under any Loan Documents (but excluding, as to any Indemnitee, any
such losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements incurred solely by reason of
the gross negligence or willful misconduct of such Indemnitee as finally
determined by a court of competent jurisdiction) (collectively, "Indemnified
Liabilities"). Owner further agrees that, without Agent's or the Co-Lenders'
prior written consent, it will not enter into any settlement of a lawsuit, claim
or other proceeding arising or relating to any Indemnified Liability unless such
settlement includes an explicit and unconditional release from the party
bringing such lawsuit, claim or other proceeding of each Indemnitee. Owner's
obligations under this Section shall survive the termination of this Agreement
and the payment of the Obligations.
(d) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Owner, Agent, the Co-Lenders, all future holders of the Note
and their respective successors and assigns.
<PAGE>
(e) Amendments and Waivers. (i) Neither this Agreement, the Note, or any
other Loan Document to which Owner or Guarantor is a party nor any terms hereof
or thereof may be amended, supplemented, modified or waived other than in a
writing executed by Owner, Guarantor, if applicable, and Agent. The parties
hereto acknowledge and agree that any amendment, modification approval, waiver
or request to be granted regarding the terms of this Agreement shall be given in
accordance with the terms, provisions and conditions of the Intercreditor
Agreement. The authority of Agent to act as Agent hereunder arises pursuant to
and is governed by the Intercreditor Agreement.
(ii) In the case of any waiver, Owner, Agent and all Co-Lenders shall be
restored to their former position and rights hereunder and under the outstanding
Note and any other Loan Documents, and any Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Event of Default, or impair any right consequent thereon.
Owner acknowledges and agrees that Agent may provide to the Co-Lenders, and
that Agent, and each of the Co-Lenders may provide to any Participant, originals
or copies of this Agreement, all Loan Documents and all other documents,
instruments, certificates, opinions, insurance policies, letters of credit,
reports, requisitions and other materials and information of every nature or
description, and may communicate all oral information, at any time submitted by
or on behalf of Owner, or Guarantor or received by Agent in connection with the
Loan or Owner or Guarantor.
(f) Marshaling; Recapture. Agent shall be under no obligation to marshal
any assets in favor of Owner or any other party or against or in payment of any
or all of the Obligations. To the extent Agent receives any payment by or on
behalf of Owner, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
Owner or its estate, trustee, receiver, custodian or any other party under any
bank ruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by the amount so repaid shall be reinstated
by the amount so repaid and shall be included within the liabilities of Owner to
Agent and the Co-Lenders as of the date such initial payment, reduction or
satisfaction occurred.
(g) Survival. Except as expressly provided to the contrary herein, all
indemnities set forth herein including, without limitation, in Section 71(d)
shall survive the execution and delivery of this Agreement, the Note and the
Loan Documents and the making and repayment of the Loan hereunder.
(h) Domicile of Loan Portions. Lender and the Co-Lenders may transfer and
carry any Loan portion at, to or for the account of any domestic or foreign
branch office, subsidiary or affiliate, subject to Section 71(i) below.
(i) Taxes. (i) All payments made by Owner under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority excluding, in the
case of Lender or any Co-Lender, net income and franchise taxes imposed on
Lender or any Co-Lender by the jurisdiction under the laws of which Lender or
<PAGE>
any Co-Lender is organized or any political subdivision or taxing authority
thereof or therein, or by any jurisdiction in which Lender's or Co-Lender's
Domestic Lending Office or Eurodollar Lending Office, as the case may be, is
located or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, deductions, charges or withholdings
being hereinafter called "Taxes").
(ii) Notwithstanding anything to the contrary herein, if at any time or
from time to time Taxes are required to be deducted or withheld from the
payments required to be made to Lender or any Co-Lender hereunder solely by
reason of a Change in Law after the date hereof (other than as a result of any
transfer or assignment of any of the obligations of Owner hereunder), all
payment required to be made by Owner hereunder (including any additional amounts
that may be payable pursuant to this clause (b)) shall be increased to the
extent required so that the net amount received by Lender or any Co-Lender after
the deduction or withholding of Taxes imposed solely by reason of a Change in
Law after the date hereof will be not less than the full amount that would
otherwise have been receivable had no such deduction or withholding been imposed
by reason of such Change in Law. In the event that this clause (b) shall be
operative, Owner shall promptly provide to Agent evidence of payment of such
Taxes to the appropriate taxing authority and shall promptly forward to Agent
any official tax receipts or other documentation with respect to the pay ment of
the Taxes as may be issued by the taxing authority. If Owner fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to Agent
the required receipts or other required documentary evidence, Owner shall
indemnify Lender and any Co-Lender for any incremental taxes, interest or
penalties that may become payable by Lender or Co-Lender as a result of any such
failure. The agreements in this Section 71(i)(ii) shall survive the termination
of this Agreement and the payment of the Note and all other Obligations.
(iii) For purposes of this Section 71(i) the term "Change in Law" shall
mean the following events: (A) the enactment of any legislation by the United
States, including the enactment, amendment or modification of a treaty; (B) the
lapse, by its terms, of any law of the United States or any treaty to which the
United States is a party; or (C) the promulgation of any temporary or final
regulation under the Code.
(iv) Each Co-Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that, prior to the first date on
which any payment is due to it hereunder, it will deliver to Owner and Agent (i)
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Co-Lender is entitled to receive payments under this Agreement and the
Note payable to it, without deduction or withholding of any United States
federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each Co-Lender required to deliver to
Owner and Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the
preceding sentence further undertakes to deliver to Owner and Agent two further
copies of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as the case may
be, on or before the date that any such letter or form expires (which, in the
case of the Form 4224, is the last day of each U.S. taxable year of the non-
U.S. Co-Lender) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent letter and form previously delivered by it
to Owner and Agent, and such other extensions or renewals thereof as may
reasonably be requested by Owner or Agent, certifying in the case of a Form 1001
or 4224 that such Co-Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes,
unless in
<PAGE>
any such case an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Co-Lender from duly completing and delivering any such letter or
form with respect to it and such Co-Lender advises Owner and Agent that it is
not capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax. Notwithstanding clause (i),
if a Co-Lender fails to provide a duly completed Form 1001 or 4224 or other
applicable form and, under applicable law, in order to avoid liability for
Taxes, Owner is required to withhold on payments made to such a Agent that has
failed to provide the applicable form, Owner shall be entitled to withhold the
appropriate amount of Taxes. In such event, Owner shall promptly provide to such
Co-Lender or Agent evidence of payment of such Taxes to the appropriate taxing
authority and shall promptly forward to such Co-Lender or Agent any official tax
receipts or other documentation with respect to the payment of the Taxes as may
be issued by the taxing authority.
(j) Limitation of Liability. No claim may be made by Owner, or any other
Person against Agent, or any Co-Lenders or the Affiliates, directors, officers,
employees, attorneys or agent of any of such Persons for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in
connection therewith; and Owner hereby waives, releases and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
(k) No Joint Venture. Notwithstanding anything to the contrary herein
contained, neither Agent, nor any Co-Lender by entering into this Agreement or
by taking any action pursuant hereto, will not be deemed a partner or joint
venturer with Owner and Owner and agree to hold Agent, and each Co-Lender
harmless from any damages and expenses resulting from such a construction of the
relationship of the parties hereto or any assertion thereof.
72. SPECIAL COVENANTS RELATING TO PROPERTY NOS. 30 (FIVE SEASONS HOTEL,
CEDAR RAPIDS), 57 (OMNI ALBANY), AND 59 (THE CLARION NIAGARA) SET FORTH ON
SCHEDULE A.
(a) Property No. 30 (Five Seasons Hotel, Cedar Rapids). (i) Owner agrees
and covenants to deliver on or before the date which is sixty (60 days from the
date hereof (the "Cedar Rapids Delivery Date"), an original fully-executed
counterpart of an estoppel by the ground lessor under the Ground Lease
applicable to the Mortgaged Property (the "Cedar Rapids Property") in the form
attached hereto as Exhibit H ("the Cedar Rapids Estoppel");
(ii) Upon the delivery of the Cedar Rapids Estoppel within the time frame
set forth above, Lender agrees to advance the maximum principal amount of the
future advance note by Servico Cedar Rapids, Inc. (the "Future Advance")
provided (i) no Event of Default exists, and (ii) Owner delivers to Lender a
datedown endorsement of the existing title policies insuring the lien of the
insured Mortgage as of the date of the advance (or an equivalent endorsement in
Texas) showing no exceptions to such policy other than the Permitted Exceptions
and otherwise acceptable to Lender in all respects; and
(iii) The proceeds of the Future Advance shall be applied to the
outstanding debt applicable to the first note and the mortgage secured thereby
held by Lehman Brothers Holdings Inc.
<PAGE>
relating to the Cedar Rapids Property (the "Lehman Note and Mortgage"). Owner
shall be required to satisfy the Lehman Note and Mortgage as of the date of the
Future Advance, irrespective of whether the proceeds of the Future Advance are
sufficient to satisfy the debt evidenced by the Lehman Note and Mortgage.
(b) Property No. 59 (Clarion Niagara). Owner hereby covenants and agrees as
follows: (i) that the Notes referred to in Nos. 2 and 3 of Schedule C-3 hereof
(collectively, the "Clarion Note"), the indenture of mortgage recorded on April
2, 1996, in Liber 3222 of Mortgages at Page 143, as assigned to Lehman Brothers
Holdings Inc. pursuant to an assignment of loan documents recorded on January
21, 1998 in Liber 1055 of Assignment of Mortgages at Page 26, as amended and
restated by an amended and restated indenture of mortgage, deed of trust,
assignment of leases and rents and security agreement recorded on January 21,
1998 in Liber 1055 of Assignment of Mortgages at Page 267, and a subordinate
mortgage, deed of trust, assignment of leases and rents and security agreement
recorded on January 21, 1998 in Liber 2860 of Deeds at Page 330 (collectively,
the "Clarion Mortgage"), together with all documents executed and delivered by
Servico New York, Inc. to Lehman Brothers Holdings Inc. in connection therewith
(the "Clarion Documents") shall mature on February 1, 1999 (the "Clarion
Maturity Date") and Owner hereby waives any right to a one (1) year extension
option contained in the Clarion Documents and/or the Seventh Amended and
Restated Consideration and Consent Agreement dated September 29, 1998 and (ii)
to deliver the following items on or before the Clarion Maturity Date: (A) an
original fully executed counterpart of the estoppel by the ground lessor under
the Ground Lease applicable to the Mortgaged Property in the form attached
hereto as Exhibit J; (B) an amendment and restatement of the Clarion Note in the
form of the Note, to be executed by Servico New York, Inc. and Niagara County
Industrial Development Authority in the principal amount equal to the Allocated
Loan Amount for Property No. 59 on Schedule A and an amendment and restatement
of the Clarion Mortgage in the form of the Mortgage, to be executed by Servico
New York, Inc. and Niagara County Industrial Development Authority securing the
principal amount of $19,168,000 (the "Note and Mortgage Amendment and
Restatement"), (C) an amendment and restatement of the assignment of leases and
rents dated as of January 16, 1998 and recorded in Liber 2800 at Page 279 in the
form of the Assignment, to be executed by Servico New York, Inc. and Niagara
County Industrial Authority (the "Assignment Amendment"), (D) a datedown
endorsement of the existing title policy insuring the lien of the insured
Mortgage as amended and restated pursuant to the Note and Mortgage Amendment and
Restatement showing no exceptions to such policy as of the date of such
Amendment and Restatement of Note and Mortgage and the Assignment Amendment
other than the Permitted Exceptions and otherwise acceptable to Lender in all
respects, and (E) an enforceability and due execution/authority opinion with
respect to the Note and Mortgage Amendment and Restatement and the Assignment
Amendment. The Note and Mortgage Amendment and the Assignment Amendment shall be
non-recourse with respect to the Niagara County Industrial Development Authority
only, but shall be with full recourse to the Owner. Notwithstanding the
foregoing, in the event that Owner shall not be able to satisfy (c)(ii)(A)-(E)
above within the time periods set forth therein, Owner agrees to comply with the
following: (1) Owner shall give Lender written notice on or before February 1,
1999 that Owner shall purchase the fee interest in the Mortgaged Property for
$1.00 in accordance with the terms of the Ground Lease relating to the Clarion
Property (the "Fee Interest Purchase"), (2) the Fee Interest Purchase shall
occur on or before March 1, 1999, (3) after the Fee Interest Purchase, Owner
shall deliver to Lender the documents referred in (c)(ii)(B) and (C) executed by
Owner as fee owner together with the title endorsement and the opinions referred
to in (c)(ii)(D) and (E) on or before March 1, 1999 and (4) in the event that
Owner delivers the notice referred to in (1) above, the Clarion Maturity Date
shall be extended to March 1, 1999.
<PAGE>
(c) Owner's failure to comply with the terms, provisions and conditions of
(a), (b) or (c) above shall be an Event of Default and Lender shall be entitled
to all remedies hereunder, under the Mortgage, under the Note and the other Loan
Documents.
(d) Owner hereby agrees to pay to Lender as additional interest (the
"Additional Interest") with respect to the Cedar Rapids Property and the Clarion
Property the following: (i) with respect to the Cedar Rapids Property, on each
Payment Date through and including the Cedar Rapids Delivery Date an amount
equal to the product of (A) the Allocated Loan Amount for the Cedar Rapids
Property and (B) the difference between the Applicable Interest Rate on the Note
and the applicable note rate on the Cedar Rapids Note (or 1.43%) and (ii) with
respect to the Clarion Property, on each Payment Date through and including
February 1, 1999 or in the event that Owner exercises its rights pursuant to the
last sentence of subsection (b) above, March 1, 1999, an amount equal to the
product of (A) the Allocated Loan Amount for the Clarion Property and (B) the
difference between the Applicable Interest Rate on the Note and the applicable
note rate on the Clarion Note (or 1.43%).
(e) Notwithstanding anything contained to the contrary in this commitment
letter dated November 4, 1998, Owner agrees that it shall pay for all of
Lender's costs and expenses incurred on and after the date hereof in connection
with this Section 72, including due diligence costs and counsel fees and
disbursements incurred in connection with this Section 72 and the review and
approval of the documents, estoppels and information required to be delivered
herewith.
73. SPECIAL COVENANT RELATING TO PROPERTY NOS. 13 AND 57 ON SCHEDULE A
(WEST PALM BEACH AND ALBANY OMNI HOTELS) (a) Owner hereby agrees to deliver a
copy of the Property Improvement Plan or such other renovation plan developed by
the Franchisor (the "Franchisor's Plan") with respect to Property Nos. 13 and/or
57 set forth on Schedule A attached (the "Omni Hotels") upon receipt of same.
Upon receipt of the Franchisor's Plan, Lender shall retain, at Owner's cost and
expense, B.E.S.T. Consulting or such other engineer, mutually acceptable to
Owner and Lender, to prepare a cost estimate for the renovations set forth in
the Franchisor's Plan (the "Cost Estimate"). Owner agrees to deposit with Lender
the total amount of the Cost Estimate on or before the Final Month (defined
below) in monthly installments calculated by Lender as follows: a monthly amount
equal to (i) the Cost Estimate multiplied by (ii) a fraction, the numerator of
which is one (1) and the denominator of which is the product of (A) the total
number of full calendar months contained in the required renovation period in
the Franchisor's Plan (and if such number of calendar months is an odd number,
it shall be rounded downwards to the next even month number) and (B) 1/2 (the
"Omni Monthly Deposits"). The Omni Monthly Deposits shall be deposited with
Lender (the "Omni Reserve") on the first day of the calendar month of the
commencement of the renovation period and on the first day of each calendar
month thereafter through and including the Final Month. The Final Month shall be
the first day of the calendar month which is "X"-1 months immediately after the
first calendar month of the commencement of the renovation period pursuant to
the Franchisor's Plan. "X" shall be calculated as follows: the total amount of
full calendar months in the renovation period (and if such number of number of
months is an odd number, it shall be rounded downwards to the next even month
number) divided by 2. Lender will maintain the Omni Reserve in a segregated
account (the "Omni Reserve Account"), which shall be an Eligible Account, and
the Omni Reserve shall be invested and reinvested by Lender, at Owner's
direction, in one or more Eligible Accounts, subject to the following
restrictions: (A) such Eligible Investments and the proceeds thereof shall be
deemed a part of the Omni Reserve; (B) each such Eligible Investments shall be
made in the name of Lender (in its capacity as such) or in the name of a nominee
of Lender under its complete and exclusive
<PAGE>
dominion and control or, if applicable law provides for perfection of pledges of
an instrument not evidenced by a certificate or other instrument through
registration of such pledge on books maintained by or on behalf of the issuer of
such investment, such pledge may be so registered; (C) Lender shall have the
sole control over such investment, the income thereon and the proceeds thereof;
(D) other than investments described in clause (B) above, any certificate or
other instrument evidencing such investment shall be delivered directly to
Lender or its agent; (E) the proceeds of each investment shall be remitted by
the purchaser thereof directly to Lender and (F) Lender shall not be liable for
any loss sustained on the investment of any funds constituting a part of the
Omni Reserve (except for losses resulting from Lender's gross negligences or
willful default).
(b) Owner hereby grants a first priority security interest to Lender, as
security for payment of all sums due under the Loan and the performance of all
other terms, conditions and provisions to be paid and performed, of all
Borrower's right, title and interest in and to the Omni Reserve and the Omni
Reserve Account and shall execute and deliver to Lender such UCC-1 Financing
Statements and other documents or instruments as Lender may request in order to
grant and perfect such security interest. Owner shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in the Omni Reserve or the Omni Reserve Account or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto. Upon the occurrence of an Event of Default, Lender
may apply any sums then present in the Omni Reserve to the payment of the Debt
(as defined in the Note) in any order in its sole discretion. Until expended or
applied as above provided, the Omni Reserve shall constitute additional security
for the Debt.
(c) Lender shall disburse amounts from the Omni Reserve in the same manner
and in accordance with disbursement requirements for the Required Repairs
Reserve as set forth in Section 64 hereof. Owner shall be required to comply
with all of the conditions precedent for disbursements as set forth in Section
64 when requesting disbursements from the Omni Reserve.
74. SPECIAL CANADIAN PROVISION. (a) The following provision relates to the
Canadian Property only: For purposes of the Interest Act (Canada), (i) whenever
any interest or fee under any Loan Document is calculated using a rate based on
a year of 360 days or 365 days, as the case may be, the rate determined pursuant
to such calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may be, (y)
multiplied by the actual number of days in the calendar year in which the period
for which such interest or fee is payable (or compounded) ends, and (z) divided
by 360 or 365, as the case may be, and (ii) the principle of deemed reinvestment
of interest does not apply to any interest calculation under any Loan Document.
(b) By the execution and delivery of this Loan Agreement or any other Loan
Document, the Canadian Guarantor shall not in any way be deemed to be a
"Borrower" of funds from Lender and Canadian Guarantor's sole obligation for the
payment of the Debt shall be pursuant to the Canadian Guarantee.
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, Borrower and Lender have executed this instrument
<PAGE>
as of the day and year first above written.
BORROWER
Toni Jones, as Vice President of each of
the Companies described on the attached
Exhibit G
LENDER:
SECORE FINANCIAL CORPORATION,
individually and as Agent for one or more
Co-Lenders and successors
By: _________________________________
Name:
Title:
IN WITNESS WHEREOF, Canadian Guarantor has executed this instrument as of
the day and year first above written.
CANADIAN GUARANTOR
By: _________________________________
Name:
Title:
SCHEDULE A
List of Mortgaged Properties
<TABLE>
<CAPTION>
Management/
TPW Franchise Consulting
PROPERTY NO. Name/Address Agreement Franchisor Agreement Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Holiday Inn Sheffield September Holiday Inns October 5, Servico
4900 Hatch Boulevard 24, 1991 Franchising, 1993 Management
Sheffield, Alabama 35660 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
2 Holiday Inn Dothan August 14, Holiday Inns December , Servico
3053 Ross Clark Circle, SW 1995 Franchising, 1996 Management
Dothan, Alabama 38301 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocated Loan
TPW Amount Release
PROPERTY NO. ("ALA") Price
- ------------------------------------------------------------
1 $4,719,199 130%
of ALA
- ------------------------------------------------------------
2 $1,819,195 125%
of ALA
- ------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Management/
TPW Franchise Consulting
PROPERTY NO. Name/Address Agreement Franchisor Agreement Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 Hampton Inn Dothan August 16, Promus August , Servico
3071 Ross Clark Circle, SW 1995 Hotels, Inc. 1995 Management
Dothan, Alabama 38301 Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
4 Holiday Inn Express Gadsden August 14, Holiday Inns December , Servico
801 Cleveland Avenue 1995 Franchising, 1996 Management
Attalia, Alabama 35954 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
8 Howard Johnson Flagstaff September 29, Howard October 5, Servico
2200 East Butler Avenue 1989 Johnson 1993 Management
Flagstaff, Arizona 88001 Franchise Corp.
Systems, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
11 Holiday Inn East Hartford May 28, 1998 Holiday August 21, Servico
363 Roberts Street Hospitality 1998 Management
East Hartford, Connecticut Franchising, Corp.
08106 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
12 Holiday Inn New Haven May 28, 1998 Holiday August 21, Servico
30 Whalley Avenue Hospitality 1998 Management
New Haven, Connecticut Franchising, Corp.
06511 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
13 Omni Hotel West Palm January 7, Omni Hotels May 15, 1982 Royce
Beach 1992 Franchising Management
1601 Belvedere Road Corporation Corp.
West Palm Beach, Florida
33406
- ------------------------------------------------------------------------------------------------------------------------------------
14 Sheraton West Palm Beach November 20, ITT November 21, Servico
630 Clearwater Park Road 1997 Sheraton 1997 Management
West Palm Beach, Florida Corporation Corp.
33401
- ------------------------------------------------------------------------------------------------------------------------------------
15 Holiday Inn Express August 14, Holiday Inns August 15, Servico
Pensacola 1995 Franchising, 1995 Management
6501 Pensacola Road Inc. Corp.
Pensacola, Florida 23505
- ------------------------------------------------------------------------------------------------------------------------------------
16 Holiday Inn University Mall August 14, Holiday Inns December , Servico
7200 Plantation Road 1995 Franchising, 1996 Management
Pensacola, Florida 32504 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
17 Hampton Inn Pensacola August 16, Promus December , Servico
7330 Plantation Road 1995 Hotels, Inc. 1996 Management
Pensacola, Florida 32504 Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
18 Holiday Inn Express Ft. August 14, Holiday Inns December , Servico
Pierce 1995 Franchising, 1996 Management
7151 Okeechobee Road Inc. Corp.
Fort Pierce, Florida 34945
- ------------------------------------------------------------------------------------------------------------------------------------
19 Holiday Inn Winter Haven November 17, Holiday November 21, Servico
1150 3rd Street SW 1997 Hospitality 1997 Management
Winter Haven, Florida 33880 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocated Loan
TPW Amount Release
PROPERTY NO. ("ALA") Price
- ------------------------------------------------------------
3 $ 3,334,130 125%
of ALA
- ------------------------------------------------------------
4 $ 3,392,624 125%
of ALA
- ------------------------------------------------------------
8 $ 2,520,000 125%
of ALA
- ------------------------------------------------------------
11 $ 3,372,736 125%
of ALA
- ------------------------------------------------------------
12 $ 3,041,663 125%
of ALA
- ------------------------------------------------------------
13 $ 15,000,000 125%
of ALA
- ------------------------------------------------------------
14 $ 9,415,450 140%
of ALA
- ------------------------------------------------------------
15 $ 5,686,154 125%
of ALA
- ------------------------------------------------------------
16 $ 5,615,377 125%
of ALA
- ------------------------------------------------------------
17 $ 5,526,455 125%
of ALA
- ------------------------------------------------------------
18 $ 2,032,831 125%
of ALA
- ------------------------------------------------------------
19 $ 4,339,282 125%
of ALA
- ------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Management/
TPW Franchise Consulting
PROPERTY NO. Name/Address Agreement Franchisor Agreement Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
26 Holiday Inn Brunswick September 24, Holiday Inns October 5, Servico
U.S. 341 at I-98 1991 Franchising, 1993 Management
Brunswick, Georgia 31520 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
29 Holiday Inn Rolling Meadows November 20, Holiday November 21, Servico
3405 Algonquin Road 1997 Hospitality 1997 Management
Rolling Meadows, Illinois Franchising, Corp.
60008 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
30 Five Season Hotel June 6, 1997 Holiday Inns April 23, 1997 Servico
350 1st Avenue NE (Conversion) Franchising, Management
Cedar Rapids, Iowa 53401 Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
39 Quality Hotel Metairie June 22, Choice October 5, Servico
2261 North Causeway Blvd. 1994 Hotels 1993 Management
Metairie, Louisiana 70001 Internationa Corp.
l, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
40 Columbia Hilton November 7, Hilton Inns, November 6, Servico
5485 Twin Knolls Road 1997 Inc. 1997 Management
Silver Spring, Maryland (Assignment) Corp.
21045
- ------------------------------------------------------------------------------------------------------------------------------------
41 Town Center N/A None February 19, Servico
8727 Colesville Road 1998 Management
Silver Spring, Maryland Corp.
20910
- ------------------------------------------------------------------------------------------------------------------------------------
45 Frederick Holiday Inn May 28, 1998 Holiday August 21, Servico
999 West Patrick Street Hospitality 1998 Management
Frederick, Maryland 21702 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
46 Holiday Inn Washington, November 17, Holiday November 21, Servico
D.C. 1997 Hospitality 1997 Management
8777 Georgia Avenue Franchising, Corp.
Silver Spring, Maryland Inc.
20920
- ------------------------------------------------------------------------------------------------------------------------------------
47 Cromwell Bridge Holiday Inn May 28, 1998 Holiday August 21, Servico
1100 Cromwell Bridge Road Hospitality 1998 Management
Towson, Maryland 21286 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
48 Belmont Holiday Inn May 28, 1998 Holiday August 21, Servico
1800 Belmont Avenue Hospitality 1998 Management
Baltimore, Maryland 21244 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
49 Northfield Hilton October 11, Hilton Inns, October 5, Servico
5500 Crooks Road 1983 Inc. 1993 Management
Troy, Michigan 48098 Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
50 Holiday Inn St. Paul June 21, Holiday Inns October 5, Servico
1201 West County Road East 1994 Franchising, 1993 Management
St. Paul, Minnesota 55112 (Conversion) Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocated Loan
TPW Amount Release
PROPERTY NO. ("ALA") Price
- ------------------------------------------------------------
26 $ 3,041,663 125%
of ALA
- ------------------------------------------------------------
29 $ 15,097,908 125%
of ALA
- ------------------------------------------------------------
30 $ 6,250,000 145%
of ALA
- ------------------------------------------------------------
39 $ 5,785,000 125%
of ALA
- ------------------------------------------------------------
40 $ 9,523,150 130%
of ALA
- ------------------------------------------------------------
41 $ 12,368,000 125%
of ALA
- ------------------------------------------------------------
45 $ 3,327,111 125%
of ALA
- ------------------------------------------------------------
46 $ 9,843,873 125%
of ALA
- ------------------------------------------------------------
47 $ 5,355,081 125%
of ALA
- ------------------------------------------------------------
48 $ 2,354,500 155%
of ALA
- ------------------------------------------------------------
49 $ 11,634,839 125%
of ALA
- ------------------------------------------------------------
50 $ 5,081,993 125%
of ALA
- ------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Management/
TPW Franchise Consulting
PROPERTY NO. Name/Address Agreement Franchisor Agreement Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
51 Comfort Inn Roseville October 17, Choice October 17, Servico
2715 Long Lake Road 1997 Hotels 1997 Management
Roseville, Minnesota 55113 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
57 Omni Albany Hotel October 29, Omni Hotels October 5, Servico
State & Lodge Streets 1992 Franchising 1993 Management
Ten Eyck Plaza Corporation Corp.
Albany, New York 12207
- ------------------------------------------------------------------------------------------------------------------------------------
58 Holiday Inn Jamestown November 7, Holiday , 1997 Servico
150 West 4th Street 1997 Hospitality Management
Jamestown, New York 14701 Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
59 Clarion Hotel Niagara Falls March 19, Holiday December 5, Servico
Third and Old Falls Street 1998 Hospitality 1997 Management
Niagara Falls, New York (Conversion) Franchising, Corp.
14303 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
60 Holiday Inn Niagara Falls May 20, 1998 ITT December 5, Servico
114 Buffalo Avenue (Conversion) Sheraton 1997 Management
Niagara Falls, New York Corporation Corp.
14303
- ------------------------------------------------------------------------------------------------------------------------------------
61 Holiday Inn Grand Island January 16, Holiday December 5, Servico
100 Whitehaven Road 1998 Hospitality 1997 Management
Grand Island, New York Franchising, Corp.
14072 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
62 Holiday Inn Fayetteville December 4, Holiday Inns October 5, Servico
1844 Cedar Creek Road 1991 Franchising, 1993 Management
Fayetteville, North Carolina Inc. Corp.
28303
- ------------------------------------------------------------------------------------------------------------------------------------
67 Holiday Inn Greentree September 24, Holiday Inns October 5, Servico
401 Holiday Drive 1991 Franchising, 1993 Management
Pittsburgh, Pennsylvania Inc. Corp.
15220
- ------------------------------------------------------------------------------------------------------------------------------------
68 Holiday Inn Parkway East December 4, Holiday Inns January 5, Servico
915 Brinton Road 1991 Franchising, 1995 Management
Pittsburgh, Pennsylvania Inc. Corp.
15221
- ------------------------------------------------------------------------------------------------------------------------------------
70 Holiday Inn York Arsenal May 28, 1998 Holiday August 21, Servico
Road Hospitality 1998 Management
334 Arsenal Road Franchising, Corp.
York, Pennsylvania 17402 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
73 Four Points Hotel Hilton October 31, ITT June 14, 1996 Servico
Head 1996 Sheraton Management
36 South Forest Beach Drive Corporation Corp.
Hilton Head Island, South
Carolina 29928
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocated Loan
TPW Amount Release
PROPERTY NO. ("ALA") Price
- ------------------------------------------------------------
51 $ 3,315,000 130%
of ALA
- ------------------------------------------------------------
57 $ 15,500,000 135%
of ALA
- ------------------------------------------------------------
58 $ 3,583,450 125%
of ALA
- ------------------------------------------------------------
59 $ 9,350,000 155%
of ALA
- ------------------------------------------------------------
60 $ 4,756,692 125%
of ALA
- ------------------------------------------------------------
61 $ 6,162,876 125%
of ALA
- ------------------------------------------------------------
62 $ 3,821,468 125%
of ALA
- ------------------------------------------------------------
67 $ 8,960,114 125%
of ALA
- ------------------------------------------------------------
68 $ 4,759,468 125%
of ALA
- ------------------------------------------------------------
70 $ 2,240,886 125%
of ALA
- ------------------------------------------------------------
73 $ 3,486,500 155%
of ALA
- ------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Management/
TPW Franchise Consulting
PROPERTY NO. Name/Address Agreement Franchisor Agreement Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
74 Best Western Charleston September 20 Best Western August 31, Servico
Int'l Airport 1993 Internationa 1994 Management
7401 Northwoods Boulevard l, Inc. Corp.
North Charleston, South
Carolina 29418
- ------------------------------------------------------------------------------------------------------------------------------------
81 Holiday Inn Austin South September 22 Holiday Inns October 5, Servico
3401 South IH-35 1993 Franchising, 1993 Management
Austin, Texas 78741 (Conversion) Inc. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
82 Holiday Inn Market March 27, Holiday Inns July 14, 1997 Servico
Center Dallas 1998 Franchising, Management
1955 Market Center (Conversion) Inc. Corp.
Boulevard
Dallas, Texas 75207
- ------------------------------------------------------------------------------------------------------------------------------------
83 Ramada Plaza Houston March 27, Holiday November 21, Servico
12801 N.W. Freeway US 290 1998 Hospitality 1997 Management
Houston, Texas 77040 (Conversion) Franchising, Corp.
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
88 Holiday Inn Select Windsor September Holiday October 3, Servico
1855 Huron Church Road 24, 1997 Hospitality 1997 Management
Windsor, Ontario, Canada Franchising, Corp.
N9C 2L6 Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
89 Days Inn June 1, 1998 Days Inn of May 2, 1993 Servico
Silver Spring, Maryland America, Management
8040 13th Street Inc. Corp.
Silver Spring, Maryland
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocated Loan
TPW Amount Release
PROPERTY NO. ("ALA") Price
- ------------------------------------------------------------
74 $ 5,200,000 125%
of ALA
- ------------------------------------------------------------
81 $ 8,905,000 130%
of ALA
- ------------------------------------------------------------
82 $ 6,495,032 125%
of ALA
- ------------------------------------------------------------
83 $ 10,180,565 125%
of ALA
- ------------------------------------------------------------
88 $ 6,581,982 125%
of ALA
- ------------------------------------------------------------
89 $ 2,222,753 125%
of ALA
- ------------------------------------------------------------
SCHEDULE B
[Intentionally Omitted]
SCHEDULE C
Global Note
1. Promissory Note dated the date hereof, in the original principal amount of
$4,719,199, made by Sheffield Motel Enterprises, Inc.
2. Promissory Note dated the date hereof, in the original principal amount of
$1,819,195, made by Dothan Hospitality 3053, Inc.
<PAGE>
3. Promissory Note dated the date hereof, in the original principal amount of
$3,334,130, made by Dothan Hospitality 3071, Inc.
4. Promissory Note dated the date hereof, in the original principal amount of
$3,392,624, made by Gadsden Hospitality, Inc.
5. Promissory Note dated the date hereof, in the original principal amount of
$2,520,000, made by Servico Flagstaff, Inc.
6. Promissory Note dated the date hereof, in the original principal amount of
$3,372,736, made by AMI Operating Partners, L.P. (#11)
7. Promissory Note dated the date hereof, in the original principal amount of
$3,041,663, made by AMI Operating Partners, L.P. (#12)
8. Promissory Note dated the date hereof, in the original principal amount of
$3,041,663, made by Brunswick Motel Enterprises, Inc.
9. Promissory Note dated the date hereof, in the original principal amount of
$15,097,908, made by Servico Rolling Meadows, Inc.
10. Promissory Note dated the date hereof, in the original principal amount of
$6,250,000, made by Servico Cedar Rapids, Inc.
11. Promissory Note dated the date hereof, in the original principal amount of
$5,785,000, made by Servico Metairie, Inc.
12. Promissory Note dated the date hereof, in the original principal amount of
$11,634,839, made by NH Motel Enterprises, Inc.
13. Promissory Note dated the date hereof, in the original principal amount of
$5,081,993, made by Minneapolis Motel Enterprises, Inc.
14. Promissory Note dated the date hereof, in the original principal amount of
$3,315,000, made by Servico Roseville, Inc.
15. Promissory Note dated the date hereof, in the original principal amount of
$3,821,468, made by Fayetteville Motel Enterprises, Inc.
16. Promissory Note dated the date hereof, in the original principal amount of
$8,960,114, made by Apico Inns of Green Tree, Inc.
17. Promissory Note dated the date hereof, in the original principal amount of
$4,759,468, made by Apico Hills, Inc.
18. Promissory Note dated the date hereof, in the original principal amount of
$2,240,886, made by AMI Operating Partners, L.P. (#70)
<PAGE>
19. Promissory Note dated the date hereof, in the original principal amount of
$3,486,500, made by Servico Hilton Head, Inc.
20. Promissory Note dated the date hereof, in the original principal amount of
$5,200,000, made by Servico Northwoods, Inc.
21. Promissory Note dated the date hereof, in the original principal amount of
$8,905,000, made by Servico Austin, Inc.
22. Promissory Note dated the date hereof, in the original principal amount of
$6,495,032, made by Servico Market Center, Inc.
23. Promissory Note dated the date hereof, in the original principal amount of
$10,180,565, made by Servico Houston, Inc.
24. Promissory Note dated the date hereof, in the original principal amount of
$6,581,982, made by Apico Hills, Inc.
SCHEDULE C-1
AMENDED AND RESTATED FLORIDA NOTES
1. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $15,000,000, made by Servico Centre Associates, Ltd.
2. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $9,415,450, made by Servico West Palm Beach, Inc.
3. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $5,686,154, made by Servico Pensacola, Inc.
4. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $5,615,377, made by Servico Pensacola 7200, Inc.
5. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $5,526,455, made by Servico Pensacola 7330, Inc.
6. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $2,032,831, made by Servico Ft. Pierce, Inc.
7. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $4,339,282, made by Servico Winter Haven, Inc.
SCHEDULE C-2
AMENDED AND RESTATED MARYLAND NOTES
<PAGE>
1. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $9,523,150, made by Servico Columbia, Inc.
2. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $12,368,000, made by Servico Colesville, Inc.
3. Consolidated, Amended and Restated Promissory Note dated the date hereof,
in the original principal amount of $3,327,111, made by AMI Operating
Partners, L.P. (#45)
4. Amended and Restated Promissory Note dated the date hereof, in the original
principal amount of $9,843,873, made by Servico Maryland, Inc.
5. Consolidated, Amended and Restated Promissory Note dated the date hereof,
in the original principal amount of $5,355,081, made by AMI Operating
Partners, L.P. (#47)
6. Consolidated, Amended and Restated Promissory Note dated the date hereof,
in the original principal amount of $2,354,500, made by AMI Operating
Partners, L.P. (#48)
7. Promissory Note dated the date hereof, in the original principal amount of
$2,222,753, made by Servico Silver Spring, Inc.
SCHEDULE C-3
NY NOTES
1. Consolidated, Amended and Restated Promissory Note dated the date hereof,
in the original principal amount of $30,003,018 made by Albany Hotel, Inc.,
Servico Jamestown, Inc., Servico Niagara Falls, Inc. and Servico Grand
Island, Inc.
2. Subordinate Mortgage Note dated January 16, 1998, in the original principal
amount of $3,528,340.00 made by Servico New York, Inc. to Lehman Brothers
Holdings Inc., as assigned as of the date hereof to Secore Financial
Corporation, as subsequently modified, amended and restated.
3. Bond dated March 29, 1996, in the original principal amount of
$6,155,000.00 made by Niagara County Industrial Development Agency to ORIX
USA Corporation, as assigned as of the dated hereof to Secore Financial
Corporation, as subsequently modified, amended and restated.
SCHEDULE D
REQUIRED REPAIRS SCHEDULE
<PAGE>
SCHEDULE E
SCHEDULE OF PARTICIPATIONS IN THE CASH MANAGEMENT SYSTEM
SCHEDULE F
SCHEDULE OF PROPERTIES GOVERNED BY CURRENT CASH MANAGEMENT SYSTEM
HI SHEFFIELD
4900 Hatch Boulevard
Sheffield, AL 35660
HI DOTHAN
3053 Ross Clark Circle
Dothan, AL 36301
HAMPTON INN DOTHAN
3071 Ross Clark Circle
Dothan, AL 36301
HI EXPRESS GADSDEN
801 Cleveland Avenue
Gadsden, AL 35954
HI EXPRESS PENSACOLA
6501 Pensacola Blvd.
Pensacola, FL 32505
HI UNIVERSITY MALL
7200 Plantation Road
Pensacola, FL 32504
HI WINTER HAVEN
1150 3RD Street S.W.
Winter Haven, Florida 33880
HI EXPRESS FT. PIERCE
7151 Okeechobee Road
Ft. Pierce, FL 34945
HAMPTON INN PENSACOLA
7330 Plantation Road
Pensacola, FL 32504
<PAGE>
HI BRUNSWICK
5252 New Jesup Highway
Brunswick, GA 31525
HI JEKYLL ISLAND
200 South Beachview Drive
Jekyll Island, GA 31527
QUALITY HOTEL & CONF. CTR.
2261 North Causeway Boulevard
Metairie, LA 70001
HI FAYETTEVILLE
1944 Cedar Creek Road @ I-95
Fayetteville, NC 28303
HI RALEIGH DOWNTOWN
320 Hillsborough Street
Raleigh, NC 27603
HI HILTON HEAD
1 South Forest Beach Drive
Hilton Head, SC 29928
BW CHARLESTON INT'L AIRPORT
7401 Northwoods Blvd.
North Charleston, SC 29406
FOUR POINTS HOTEL
36 South Forest Beach Drive
Hilton Head, SC 29928
HI BLOOMINGTON
1710 Kinser Pike
Bloomington, IN 47404
FT. WAYNE HILTON
1020 South Calhoun Street
Fort Wayne, IN 46802
OMNI ALBANY HOTEL
State & Lodge Streets
Albany, NY 12207
CLARION HOTEL
Third & Old Falls Streets P.O. Box 845
Niagara Falls, NY 14303
HI NIAGARA FALLS
114 Buffalo Avenue
Niagara Falls, New York 14303
HI JAMESTOWN
150 W. 4th Street
Jamestown, New York 14701
<PAGE>
HI GRAND ISLAND
100 Whitehave Road
Grand Island, New York 14072
HI MONROEVILLE
2750 Mosside Boulevard
Monroeville, PA 15146
HI GREENTREE
401 Holiday Drive
Pittsburgh, PA 15220
HI PARKWAY EAST
915 Brinton Road
Pittsburgh, PA 15221
CLARION-ROYCE HOTEL
1160 Thorn Run Road Extension
Coraopolis, PA 15108
HI MCKNIGHT
4859 McKnight Road
Pittsburgh, PA 15237
WESTIN WILLIAM PENN
530 William Penn Place
Pittsburgh, PA 15219
HI MEADOWLANDS
340 Racetrack Road
Washington, PA 15301
HI PHOENIX
1500 North 51st Avenue
Phoenix, AZ 85043
RAD. PHOENIX AIRPORT
3333 East University Drive
Phoenix, AZ 85034
HJ FLAGSTAFF
2200 East Butler Avenue
Flagstaff, AZ 86004
HI SELECT AIRPORT PHX
4300 E. Washington
Phoenix, AZ 85034
HI EXPRESS PALM DESERT
74675 Highway #111
Palm Desert, CA 92260
SHERATON CONCORD HOTEL
45 John Glenn Drive
Concord, CA 94520
<PAGE>
BW COUNCIL BLUFFS
3537 W. Broadway
Council Bluffs, IA 51501
FOUR POINTS DES MOINES WEST
11040 Hickman Road @ I-80
West Des Moines, IA 50325
CROWNE PLZ FIVE SEASONS
350 1st Avenue N.E.
Cedar Rapids, IA 52401
HI MANHATTAN
530 Richards Drive
Manhattan, KS 66502
HI LAWRENCE
200 McDonald Drive
Lawrence, KS 66044
HI WICHITA AIRPORT
5500 W. Kellogg
Wichita, KS 67209
BW CENTRAL
3650 S. 72nd Street @ I-80
Omaha, NE 68124
FOUR POINTS HOTEL OMAHA
4888 S. 118 Street @ I-80
Omaha, NE 68137
HI SANTA FE
4048 Cerrillos Road
Santa Fe, NM 87505
RAMADA PLAZA
12801 NW Freeway US 290
Houston, Texas 77040
HI AUSTIN SOUTH
3401 South IH-35
Austin, TX 78741
HI MARKET CENTER
1955 Market Center Blvd.
Dallas, Texas 75207
HI EAST HARTFORD
363 Roberts Street
E. Hartford, Connecticut 06108
HI NEW HAVEN
30 Whalley Avenue
New Haven, Connecticut 06511
<PAGE>
DAYS INN SILVER SPRING
8040 13th Street
Silver Spring, MD 20910
HILTON INN COLUMBIA
5485 Twin Knolls Road
Columbia, MD 21045
HI SILVER SPRING
8777 Georgia Avenue
Silver Spring, MD 20910
TOWN CENTER HOTEL
8727 Colesville Road
Silver Spring, MD 20910
HI INNER HARBOR
301 W. Lombard Street
Baltimore, Maryland 21201
HI INT'L AIRPORT
890 Elkridge Landing Road
Linthicum Heights, Maryland 21090
HI FREDERICK
999 W. Patrick Street
Frederick, Maryland 21702
HI GLEN BURNIE N.
6323 Governor Ritchie Highway
Glen Burnie, Maryland 21061
HI CROMWELL BRIDGE
1100 Cromwell Bridge Road
Towson, Maryland 21286-2216
HI BELMONT
1800 Belmont Avenue
Baltimore, Maryland 21244
HI LANCASTER EAST
521 Greenfield Road
Lancaster, PA 17601
HI YORK ARSENAL ROAD
334 Arsenal Road
York, Pennsylvania 17402-1900
HI FRISCO
1129 N. Summit Blvd.
Frisco, CO 80443
HI ROLLING MEADOWS
3405 Algonquin Road
Rolling Meadows, IL 60008
<PAGE>
HI-ST. PAUL NORTH
1201 West County Road E
St. Paul, MN 55112
COMFORT INN-ROSEVILLE
2715 Long Lake Road
Roseville, MN 55113
HILTON INN NORTHFIELD
5500 Crooks Road
Troy, MI 48098
HI LANSING WEST
7501 W. Saginaw Highway
Lansing, MI 48917
HI SELECT
1855 Huron Church Road
Windsor, Ontario Canada N9C 2L6
OMNI HOTEL WPB
1601 Belvedere Road
West Palm Beach, FL 33406
SHERATON HOTEL
630 Clearwater Park Road
West Palm Beach, Florida 33401
HI YORK MARKET STREET
2600 East Market Street
York, PA 17402
HI LANCASTER NORTH
3492 Lititz Pike
Lancaster, PA
SCHEDULE G
LIST OF AMI PROPERTIES
1. "Glenn Burnie North"
6323 Governor Richie Highway
Glen Burnie, MD 21061
2. "Pikesville"
1721 Belmont Avenue
Pikesville, MD 21208
3. "Moravia"
6510 Frankford Avenue
Baltimore, MD 21206
<PAGE>
4. "Inner Harbor"
301 West Lombard Street
Baltimore, MD 21201
5. "International Airport"
890 Eldridge Landing Road
Linthicum Heights, MD 21090
6. "Glen Burnie South"
Glen Burnie, Maryland 21061
7. "Lancaster North"
1492 Lititz Pike
Lancaster, PA 17601
8. "Lancaster East"
521 Greenfield Road
Lancaster, PA 17601
9. "York Market Street"
2600 East Market Street
York, PA 17402
10. "Hazleton"
Route 309 North
Hazelton, PA 18201
SCHEDULE H
LIST OF PIP'S
Property No. PROPERTY
83. RAMADA HOUSTON
29. HI ROLLING MEADOWS
61. HI GRAND ISLAND
60. HI NIAGARA FALLS
59. CLARION NIAGARA FALLS
14. SHERATON WEST PALM BEACH
88. HI WINDSOR
11. HI EAST HARTFORD
12. HI NEW HAVEN
47. HI CROMWELL BRIDGE
45. HI FREDERICK
70. HI YORK ARSENAL
<PAGE>
48. HI BELMONT
58. HI JAMESTOWN
46. HI SILVER SPRING
SCHEDULE I
(FF&E LEASE AGREEMENTS)
PART I. LIST OF LEASE AGREEMENTS
<TABLE>
<CAPTION>
LESSOR/SECURED LESSEE/DEBTOR ORIGINAL PRINCIPAL NOTES/SECURITY OUTSTANDING PRINCIPAL ANNUAL PAYMENTS
PARTY AMOUNT AGREEMENTS/LEASES AMOUNT ALLOCATED TO ALLOCATED TO
MATURITY/EXPIRATION MORTGAGED PROPERTIES MORTGAGED
DATES PROPERTIES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CHARTER FINANCIAL, SERVICO, INC. $1,054,483.00 1. PROMISSORY NOTE $232,668 $187,656
INC. DATED 12/23/96, WHICH
NOTE MATURES12/25/99.
2. SECURITY AGREEMENT
DATED 12/23/96, WHICH
SECURITY AGREEMENT
MATURES 12/25/99.
- ------------------------------------------------------------------------------------------------------------------------------------
LYON CREDIT SERVICO, INC. $237,746.99 PROMISSORY NOTE DATED $29,869 $9,552
9/27/96, WHICH NOTE
MATURES 1/31/01.
- ------------------------------------------------------------------------------------------------------------------------------------
$220,405.77 PROMISSORY NOTE DATED $80,914 $34,500
9/27/96, WHICH NOTE
MATURES 10/31/01.
- ------------------------------------------------------------------------------------------------------------------------------------
$113,310.99 PROMISSORY NOTE DATED $37,875 $32,424
11/22/96, WHICH NOTE
MATURES 12/31/99.
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITY AGREEMENT
DATED 12/26/95 $148,658 $76,476
(SECURES EACH OF THE
ABOVE NOTES).
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL MARKETING SERVICO N/A MASTER EQUIPMENT $114,217 $51,235
SERVICES, INC. MANAGEMENT LEASE DATED 10/25/95,
CORP., AS AGENT WHICH LEASE TERMINATES
FOR BORROWER 10/31/00.
- ------------------------------------------------------------------------------------------------------------------------------------
GELCO CORPORATION SERVICO, INC. N/A MASTER LEASE $13,566 $11,424
D/B/A GE CAPITAL AGREEMENT DATED
FLEET SERVICES 11/9/94, WHICH LEASE
TERMINATES ONLY UPON
30 DAYS' WRITTEN NOTICE
BY EITHER PARTY.
- ------------------------------------------------------------------------------------------------------------------------------------
TELERANT LEASING BRUNSWICK $104,551.20 LEASE AGREEMENT DATED $21,531 $25,740
CORPORATION MOTEL 3/31/94.
ENTERPRISES AND
SERVICO, INC.
(HOLIDAY INN
BRUNSWICK)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LESSOR/SECURED LESSEE/DEBTOR ORIGINAL PRINCIPAL NOTES/SECURITY OUTSTANDING PRINCIPAL ANNUAL PAYMENTS
PARTY AMOUNT AGREEMENTS/LEASES AMOUNT ALLOCATED TO ALLOCATED TO
MATURITY/EXPIRATION MORTGAGED PROPERTIES MORTGAGED
DATES PROPERTIES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TELERANT LEASING KDS $83,679.00 LEASE AGREEMENT $36,104 $18,024
CORPORATION CORPORATION 8/14/95
(QUALITY INN
METARIE)
- ------------------------------------------------------------------------------------------------------------------------------------
TELERANT LEASING KDS $84,465.00 LEASE AGREEMENT DATED $37,750 $18,288
CORPORATION CORPORATION AND 1/16/96
SERVICO, INC.
(HOLIDAY INN
AUSTIN SOUTH)
- ------------------------------------------------------------------------------------------------------------------------------------
TELERANT LEASING SHEFFIELD MOTEL $95,086.20 LEASE AGREEMENT DATED $32,063 $20,544
CORPORATION ENTERPRISES, INC. 3/27/95.
(HOLIDAY INN
SHEFFIELD)
- ------------------------------------------------------------------------------------------------------------------------------------
M&SD SERVICO, INC. N/A MASTER AGREEMENT OF $152,738 $133,656
AND SERVICO LEASE DATED JULY 13,
MANAGEMENT 1994.
CORPORATION, AS
AGENT FOR
AFFILIATES
- ------------------------------------------------------------------------------------------------------------------------------------
SANLYN & MINNEAPOLIS N/A 1. DISPLAY LEASE DATED $4,689 $8,412
ASSOCIATES, INC. MOTEL 9/14/95.
ENTERPRISES, INC. 2. SECURITY AGREEMENT
(HOLIDAY INN ST. DATED 10/6/95.
PAUL)
- ------------------------------------------------------------------------------------------------------------------------------------
GIAC LEASING SERVICO N/A MASTER EQUIPMENT $4,578 $7,764
CORPORATION MANAGEMENT LEASE AGREEMENT DATED
CORP., AS AGENT 9/11/92.
FOR AFFILIATES
- ------------------------------------------------------------------------------------------------------------------------------------
METLIFE CAPITAL SERVICO, INC. N/A EQUIPMENT LEASE $411 $4,278
AGREEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PART II. PROPERTY SPECIFIC FF&E ALLOCATIONS
<TABLE>
<CAPTION>
PROP MORTGAGED PROPERTY LESSOR/LENDER ALLOCATED OUTSTANDING ALLOCATED ANNUAL
NO. PRINCIPAL AS OF 9/30/98 PAYMENTS
$ $
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. HOLIDAY INN SHEFFIELD CHARTER FINANCIAL 2,538 2,040
4900 HATCH BOULEVARD TELERENT 32,063 20,544
SHEFFIELD, ALABAMA 35660 GE CAPITAL 3,966 3,468
M&SD 16,905 19,236
------ ------
55,472 45,288
- ------------------------------------------------------------------------------------------------------------------------------------
2. HOLIDAY INN DOTHAN FINANCIAL MARKETING SERVICES 4,391 2,124
3071 ROSS CLARK CIRCLE, SW LYON CREDIT 2,084 5,496
DOTHAN, ALABAMA 38301 LYON CREDIT 11,513 792
------ ------
17,986 8,412
- ------------------------------------------------------------------------------------------------------------------------------------
3. HAMPTON INN DOTHAN FINANCIAL MARKETING SERVICES 5,819 235
3053 ROSS CLARK CIRCLE, SW
DOTHAN, ALABAMA 38301
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROP MORTGAGED PROPERTY LESSOR/LENDER ALLOCATED OUTSTANDING ALLOCATED ANNUAL
NO. PRINCIPAL AS OF 9/30/98 PAYMENTS
$ $
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4. HOLIDAY INN EXPRESS GADSDEN LYON CREDIT 2,084 792
801 CLEVELAND AVENUE GE CAPITAL 2,577 2,124
ATTALIA, ALABAMA 35954 FINANCIAL MARKETING SERVICES 6,639 3,216
------ -----
11,300 6,132
- ------------------------------------------------------------------------------------------------------------------------------------
8. HOWARD JOHNSON FLAGSTAFF FINANCIAL MARKETING SERVICES 5,006 1,980
2200 EAST BUTLER AVENUE CHARTER FINANCIAL 23,166 18,660
------ ------
FLAGSTAFF, ARIZONA 88001 28,172 20,640
- ------------------------------------------------------------------------------------------------------------------------------------
13. OMNI HOTEL WEST PALM BEACH FINANCIAL MARKETING SERVICES 51,518 24,960
1601 BELVEDERE ROAD WEST PALM GE CAPITAL 3,130 2,436
BEACH, FLORIDA 33406 CHARTER FINANCIAL 22,157 17,844
LYON CREDIT 2,064 5,772
------ ------
78,869 51,012
- ------------------------------------------------------------------------------------------------------------------------------------
15. HOLIDAY INN EXPRESS PENSACOLA LYON CREDIT 2,084 792
6501 PLANTATION ROAD
PENSACOLA, FLORIDA 32505
- ------------------------------------------------------------------------------------------------------------------------------------
16. HOLIDAY INN UNIVERSITY MALL LYON CREDIT 2,084 792
7200 PLANTATION ROAD
PENSACOLA, FLORIDA 32504
- ------------------------------------------------------------------------------------------------------------------------------------
18. HOLIDAY INN EXPRESS FT. PIERCE LYON CREDIT 2,064 780
7151 OKEECHOBEE ROAD
FORT PIERCE, FLORIDA 34945
- ------------------------------------------------------------------------------------------------------------------------------------
26. HOLIDAY INN BRUNSWICK TELERENT 923 3,780
U.S. 341 AT I-98 TELERENT 20,608 21,960
BRUNSWICK, GEORGIA 31520 LYON CREDIT 2,139 804
------ ------
23,670 26,544
- ------------------------------------------------------------------------------------------------------------------------------------
39. QUALITY HOTEL MATAIRIE TELERENT 36,104 18,024
2261 NORTH CAUSEWAY BLVD. M&SD 23,976 21,684
MATAIRIE, LOUISIANA 70001 CHARTER FINANCIAL 24,153 19,452
------ ------
84,233 59,160
- ------------------------------------------------------------------------------------------------------------------------------------
49. NORTHFIELD HILTON SANLYN & ASSOCIATES 4,689 8,412
5500 CROOKS ROAD LYON CREDIT 29,906 11,304
TROY, MICHIGAN 48098 M&SD 25,879 18,708
------ ------
60,474 38,424
- ------------------------------------------------------------------------------------------------------------------------------------
50. HOLIDAY INN ST. PAUL M&SD 22,075 19,968
1201 WEST COUNTY ROAD EAST METLIFE CAPITAL (GIAC) 411 4,278
ST. PAUL, MINNESOTA 55112 CHARTER FINANCIAL 40,143 32,340
FINANCIAL MARKETING SERVICES 2,405 852
LYON CREDIT 2,175 828
------ ------
67,209 58,266
- ------------------------------------------------------------------------------------------------------------------------------------
57. OMNI ALBANY HOTEL CHARTER FINANCIAL 46,396 37,368
STATE & LODGE STREETS FINANCIAL MARKETING SERVICES 19,478 9,432
TEN EYCK PLAZA LYON CREDIT 18,356 8,760
------ ------
ALBANY, NY 12207 84,320 55,560
- ------------------------------------------------------------------------------------------------------------------------------------
62. HOLIDAY INN FAYETTEVILLE CHARTER FINANCIAL 41,216 33,444
1844 CEDAR CREEK ROAD LYON CREDIT 2,157 792
FAYETTEVILLE, NC 28303 GE CAPITAL 3,893 3,396
------ ------
47,266 37,416
- ------------------------------------------------------------------------------------------------------------------------------------
67. HOLIDAY INN GREENTREE FINANCIAL MARKETING SERVICES 10,520 5,100
401 HOLIDAY DRIVE M&SD 18,961 21,564
PITTSBURGH, PA 15220 CHARTER FINANCIAL 7,995 6,444
LYON CREDIT 2,192 828
------ ------
39,668 33,936
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROP MORTGAGED PROPERTY LESSOR/LENDER ALLOCATED OUTSTANDING ALLOCATED ANNUAL
NO. PRINCIPAL AS OF 9/30/98 PAYMENTS
$ $
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
68. HOLIDAY INN PARKWAY EAST M&SD 21,365 15,444
915 BRINTON ROAD LYON CREDIT 2,192 828
PITTSBURGH, PA 15221 LYON CREDIT 9,742 8,340
GIAC 4,578 7,764
------ ------
37,877 32,276
- ------------------------------------------------------------------------------------------------------------------------------------
73. FOUR POINTS HOTEL HILTON HEAD LYON CREDIT 25,472 9,624
35 SOUTH FOREST BEACH DRIVE
HILTON HEAD ISLAND, SC 29928
- ------------------------------------------------------------------------------------------------------------------------------------
81. HOLIDAY INN AUSTIN SOUTH M&SD 23,577 17,052
3401 SOUTH IH-35 TELERENT 37,750 18,288
AUSTIN, TEXAS 78741 LYON CREDIT 2,217 840
CHARTER FINANCIAL 24,904 20,064
FINANCIAL MARKETING SERVICES 8,441 3,336
------ ------
96,889 59,500
- ------------------------------------------------------------------------------------------------------------------------------------
89. DAYS INN SILVER SPRING LYON CREDIT 28,133 24,084
8040 13TH STREET
SILVER SPRING, MARYLAND
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT A
Schedule of Each of the Premises
EXHIBIT B
FORM OF REQUEST FOR RELEASE
FF&E REPLACEMENT RESERVE DISBURSEMENT REQUEST
*Note: Attach supporting documentation to this form
Project Name _________________________
Date _________________________________
Project Location _____________________
Project No. __________________________
<TABLE>
<CAPTION>
====================================================================================================================================
DESCRIPTION OF LOCATION OF INVOICE #/DATE OR AMOUNT PAID OR FOR LENDER'S USE ONLY
ITEMS REPLACED INSTALLATION VENDOR NAME CONTRACT PAYMENT REQUESTED DATE PAID CHECK # APPROVED DISAPPROVED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL
====================================================================================================================================
</TABLE>
<PAGE>
Owner hereby certifies to Lender that (i) the FF&E Replacements that are
the subject of this written request have been completed, (ii) the amounts
requested are for the cost of such FF&E Replacements that have been paid or
incurred since the immediately preceding request, (iii) the FF&E Replacement for
which the disbursement is requested is a permitted expenditure on the current
Approved Capital Budget and Schedule B attached to the Loan Agreement, (iv) the
amount requested is less than or equal to the amount budgeted for such FF&E
Replacement in the current Approved Capital Budget and Schedule B, and (v) the
FF&E Replacements that were the subject of the prior written request for
disbursement have been made in accordance with all applicable Legal Requirements
of any Governmental Authority having jurisdiction over the applicable Mortgaged
Property to which the FF&E Replacements are being provided and the cost of such
FF&E Replacements have been paid in full.
OWNER:
Name:
Title:
EXHIBIT C
NOTICE OF REQUEST FOR RELEASE
[OWNER]
______________________, 19_____
Secore Financial Corporation
3 Bethesda Metro Centre
Suite 700
Bethesda, Maryland 20814
Attention:
Ladies and Gentlemen:
We refer to that certain mortgage loan made by you to us in the original
principal sum of $___________ secured by premises known as ___________, [CITY],
[STATE], [_____________, [CITY], [STATE], and _______________, [CITY], [STATE]
evidenced by a Note (the "Note") and secured by a [THOSE CERTAIN]
Mortgage(s)/Deed(s) of Trust covering said premises ([COLLECTIVELY] the
"Security Instruments") and Loan Agreement made by and between us and Lender,
each dated as of ______________ (the "Loan"). This certificate is delivered to
you, pursuant to Paragraph 61(c) of the Loan Agreement. All capitalized terms
used herein shall have the same meanings herein as they have in the Loan
Agreement.
On or about ___________ ____, 19___ (the "Release Date"), we shall deliver
to you $______, together with all other sums required under the Loan Agreement.
In connection with the prepayment, we also request a Property Release of
the premises known as __________________, [CITY], [STATE] (the "Release
Premises") pursuant to Section 61 of the Loan Agreement covering the Release
Premises. In order to induce you to make a Property Release of the Release
Premises from the lien of the related Security Instruments, the undersigned
hereby represents and certifies as follows:
<PAGE>
1. The amount being delivered to you hereunder is in the amount required
pursuant to Section 61 of the Loan Agreement.
2. No Event of Default has occurred and is continuing.
3. Each of the items required for a Property Release under Section 61 of the
Loan Agreement are enclosed herewith or have previously been delivered to
you.
4. The Aggregate Debt Service Coverage Ratio (as defined in the Loan
Agreement) after giving effect to the Property Release shall be equal to or
greater than the Origination DSCR or the Current DSCR.
5. All legal, record, beneficial and economic interests of the Release
Premises shall, on the Release Date, simultaneously with the Property
Release, be transferred and conveyed to a Release Premises Transferee.
6. Each of the representations and warranties contained in the Note, the
Security Instruments and all Other Loan Documents are true and correct as
of the date hereof.
Owner hereby request a Property Release of the Release Premises from the
lien of the Security Instruments and related Loan Documents.
[OWNER]
EXHIBIT D
[INTENTIONALLY OMIT]
EXHIBIT E
Cash Management Agreement
EXHIBIT F
Notices to Tenants/Credit Card Companies
EXHIBIT G
Sheffield Motel Enterprises, Inc., an Alabama corporation
Dothan Hospitality 3053, Inc., an Alabama corporation
Dothan Hospitality 3071, Inc., an Alabama corporation
<PAGE>
Gadsden Hospitality, Inc., an Alabama corporation
Servico Flagstaff, Inc., an Arizona corporation
AMIOP Acquisition Corp., a Delaware corporation, as the sole general partner of
AMI Operating Partners, L.P., a Delaware limited partnership
Palm Beach Motel Enterprises, Inc., a Florida corporation, as the sole general
partner of Servico Centre Associates Ltd., a Florida limited partnership
Servico West Palm Beach, Inc., a Florida corporation
Servico Pensacola, Inc., a Delaware corporation
Servico Pensacola 7200, Inc., a Delaware corporation
Servico Pensacola 7330, Inc., a Delaware corporation
Servico Ft. Pierce, Inc., a Delaware corporation
Servico Winter Haven, Inc., a Florida corporation
Brunswick Motel Enterprises, Inc., a Georgia corporation
Servico Rolling Meadows, Inc., an Illinois corporation
Servico Cedar Rapids, Inc., an Iowa corporation
Servico Metairie, Inc., a Louisiana corporation
Servico Columbia, Inc., a Maryland corporation
Servico Colesville, Inc., a Maryland corporation
Servico Maryland, Inc., a Maryland corporation
NH Motel Enterprises, Inc., a Michigan corporation
Minneapolis Motel Enterprises, Inc., a Minnesota corporation
Servico Roseville, Inc., a Minnesota corporation
Albany Hotel, Inc., a Florida corporation, f/k/a Albany Motel Enterprises, Inc.
Servico Jamestown, Inc., a New York corporation
<PAGE>
Servico New York, Inc., a New York corporation
Servico Niagara Falls, Inc., a New York corporation
Servico Grand Island, Inc., a New York corporation
Fayetteville Motel Enterprises, Inc., a North Carolina corporation
Apico Inns of Green Tree, Inc., a Pennsylvania corporation
Apico Hills, Inc., a Pennsylvania corporation
Servico Hilton Head, Inc., a South Carolina corporation
Servico Northwoods, Inc., a Florida corporation
Servico Austin, Inc., a Texas corporation
Servico Market Center, Inc., a Texas corporation
Servico Houston, Inc., a Texas corporation
Servico Silver Spring, Inc., a Florida corporation
Servico Windsor, Inc., a Florida corporation (Canadian Guarantor)
EXHIBIT H
CEDAR RAPIDS ESTOPPEL
EXHIBIT I
[INTENTIONALLY OMITTED]
EXHIBIT J
CLARION ESTOPPEL
EXHIBIT K
Referred Ground Rent Calculation
(#57 -Omni Albany)
<PAGE>
LOAN AGREEMENT
between
SECORE FINANCIAL CORPORATION, INDIVIDUALLY
AND AS AGENT FOR ONE OR MORE CO-LENDERS AND SUCCESSORS,
Lender
THE BORROWERS NAMED HEREIN
Borrowers
and
SERVICO WINDSOR, INC.
CANADIAN GUARANTOR
Dated: as of _________ ___, 1998
TABLE OF CONTENTS
Section Page
1. Defined Terms 1
2. Payment of Debt; Incorporation of Covenants, Conditions
and Agreements 10
3. Warranty of Title 10
<PAGE>
4. Insurance 11
5. Payment of Taxes 15
6. Tax, Insurance and Ground Rent Escrow Fund 15
7. FF&E Replacement Reserve; Repair Escrow 17
8. Condemnation 24
9. Leases and Rents 26
10. Representations Concerning Loan 27
11. Single Purpose Entity; Authorization 32
12. Maintenance of Mortgaged Property 35
13. Transfer or Encumbrance of the Mortgaged Property 35
14. Estoppel Certificates; Affidavits 38
15. Changes in the Laws Regarding Taxation 38
16. No Credits on Account of the Debt 39
17. Documentary Stamps 39
18. Controlling Agreement 39
19. Books and Records 39
20. Performance of Other Agreements 43
21. Further Assurances; Right to Split the Loan 43
22. Recording of Mortgage 44
23. Reporting Requirements 44
24. Events of Default 44
25. Late Payment Charge; Servicing Fees 47
26. Right to Cure Defaults 47
27. Remedies 48
28. Right of Entry 50
29. Security Agreement 50
30. Actions and Proceedings 51
31. Waiver of Setoff and Counterclaim 51
32. Contest of Certain Claims 51
33. Recovery of Sums Required to Be Paid 52
34. Marshalling and Other Matters 52
35. Intentionally Omitted 52
36. Intentionally Omitted 52
37. Intentionally Omitted 52
38. Management of the Hotel 53
39. Handicapped Access 55
40. ERISA 55
41. Indemnification 56
42. Notice 57
43. Authority 57
44. Waiver of Notice 57
45. Remedies of Borrower 57
46. Sole Discretion of Lender 58
47. Non-Waiver 58
48. No Oral Change 58
49. Liability 58
50. Inapplicable Provisions 58
51. Section Headings 58
52. Counterparts 59
<PAGE>
53. Certain Definitions 59
54. Homestead 59
55. Assignments 59
56. Intentionally Omitted 59
57. Agent for Receipt of Process 59
58. Service of Process 60
59. WAIVER OF JURY TRIAL 60
60. CHOICE OF LAW 60
61. Property Releases 60
62. Intentionally Omitted 64
63. Intentionally Omitted 64
64. Required Repairs; Required Repair Funds 64
65. Special Condominium Rider. 67
66. Lock-box Account 70
67. Ground Leases 73
68. Contribution 73
69. Recourse. 74
70. Confidentiality. 74
71. Syndication. 75
72. Special Covenants Relating to Property Nos. 30 80
73. Special Covenant Relating to Property Nos. 13 and 57 on Schedule A
(West Palm Beach and Albany Omni Hotels) 82
74. Special Canadian Provision. 83
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of December 11, 1998, (the "Pledge
Agreement") among Secore Financial Corporation, a Pennsylvania corporation
("Secore"), Lehman Brothers Holdings Inc., a Delaware corporation, as collateral
agent (the "Collateral Agent") on behalf of Secore, Lodgian, Inc., a Georgia
corporation ("Lodgian"), as owner of all of the outstanding capital stock of the
entities listed on Schedule A, Servico, Inc., a Florida corporation ("Servico"),
as owner of all of the outstanding capital stock of the entities listed on
Schedule B, Servico Operations Corporation, a Florida corporation ("Servico
Operations"), as owner of all of the capital stock of the entities listed on
Schedule C, Sharon Motel Enterprises, Inc., a Pennsylvania corporation
("Sharon"), as owner of all of the outstanding capital stock of the entities
listed on Schedule D, KDS Corporation, a Nevada corporation ("KDS"), as owner of
all of the outstanding capital stock of the entities listed on Schedule E, AMIOP
Acquisition Corp, a Delaware corporation ("AMIOP"), as owner of all of the
limited partnership interests in the entities listed on Schedule F, Servico
Acquisition Corp., a Florida corporation ("Servico Acquisition"), as owner of
all of the general partnership interests in the entities listed on Schedule G,
and Palm Beach Motel Enterprises, Inc., a Florida corporation ("Palm Beach"), as
owner of all of the general partnership interests in the entities listed on
Schedule H (Lodgian, Servico, Servico Operations, Sharon, KDS, AMIOP Servico
Acquisition and Palm Beach, each a "Pledgor" and collectively, the "Pledgors").
INTRODUCTORY STATEMENTS
Reference is made to the Loan Agreement (the "Loan Agreement"), dated as of
December __, 1998, among Secore and the entities listed on Schedule I hereto
(the "Borrowers"), direct or indirect subsidiaries of the Pledgors.
Each Pledgor is the sole shareholder or a partner in each of the entities
corresponding to its name on each of Schedules A, B, C, D, E, F, G and H, which
such entities are the direct or indirect parents of the Borrowers. To secure the
obligations of the Borrowers under the Loan Agreement, the Pledgors have entered
into the Guaranty (the "Guaranty"), dated as of December __, 1998, by the
Pledgors in favor of Secore. To secure the obligations of the Pledgors under the
Guaranty (the "Pledgor Obligations"), the each Pledgor has agreed to pledge all
of its interest as sole shareholder or a partner in each of the entities listed
on Schedules A, B, C, D, E, F, G and H (each a "Company" and together, the
"Companies") to the Collateral Agent on behalf of Secore, all such interest
represented by the stock certificates (or by the percentage ownership of the
partnerships) listed on attached Schedules A, B, C, D, E, F, G and H (the
"Pledged Shares").
In consideration of the premises and of the agreements herein contained,
each Pledgor, Secore and the Collateral Agent agree as follows:
Section 1. Definitions. Capitalized terms used but not otherwise defined in
this Pledge Agreement shall have the meanings specified therefor in the Loan
Agreement, or if not
<PAGE>
defined therein, as defined in the Guaranty.
"Lien" means, as applied to the property or assets (or the income or
profits therefrom) of any Person, in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
Section 2. Pledge of Stock and Grant of Security Interest. As security for
the full and complete performance of all of the Pledgor Obligations, each
Pledgor hereby delivers, pledges and assigns to the Collateral Agent on behalf
of Secore, and grants in favor of the Collateral Agent on behalf of Secore, a
first priority security interest in all of such Pledgor's right, title and
interest in and to the Pledged Shares of the Companies of which it is an owner
together with all of such Pledgor's rights and privileges with respect thereto,
all proceeds, income and profits thereof and all property received in exchange
thereof or in substitution therefor (the "Collateral").
Section 3. Stock Dividends, Options, or Other Adjustments. Until the date
on which all amounts owing under the Loan Agreement shall have been indefeasibly
paid in full (the "Expiration Date"), each Pledgor, shall deliver, as
Collateral, to the Collateral Agent, any and all additional shares of stock or
partnership interests or any other property of any kind distributable on or by
reason of the Collateral, whether in the form of or by way of stock dividends,
warrants, total or partial liquidation, conversion, prepayments, redemptions or
otherwise, with the sole exception of cash dividends, cash interest payments or
distributions to partners, as the case may be. If any additional shares of
capital stock, partnership interest, instruments, or other property, a security
interest in which can only be perfected by possession by the Collateral Agent,
which are distributable on or by reason of the Collateral pledged hereunder,
shall come into the possession or control of any Pledgor, such Pledgor shall
forthwith transfer and deliver such property to the Collateral Agent, as
Collateral hereunder.
Section 4. Delivery of Share Certificates; Stock Powers; Financing
Statements.
(a) Simultaneously with the delivery of this Pledge Agreement, each Pledgor
is delivering to the Collateral Agent all instruments and stock certificates
(and certificated partnership interests, if any) representing the Collateral,
together with stock powers or other instruments of transfer duly executed in
blank by such Pledgor. Each Pledgor shall promptly deliver to the Collateral
Agent, or cause Borrowers or any other entity issuing the Collateral to deliver
directly to the Collateral Agent, share certificates (and certificated
partnership interests, if any) or other instruments representing any Collateral
acquired or received after the date of this Pledge Agreement with a stock or
bond power or other instrument of transfer duly executed by such Pledgor. If at
any time either the Collateral Agent or Secore notifies any Pledgor that it
requires additional stock powers or other instrument of transfer endorsed in
blank, such Pledgor shall promptly execute in blank and deliver the requested
power or other instruments of transfer to the requesting party.
<PAGE>
(b) AMIOP, Servico Acquisition, Palm Beach and any other Pledgor that is
the owner of an uncertificated interest in a partnership that is a Company (a
"Partnership Pledgor") shall have recorded and filed, at its expense, any
financing statement, with respect to the Collateral to be pledged to the
Collateral Agent on behalf of Secore, meeting the requirements of applicable
state law in such manner in such jurisdictions as are necessary to perfect the
pledge of the Collateral to the Collateral Agent on behalf of Secore, and shall
deliver a file-stamped copy of such financing statements or other evidence of
such filings to the Collateral Agent and Secore. From time to time thereafter,
each Partnership Pledgor shall execute and file such financing statements and
cause to be filed such continuation statements all in such manner and in such
places as may be required by law to fully preserve, maintain and protect the
interest of the Collateral Agent on behalf of Secore. Each Partnership Pledgor
shall deliver (or cause to be delivered) to the Collateral Agent on behalf of
Secore and to Secore, file stamped copies of, or filing receipts for any
document filed in accordance with this Section 4(b), as soon as available
following such filing. In the event the Partnership Pledgor fails to perform its
obligations under this Section 4(b), Collateral Agent or Secore may do so at the
expense of such Partnership Pledgor.
(c) Collateral Agent or Secore, upon notice to the applicable Partnership
Pledgor, is authorized to file financing statements signed only by Collateral
Agent or Secore with respect to this Pledge Agreement in accordance with the
Uniform Commercial Code or signed by Collateral Agent or Secore as
attorney-in-fact for such Partnership Pledgor in each jurisdiction where such
Partnership Pledgor's principal place of business or chief executive office is
or may from time to time be located. Collateral Agent or Secore as applicable
shall send such Partnership Pledgor copies of all financing statements covering
the Collateral which are filed by Collateral Agent or Secore without such
Partnership Pledgor's signature.
(d) Upon the closing of SHG-S Sub, Inc.'s merger into Servico, Inc.,
Lodgian shall forthwith deliver to the Collateral Agent, a stock certificate or
stock certificates representing all issued and outstanding shares of Servico,
Inc. together with a stock power, duly executed in blank, as Pledged Shares.
Section 5. Power of Attorney. Each Pledgor hereby constitutes and
irrevocably appoints the Collateral Agent and Secore, or either one acting
alone, with full power of substitution and revocation, as each Pledgor's true
and lawful attorney-in-fact, with the power, after the occurrence and
continuation of an "Event of Default" under and as defined in the Loan
Agreement, to the full extent permitted by law, to affix to any certificates and
documents representing the Collateral the stock or bond powers or other
instruments of transfer delivered with respect thereto, and to transfer or cause
the transfer of the Collateral, or any part thereof, on the books of the
Borrowers or other entity issuing such Collateral, to the name of the Collateral
Agent or Secore or any nominee, and thereafter to exercise with respect to such
Collateral, all the rights, powers and remedies of an owner. The power of
attorney granted pursuant to this Pledge Agreement and all authority hereby
conferred are granted and conferred solely to protect Secore's interest in the
Collateral and shall not impose any duty upon the Collateral Agent or Secore to
exercise any power. This power of attorney shall be irrevocable as one coupled
with an interest until the Expiration Date.
<PAGE>
Section 6. Inducing Representations of the Pledgor. Each Pledgor represents
and warrants to Secore that:
(a) The Pledged Shares are validly issued, fully paid for and
nonassessable.
(b) The Pledged Shares represent all of the issued and outstanding capital
stock (or the percentage ownership of the partnerships) of the Companies.
(c) The Pledgor is the sole legal and beneficial owner of, and has good and
marketable title to, the Pledged Shares listed on the schedules hereto
corresponding to its name, free and clear of all pledges, liens, security
interests and other encumbrances other than the security interest created by
this Pledge Agreement, and the Pledgor has the unqualified right and authority
to execute and perform this Pledge Agreement.
(d) No options, warrants or other agreements with respect to the Collateral
are outstanding.
(e) Any consent, approval or authorization of or designation or filing with
any authority (including, but not limited to, the consent, approval or
authorization of the general partner of each partnership and any third parties)
on the part of the Pledgor which is required in connection with the pledge and
security interest granted under this Pledge Agreement has been obtained or
effected.
(f) Neither the execution and delivery of this Pledge Agreement by the
Pledgor, the consummation of the transaction contemplated hereby nor the
satisfaction of the terms and conditions of this Pledge Agreement:
(i) conflicts with or results in any breach or violation of any
provision of the articles of incorporation or bylaws of the Pledgor or any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the Pledgor or any of its
properties, including regulations issued by an administrative agency or other
governmental authority having supervisory powers over the Pledgor;
(ii) except as set forth on Schedule J, conflicts with, constitutes a
default (or an event which with the giving of notice or the passage of time, or
both, would constitute a default) by the Pledgor under, or a breach of or
contravenes any provision of, the Loan Documents, any loan agreement, mortgage,
indenture or other agreement or instrument to which the Pledgor or any of its
subsidiaries is a party or by which it or any of their properties is or may be
bound or affected; or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Pledgor's assets except the Lien created by this Pledge
Agreement.
(g) Upon the Pledgor's delivery of the Pledged Shares to the Collateral
Agent (and the filing of the financing statements required by Section 4(b)), the
Collateral Agent, on behalf
<PAGE>
of Secore, will have a valid, perfected first priority Lien on the Collateral,
enforceable as such against all creditors of the Pledgor and against all Persons
purporting to purchase any of the Collateral from the Pledgor.
(h) It has a principal place of business and chief executive office in
Fulton County, Georgia in care of Lodgian, Inc., at the office in Section 21(c).
Section 7. Obligations of the Pledgors. Each Pledgor further represents,
warrants and covenants to Secore that:
(a) The Pledgor will not sell, transfer or convey any interest in, or
suffer or permit any Lien or encumbrance to be created upon or with respect to,
any of the Collateral (other than as created under this Pledge Agreement) during
the term of this Pledge Agreement.
(b) The Pledgor will, at its own expense, at any time and from time to time
at the request of the Collateral Agent or Secore, do, make, procure, execute and
deliver all acts, things, writings, assurances and other documents as may be
proposed by the Collateral Agent or Secore to preserve, establish, demonstrate
or enforce the Collateral Agent's rights, interests and remedies as created by,
provided in, or emanating from this Pledge Agreement.
(c) The Pledgor will not take any action which would cause the Companies to
issue any other capital stock (or partnership interests), without the prior
written consent of Secore. Any such issuance shall be subject to this Pledge
Agreement.
(d) The Pledgor will not consent to any amendment to the articles of
incorporation or partnership agreement of any Company without the prior written
consent of Secore.
Section 8. Dividends. The Pledgor agrees that it shall not cause any
Company to declare or make payment of (i) any dividend or other distribution on
any shares of its capital stock or partnership interest, or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of any option,
warrant or other right to acquire shares of its capital stock or partnership
interest, unless (in each case) at the time of such declaration or payment (and
after giving effect thereto) no amount payable by any Borrower under any Loan
Document is then due and owing but unpaid.
Section 9. Voting Proxy. Each Pledgor hereby grants to the Collateral Agent
an irrevocable proxy to vote upon and after the occurrence and during the
continuation of an Event of Default, the Pledged Shares and any other Collateral
with respect to any and all matters which proxy shall continue until the
Expiration Date. The Collateral Agent agrees that it shall not exercise such
proxy until the occurrence of an Event of Default. The Pledgor represents and
warrants that it has directed the Companies to reflect the Collateral Agent's
right to vote the Collateral on each Company's books. Upon the request of the
Collateral Agent, each Pledgor shall deliver to the Collateral Agent such
further evidence of such irrevocable proxy or such further irrevocable proxy to
vote the Pledged Shares and the other Collateral as the Collateral Agent may
request.
<PAGE>
Section 10. Rights of the Collateral Agent and Secore. At any time and
without notice, Secore may, upon providing the Collateral Agent with the full
amount necessary to carry out such direction, direct the Collateral Agent to
discharge any taxes, liens, security interests or other encumbrances levied or
placed on the Collateral, pay for the maintenance and preservation of the
Collateral, or pay for insurance on the Collateral; the amount of such payments,
plus any and all fees, costs and expenses of the Collateral Agent and Secore
(including attorneys' fees and disbursements) in connection therewith, shall, at
the option of the Collateral Agent or Secore, as appropriate, be reimbursed by
the Pledgors on demand, with interest thereon from the date paid at the Default
Rate.
Section 11. Remedies Upon Event of Default under the Loan Agreement.
(a) Upon the occurrence of an "Event of Default" under and as defined in
the Loan Agreement, Secore may, directly or through the Collateral Agent,
without notice to any Pledgor,
(i) cause the Collateral to be transferred to the Collateral Agent's
name or Secore's name or in the name of nominees of either and thereafter
exercise as to such Collateral all of the rights, powers and remedies of an
owner;
(ii) collect by legal proceedings or otherwise all dividends,
interest, principal payments, capital distributions and other sums now or
hereafter payable on account of the Collateral, and hold all such sums as part
of the Collateral, or apply such sums to the payment of the Pledgor Obligations
in such manner and order as Secore may decide, in its sole discretion; or
(iii) enter into any extension, subordination, reorganization,
deposit, merger, or consolidation agreement, or any other agreement relating to
or affecting the Collateral, and in connection therewith deposit or surrender
control of the Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in accordance
with the provisions hereof.
(b) In addition to all the rights and remedies of a secured party under the
Uniform Commercial Code, Secore shall have the right, and without demand of
performance or other demand, advertisement or notice of any kind, except as
specified below, to or upon any Pledgor or any other person (all and each of
which demands, advertisements and/or notices are hereby expressly waived to the
extent permitted by law), to proceed forthwith, or direct the Collateral Agent
to proceed forthwith, to collect, receive, appropriate and realize upon the
Collateral, or any part thereof and to proceed forthwith to sell, assign, give
an option or options to purchase, contract to sell, or otherwise dispose of and
deliver the Collateral or any part thereof in one or more parcels in accordance
with applicable securities laws and in a manner designed to ensure that such
sale will not result in a distribution of the Pledged Shares in violation of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act") and
on such terms (including, without limitation, a requirement that any purchaser
of all or any part of the Collateral shall be required to purchase any
securities constituting the Collateral solely for investment and without any
intention to make a distribution thereof) as Secore, in its sole and absolute
discretion, deems appropriate without any liability for any loss due to a
decrease in the market value of the Collateral during the period held. If any
notification of
<PAGE>
intended disposition of the Collateral is required by law, such notification
shall be deemed reasonable and properly given if mailed to the applicable
Pledgor, postage prepaid, at least five (5) days before any such disposition at
the address indicated in Section 21(b) hereof. Any disposition of the Collateral
or any part thereof may be for cash or on credit or for future delivery without
assumption of any credit risk, with the right of Secore to purchase all or any
part of the Collateral so sold at any such sale or sales, public or private,
free of any equity or right of redemption in any Pledgor, which right of equity
is, to the extent permitted by applicable law, hereby expressly waived or
released by such Pledgor.
(c) Secore, in its sole and absolute discretion, may elect to obtain or
cause the Collateral Agent to obtain the advice of any independent nationally
known investment banking firm, which is a member firm of the New York Stock
Exchange, with respect to the method and manner of sale or other disposition of
any of the Collateral, the best price reasonably obtainable therefor, the
consideration of cash and/or credit terms, or any other details concerning such
sale or disposition; costs and expenses of obtaining such advice shall be for
the account of Secore. Secore, in its sole and absolute discretion, may elect to
sell or cause the Collateral Agent to sell, the Collateral on any credit terms
which it deems reasonable; the out-of-pocket costs and expenses of such sale
shall be for the account of Secore. The sale of any of the Collateral on credit
terms shall not relieve any Pledgor of its liability with respect to the Pledgor
Obligations. All payments received by the Collateral Agent, if any, and Secore
in respect of any sale of the Collateral shall be applied to the Pledgor
Obligations as and when such payments are received.
(d) Each Pledgor recognizes that it may not be feasible to effect a public
sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act, and that it may be necessary to sell privately
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view for the distribution or resale thereof. Each Pledgor agrees that
private sales may be at prices and other terms less favorable to the seller than
if the Collateral were sold at public sale, and that neither the Collateral
Agent nor Secore has any obligation to delay the sale of any Collateral for the
period of time necessary to permit the registration of the Collateral for public
sale under the Securities Act. Each Pledgor agrees that a private sale or sales
made under the foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner.
(e) If any consent, approval or authorization of any state, municipal or
other governmental department, agency or authority shall be necessary to
effectuate any sale or other disposition of the Collateral, or any partial
disposition of the Collateral, each Pledgor will execute all such applications
and other instruments as may be required in connection with securing any such
consent, approval or authorization, and will otherwise use its best efforts to
secure the same.
(f) Upon any sale or other disposition, the Collateral Agent, acting at the
direction of Secore, or Secore shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold or disposed of. Each
purchaser at any such sale or other disposition (including Secore) shall hold
the Collateral free from any claim or right of whatever kind, including any
equity or right of redemption of any Pledgor. Each Pledgor specifically waives,
to the extent permitted by applicable law, all rights of redemption, stay or
appraisal which it may have under any rule of law
<PAGE>
or statute now existing or hereafter adopted.
(g) Neither the Collateral Agent nor Secore shall be obligated to make any
sale or other disposition of the Collateral, unless the terms thereof shall be
satisfactory to Secore. The Collateral Agent or Secore may, without notice or
publication, adjourn any private or public sale, and, upon five (5) days' prior
notice to the applicable Pledgor, hold such sale at any time or place to which
the same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or future delivery, the Collateral so sold may be retained
by the Collateral Agent or Secore until the selling price is paid by the
purchaser thereof, but neither the Collateral Agent nor Secore shall incur any
liability in case of the failure of such purchaser to take up and pay for the
property so sold and, in case of any such failure, such property may again be
sold as herein provided.
(h) All of the rights and remedies granted to the Collateral Agent and
Secore, including but not limited to the foregoing, shall be cumulative and not
exclusive and shall be enforceable alternatively, successively or concurrently
as Secore may deem expedient.
Section 12. Limitation on Liability.
(a) Neither the Collateral Agent nor Secore, nor any of their respective
directors, officers or employees, shall be liable to any Pledgor for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith,
except that the Collateral Agent and Secore shall each be liable for its own
gross negligence, bad faith or willful misconduct.
(b) The Collateral Agent shall incur no liability to Secore except for the
Collateral Agent's negligence or willful misconduct in carrying out its duties
hereunder.
(c) The Collateral Agent shall be protected and shall incur no liability to
any party in relying upon the accuracy, acting in reliance upon the contents,
and assuming the genuineness of any notice, demand, certificate, signature,
instrument or other document the Collateral Agent reasonably believes to be
genuine and to have been duly executed by the appropriate signatory, and (absent
actual knowledge to the contrary) the Collateral Agent shall not be required to
make any independent investigation with respect thereto. The Collateral Agent
shall at all times be free independently to establish to its reasonable
satisfaction, but shall have no duty to independently verify, the existence or
nonexistence of facts that are a condition to the exercise or enforcement of any
right or remedy hereunder.
(d) The Collateral Agent may consult with qualified counsel, financial
advisors or accountants and shall not be liable for any action taken or omitted
to be taken by it hereunder in good faith and in accordance with the written
advice of such counsel, financial advisors or accountants.
(e) The Collateral Agent shall not be under any obligation to exercise any
of the rights, powers or duties vested in it by this Pledge Agreement unless it
shall have received reasonable security or indemnity satisfactory to the
Collateral Agent against the costs, expenses and liabilities which it might
incur.
<PAGE>
Section 13. Performance of Duties. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Pledge
Agreement, subject to the provisions of this Pledge Agreement or as directed by
Secore in accordance with this Pledge Agreement.
Section 14. Appointment of and Powers of Collateral Agent. Subject to the
terms and conditions hereof, Secore appoints Lehman Brothers Holdings Inc. as
its Collateral Agent and Lehman Brothers Holdings Inc. accepts such appointment
and agrees to act as Collateral Agent on behalf of Secore to maintain custody
and possession of the Collateral and to perform the other duties of the
Collateral Agent in accordance with the provisions of this Pledge Agreement. The
Collateral Agent shall, subject to the other terms and provisions of this Pledge
Agreement, act upon and in compliance with Secore's written instructions
delivered pursuant to this Pledge Agreement as promptly as possible following
receipt of such written instructions. Receipt of written instructions shall not
be a condition to the exercise by the Collateral Agent of its express duties
hereunder, unless this Pledge Agreement provides that the Collateral Agent is
permitted to act only following receipt of such written instructions.
Section 15. Successor Collateral Agent.
(a) Merger. Any Person into which the Collateral Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Collateral Agent is a party, shall (provided it is
otherwise qualified to serve as the Collateral Agent hereunder) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, immunities, privileges
and other matters as was its predecessor without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
(b) Resignation. The Collateral Agent and any successor Collateral Agent
may resign only (i) with the prior written consent of Secore (which consent will
not be unreasonably withheld) or (ii) if the Collateral Agent is unable to
perform its duties hereunder as a matter of law as evidenced by an opinion of
counsel acceptable to Secore. Upon the occurrence of (i) or (ii) above, the
Collateral Agent shall give notice of its resignation by registered or certified
mail to the Pledgors (with a copy to Secore). Any resignation by the Collateral
Agent shall take effect only upon the date which is the later of (x) the
effective date of the appointment by Secore of a successor Collateral Agent and
the acceptance in writing by such successor Collateral Agent of such appointment
and (y) the date on which the Collateral is delivered to the successor
Collateral Agent. Notwithstanding the preceding sentence, if by the contemplated
date of resignation specified in the written notice of resignation delivered (as
described above) no successor Collateral Agent has been appointed Collateral
Agent or becomes the Collateral Agent pursuant to subsection (d) below, the
resigning Collateral Agent may petition a court of competent jurisdiction for
the appointment of a successor.
(c) Removal. The Collateral Agent may be removed by Secore at any time,
with or without cause, by an instrument or concurrent instruments in writing
delivered to the Collateral Agent. Any removal pursuant to the provisions of
this subsection (c) shall take effect only upon the
<PAGE>
later to occur of (i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor Collateral
Agent of such appointment and of its obligation to perform its duties hereunder
in accordance with the provisions hereof and (ii) the date on which the
Collateral is delivered to the successor Collateral Agent. In the event of any
removal by Secore pursuant to this Section 15(c), the Pledgors shall pay the
Collateral Agent its fees and expenses then due and owing in accordance with
Section 19 hereof.
(d) Appointment of and Acceptance by Successor.
(i) Secore shall have the sole right to appoint each successor
Collateral Agent. Every successor Collateral Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to Secore and the
Pledgors an instrument in writing accepting such appointment hereunder and the
relevant predecessor shall execute, acknowledge and deliver such other documents
and instruments as will effectuate the delivery of all Collateral to the
successor Collateral Agent, whereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessor. Such predecessor
shall, nevertheless, on the written request of Secore, execute and deliver an
instrument transferring to such successor all the estates, properties, rights
and powers of such predecessor hereunder.
(ii) Every predecessor Collateral Agent shall assign, transfer and
deliver all Collateral held by it as Collateral Agent hereunder to its successor
as Collateral Agent.
(iii) Should any instrument in writing from the Pledgors be reasonably
required by a successor Collateral Agent for more fully and certainly vesting in
such successor the estates, properties, rights, powers, duties and obligations
vested or intended to be vested hereunder in the Collateral Agent, any and all
such written instruments shall, at the request of the successor Collateral
Agent, be forthwith executed, acknowledged and delivered by the applicable
Pledgors.
(iv) The designation of any successor Collateral Agent and the
instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for herein,
shall be maintained with the records relating to the Collateral and, to the
extent required by applicable law, filed or recorded by the successor Collateral
Agent in each place where such filing or recording is necessary to effect the
transfer of the Collateral to the successor Collateral Agent or to protect and
preserve the security interest granted hereunder.
Section 16. Indemnification. The Pledgors shall indemnify the Collateral
Agent, its directors, officers, employees and its agents for, and hold the
Collateral Agent, its directors, officers, employees and its agents harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim of liability) arising out of or in connection with
the Collateral Agent's acting as Collateral Agent hereunder, except such loss,
liability or expense as shall result from the negligence, bad faith or willful
misconduct of the Collateral Agent or its directors, officers, employees or
agents. The obligation of the Pledgors under this Section 16 shall survive the
<PAGE>
termination of this Pledge Agreement and the resignation or removal of the
Collateral Agent.
Section 17. Representations and Warranties of the Collateral Agent. The
Collateral Agent represents and warrants to Pledgors and to Secore as follows:
(a) Due Organization. The Collateral Agent is a corporation, duly
organized, validly existing and in good standing under the laws of Delaware and
is duly authorized and licensed under applicable law to conduct its business as
presently conducted.
(b) Corporate Power. The Collateral Agent has all requisite right, power
and authority to execute and deliver this Pledge Agreement and the Loan
Documents to which it is a party and to perform all of its duties as Collateral
Agent hereunder and thereunder.
(c) Due Authorization. The execution and delivery by the Collateral Agent
of this Pledge Agreement and the Loan Documents to which it is a party, and the
performance by the Collateral Agent of its duties hereunder and thereunder, have
been duly authorized by all necessary corporate proceedings and no further
approvals or filings, including any governmental approvals, are required for the
valid execution and delivery by the Collateral Agent, or the performance by the
Collateral Agent, of this Pledge Agreement and such Loan Documents.
(d) Valid and Binding Agreements. The Collateral Agent has duly executed
and delivered this Pledge Agreement and each Loan Document to which it is a
party, and each of this Pledge Agreement and each such Loan Document constitutes
the legal, valid and binding obligation of the Collateral Agent, enforceable
against the Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
Section 18. Termination. This Pledge Agreement shall continue in full force
and effect until the Expiration Date. Subject to any sale or other disposition
by the Collateral Agent or Secore of the Collateral or any part thereof pursuant
to and in accordance with this Pledge Agreement, the Collateral shall be
returned to the applicable Pledgors on the Expiration Date.
Section 19. Compensation and Reimbursement. Each Pledgor agrees for the
benefit of Secore and as part of the Pledgor Obligations (a) to pay (without
duplication) to the Collateral Agent, from time to time, reasonable compensation
for all services rendered by it hereunder; and (b) to reimburse (without
duplication) the Collateral Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Collateral Agent in
accordance with any provision of, or carrying out its duties and obligations
under, this Pledge Agreement (including the reasonable compensation and fees and
the expenses and disbursements of its agents, any independent certified public
accountants and independent counsel), except any expense, disbursement or
advances as may be attributable to negligence, bad faith or willful misconduct
on the part of the Collateral Agent.
<PAGE>
Section 20. Foreclosure Expenses of the Collateral Agent and Secore. All
expenses (including reasonable fees and disbursements of counsel) incurred by
the Collateral Agent or Secore in connection with any actual or attempted sale,
exchange of, or any enforcement, collection, compromise or settlement
respecting, this Pledge Agreement or the Collateral, or any other action taken
by Secore hereunder whether directly or as attorney-in-fact pursuant to a power
of attorney or other authorization herein conferred, for the purpose of
satisfaction of the Pledgor Obligations shall be deemed a Pledgor Obligation for
all purposes of this Pledge Agreement and the Collateral Agent (with the consent
of Secore) and Secore may apply the Collateral to payment of or reimbursement of
itself for such liability.
Section 21. Notices. Any notice or other communication given hereunder
shall be in writing and shall be sent by registered mail, postage prepaid, or
personally delivered or telecopied to the recipient as follows:
(a) To the Collateral Agent:
Lehman Brothers Holdings Inc.
3 World Financial Center
200 Vesey Street
New York, NY 10295
Attention: Larry Kravetz
Confirmation: (212) 526-5838
Telecopy No.: (212) 526-8679
(b) To Secore:
Secore Financial Corporation
3 Bethesda Metro Center, Suite 700
Bethesda, Md 20814
Attention: William Tanker
Confirmation: (301) 664-8414
Telecopy No.: (301) 664-8413
(c) To the Pledgors:
c/o Lodgian, Inc.
3445 Peachtree Road, N.E.
Two Live Oak Center, Suite 700
Atlanta, Georgia 30326
Attention: Robert Cole
Confirmation: (404) 364-0088
Telecopy No: (404)365-3800
with a copy to:
Stearns Weaver Miller Weissler
<PAGE>
Alhadeft & Sitterson P.A.
Museum Tower, Suite 2200
150 West Flagler Street
Miami, Florida 33130
Attention: Robert I. Weissler
Confirmation: (305) 789-3540
Telecopy No: (305) 789-3395
Section 22. General Provisions.
(a) The Collateral Agent on behalf of Secore and its successors and assigns
shall have no obligation in respect of the Collateral, except to use reasonable
care in holding the Collateral and to hold and dispose of the same in accordance
with the terms of this Pledge Agreement.
(b) The failure of the Collateral Agent or Secore to exercise, or delay in
exercising, any right, power or remedy hereunder, shall not operate as a waiver
thereof, nor shall any single or partial exercise by the Collateral Agent or
Secore of any right, power or remedy hereunder preclude any other or future
exercise thereof, or the exercise of any other right, power or remedy. The
remedies herein provided are cumulative and are not exclusive of any remedies
provided by law or any other agreement.
(c) The representations, covenants and agreements of the Pledgors herein
contained shall survive the date hereof.
(d) Neither this Pledge Agreement nor the provisions hereof can be changed,
waived or terminated orally. This Pledge Agreement may be amended only with the
written consent of Secore, the Pledgors and the Collateral Agent (the consent of
which shall not be withheld or delayed with respect to any amendment that does
not adversely effect the Collateral Agent). This Pledge Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. If any provision of this Pledge
Agreement shall be invalid or unenforceable in any respect or in any
jurisdiction, the remaining provisions shall remain in full force and effect and
shall be enforceable to the maximum extent permitted by law.
(e) This Pledge Agreement may be executed in counterparts, each of which
shall constitute an original but all of which, when taken together, shall
constitute one instrument.
(f) Each of the parties hereto waives, to the fullest extent permitted by
law, any right it may have to a trial by jury in respect of any litigation
arising directly or indirectly out of, under or in connection with this Pledge
Agreement or any of the transactions contemplated hereunder or thereunder. Each
of the parties hereto (i) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
<PAGE>
foregoing waiver and (ii) acknowledges that it has been induced to enter into
this Pledge Agreement and the Loan Documents to which it is a party, by among
other things, this waiver.
(g) This Pledge Agreement shall be governed by and construed, and the
obligations, rights and remedies of the parties hereunder shall be determined,
in accordance with the laws of the State of Georgia, without regard to its
conflicts of law provisions.
(h) Each Pledgor irrevocably submits to the jurisdiction of the United
States District Court for the Southern District of New York, any court in the
State of New York located in the city and county of New York, and any appellate
court from any thereof, in any action, suit or proceeding brought against it and
related to or in connection with this Pledge Agreement, the Loan Documents or
the transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. To the extent permitted by applicable law,
each of the parties hereby waives and agrees not to assert by way of motion, as
a defense or otherwise in any such suit, action or proceeding, any claim that is
not personally subject to the jurisdiction of such courts, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Pledge Agreement or any of the
Loan Documents or the subject matter hereof or thereof may not be litigated in
or by such courts. Each Pledgor irrevocably appoints and designates Stearns
Weaver Miller Weissler Alhadeff & Sitterson, P.A., whose address is at Museum
Tower, Suite 2200, 150 West Flagler Street, Miami, Florida 33130, Attn: Robert
I. Weissler, Esq., as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Each Pledgor agrees that service of such
process upon such Person shall constitute personal service of such process upon
it. Service of process may be made by any method set forth in the Loan
Agreement. Nothing contained in this Pledge Agreement shall limit or affect the
rights of any party hereto to serve process in any other manner permitted by law
or to start legal proceedings related to any of the Loan Documents against any
Pledgor or its respective property in the courts of any jurisdiction.
(i) The Collateral Agent, by the execution hereof, acknowledges receipt of
the Pledged Shares on behalf of Secore.
[signatures follow]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge Agreement on the date first above written.
LEHMAN BROTHERS HOLDINGS INC.
LODGIAN, INC.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
-------------------------- ----------------------------
SECORE FINANCIAL CORPORATION
SERVICO, INC.
By: By:
----------------------------- ----------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
-------------------------- ----------------------------
<PAGE>
SERVICO OPERATIONS CORPORATION
SHARON MOTEL ENTERPRISES, INC.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
-------------------------- ----------------------------
KDS CORPORATION AMIOP ACQUISITION CORP.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
-------------------------- ----------------------------
SERVICO ACQUISITION CORP. PALM BEACH MOTEL ENTERPRISES, INC.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
--------------------------- -----------------------------
SCHEDULE A TO PLEDGE AGREEMENT
PLEDGED SHARES -LODGIAN
Certificate No. 1, 1,000 shares of the Common Stock of SHG-S Sub, Inc. and upon
conversion of SHG-S Sub, Inc. stock to the stock of Servico, Inc., all of the
shares of Servico, Inc.
SCHEDULE B TO PLEDGE AGREEMENT
PLEDGED SHARES -SERVICO
<PAGE>
Certificate No. 1, 1,000 shares of the Common Stock of Servico Acquisition
Corporation.
Certificate No. 2, 100 shares of the Common Stock of AMIOP Acquisition Corp.
SCHEDULE C TO PLEDGE AGREEMENT
PLEDGED SHARES -SERVICO OPERATIONS
Certificate No. 3, 50 Shares of the Common Stock of Sheffield Motel Enterprises,
Inc.
Certificate No. 2, 1,000 Shares of the Common Stock of Dothan Hospitality 3053,
Inc.
Certificate No. 2, 1,000 Shares of the Common Stock of Dothan Hospitality 3071,
Inc.
Certificate No. 2, 1,000 Shares of the Common Stock of Gadsden Hospitality, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico West Palm Beach,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Pensacola, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Pensacola 7200,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Pensacola 7330,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Ft. Pierce, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Rolling Meadows,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Cedar Rapids,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Columbia, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Colesville, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Maryland, Inc.
Certificate No. 5, 1,000 Shares of the Common Stock of N.H. Motel Enterprises,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Roseville, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Albany Hotel, Inc. (f/k/a
Albany Motel Enterprises, Inc.)
<PAGE>
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Jamestown, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico New York, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Niagra Falls,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Grand Island,
Inc.
Certificate No. 3, 100 Shares of the Common Stock of Fayetteville Motel
Enterprises, Inc.
Certificate No. 6, 1,000 Shares of the Common Stock of Apico Inns of Green Tree,
Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Hilton Head, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Northwoods, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Market Center,
Inc.
Certificate No. 2, 1,000 Shares of the Common Stock of Servico Houston, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Windsor, Inc.
Certificate No. 2, 1,000 Shares of the Common Stock of Servico Silver Spring,
Inc.
Certificate No. 6, 60 Shares of the Common Stock of Palm Beach Motel
Enterprises, Inc.
Certificate No. 1, 1,000 Shares of the Common Stock of Servico Winter Haven,
Inc.
Certificate No. 4, 200 Shares of the Common Stock of Brunswick Motel
Enterprises, Inc.
SCHEDULE D TO PLEDGE AGREEMENT
PLEDGED SHARES -SHARON
Certificate No. 4, 1,000 shares of the Common Stock of Apico Hills, Inc.
Certificate No. 3, 1,000 shares of the Common Stock of Minneapolis Motel
Enterprises, Inc.
SCHEDULE E TO PLEDGE AGREEMENT
PLEDGED SHARES -KDS
Certificate No. 2, 1,000 shares of the Common Stock of Servico Flagstaff, Inc.
<PAGE>
Certificate No. 2, 1,000 shares of the Common Stock of Servico Metairie, Inc.
Certificate No. 2, 1,000 shares of the Common Stock of Servico Austin, Inc.
SCHEDULE F TO PLEDGE AGREEMENT
PLEDGED SHARES -AMIOP
100% of the general partnership interests in AMI Operating Partners L.P.
SCHEDULE G TO PLEDGE AGREEMENT
PLEDGED SHARES -SERVICO ACQUISITION
100% of the limited partnership interests in AMI Operating Partners L.P.
SCHEDULE H TO PLEDGE AGREEMENT
PLEDGED SHARES -PALM BEACH
100% of the general partnership interests in Servico Centre Associates, Ltd.
SCHEDULE I TO PLEDGE AGREEMENT
BORROWERS
1. Sheffield Motel Enterprises, Inc.
2. Dothan Hospitality 3053, Inc.
3. Dothan Hospitality 3071, Inc.
4. Gadsden Hospitality, Inc.
5. Servico Flagstaff, Inc.
6. AMI Operating Partners, L.P.
7. Servico Centre Associates, Ltd.
8. Servico West Palm Beach, Inc.
9. Servico Pensacola, Inc.
10. Servico Pensacola 7200, Inc.
11. Servico Pensacola 7330, Inc.
12. Servico Ft. Pierce, Inc.
13. Servico Winter Haven, Inc.
14. Brunswick Motel Enterprises, Inc.
15. Servico Rolling Meadows, Inc.
16. Servico Cedar Rapids, Inc.
<PAGE>
17. Servico Metairie, Inc.
18. Servico Columbia, Inc.
19. Servico Colesville, Inc.
20. Servico Maryland, Inc.
21. N.H. Motel Enterprises, Inc.
22. Minneapolis Motel Enterprises, Inc.
23. Servico Roseville, Inc.
24. Albany Hotel, Inc. (f/k/a Albany Motel Enterprises, Inc.)
25. Servico Jamestown, Inc.
26. Servico New York, Inc.
27. Servico Niagra Falls, Inc.
28. Servico Grand Island, Inc.
29. Fayetteville Motel Enterprises, Inc.
30. Apico Inns of Green Tree, Inc.
31. Apico Hills, Inc.
32. Servico Hilton Head, Inc.
33. Servico Northwoods, Inc.
34. Servico Austin, Inc.
35. Servico Market Center, Inc.
36. Servico Houston, Inc.
37. Servico Windsor, Inc.
38. Servico Silver Spring, Inc.
<PAGE>
SCHEDULE J TO PLEDGE AGREEMENT
(Section 6(f)(ii) conflicting agreements)
<TABLE>
<CAPTION>
LENDER HOTEL NAME BORROWING ENTITY DOCUMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lehman Brothers Holdings, Inc. Holiday Inn Summit County -Frisco Servico Frisco, Inc., a Colorado Mortgage Note,
corporation Mortgage/Deed of Trust,
Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. Holiday Inn Melbourne Melbourne Hospitality Associates, Mortgage Note,
L.P., a Florida limited partnership Mortgage/Deed of Trust,
Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Holiday Inn Augusta 1075 Hospitality, L.P., a Georgia Mortgage Note,
limited partnership Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. Holiday Inn & Suites Fort Wayne Fort Wayne Hospitality Associates Mortgage Note,
II, L.P., a Florida limited Mortgage/Deed of Trust,
partnership Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Hilton Sioux City Sioux City Hospitality, L.P., an Mortgage Note,
Iowa limited partnership Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Best Western Council Bluffs Servico Council Bluffs, Inc., an Mortgage Note,
Iowa corporation Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Four Points West Des Moines (Sheraton Servico West Des Moines, Inc., an Mortgage Note,
West) Iowa corporation Loan Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Holiday Inn Wichita Airport Servico Wichita, Inc., a Kansas Loan Agreement,
corporation Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Best Western Central Omaha Servico Omaha Central, Inc., a Loan Agreement,
Nebraska corporation Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Four Point Hotel -Omaha (Sheraton) Servico Omaha, Inc., a Nebraska Loan Agreement,
corporation Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. Crowne Plaza Worcester Worcester Hospitality Associates, Loan Agreement,
L.P., a Florida limited partnership Mortgage/Deed of Trust,
Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GMAC Commercial Mortgage Corp. Holiday Inn Richfield Brecksville Hospitality, L.P., an Loan Agreement,
Ohio limited partnership Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. Holiday Inn Monroeville Apico Inns of Pittsburgh, Inc., a Loan Agreement,
Pennsylvania corporation Mortgage Note,
Mortgage/Deed of Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn McKnight Southfield Hotel Group II, L.P., a Loan Agreement,
Michigan limited Promissory Note,
partnership/McKnight Motel, Inc., Mortgage
a Pennsylvania corporation
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Corp. Holiday Inn Lansing Servico Lansing, Inc., a Michigan Loan Agreement,
corporation Mortgage Note
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Select Phoenix Airport East Washington Associates, L.P., Loan Agreement,
an Arizona limited partnership Promissory Note,
Deed of Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Phoenix West Servico Hotels I, Inc., a Florida Loan Agreement,
corporation Promissory Note,
Deed of Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Radisson Hotel Phoenix Airport Servico Hotels II, Inc., a Florida Loan Agreement,
corporation Promissory Note,
Deed of Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Palm Desert Servico Hotels III, Inc., a Florida Loan Agreement,
corporation Promissory Note,
Deed of Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Hilton Fort Wayne Servico Fort Wayne, Inc., a Florida Loan Agreement,
corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Radisson Hotel New Orleans New Orleans Airport Motel Loan Agreement,
Associates, L.P., a Florida limited Promissory Note,
partnership Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Clarion-Royce Pittsburgh Moon Airport Motel, Inc., a Loan Agreement,
Pennsylvania corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Column Financial, Inc. Westin William Penn Hotel Wilpen, Inc., a Pennsylvania Loan Agreement,
corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Meadowlands Washington Motel Enterprises, Inc., Loan Agreement,
a Pennsylvania corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Hilton Head Hilton Head Motel Enterprises, Inc., Loan Agreement,
a South Carolina corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
Column Financial, Inc. Holiday Inn Santa Fe Servico Hotels IV, Inc., a Florida Loan Agreement,
corporation Promissory Note,
Mortgage
- ------------------------------------------------------------------------------------------------------------------------------------
Crests\144A Private Placement with N/A Lodgian, Inc., a Delaware Indenture, Debenture
NationsBanc Montgomery Securities corporation
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GUARANTY
This Guaranty ("Guaranty") is made as of December 11, 1998, by Servico,
Inc. ("Servico"), a Florida corporation, Lodgian, Inc. ("Lodgian"), a Delaware
corporation, Servico Operations Corporation, a Florida corporation, Sharon Motel
Enterprises, Inc., a Pennsylvania corporation, KDS Corporation, a Nevada
corporation, AMIOP Acquisition Corp., a Delaware corporation, Servico
Acquisition Corp., a Florida corporation, and Palm Beach Motel Enterprises,
Inc., a Florida corporation, (collectively, together with their respective
successors and assigns, each, a "Guarantor" and together, the "Guarantors"),
each having an address c/o Lodgian, Inc., 3445 Peachtree Road, N.E., Two Live
Oak Center, Suite 700, Atlanta, Georgia 30326, in favor of Secore Financial
Corporation ("Secore"), a Pennsylvania corporation, having an address at 3
Bethesda Metro Center, Suite 700, Bethesda, Maryland 20814, as lender under that
certain Loan Agreement dated as of the date hereof (as the same may amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among the borrowers and guarantors that are a party thereto (each, a
"Borrower" and together, the "Borrowers"), and Secore (Secore, individually and
as agent for one or more Co-Lenders, together with any and all successors and
assigns, hereinafter referred to as "Lender").
RECITALS
A. Pursuant to the terms of the Loan Agreement, as a condition to the
making of the Loan in the principal amount of $265,000,000.00 pursuant to the
terms of the Loan Agreement to the Borrowers by Lender, the Guarantors are
required to guarantee the payment of the Loan to the Lender, as set forth
herein.
B. Lodgian is the owner of 100% of all issued and outstanding shares of
Servico, and Servico is the direct or indirect owner of 100% of all issued and
outstanding shares of each Borrower that is a corporation, and is the direct or
indirect owner of 100% of all partnership interests in each Borrower that is a
partnership except for Servico Centre Associates, Ltd., in which Servico owns,
directly or indirectly, 100% of the general partnership interests therein.
C. The Guarantors will derive substantial benefit from the Lender's making
of the Loan to the Borrowers and the extension to the Borrowers of the credit
provided under the Loan Agreement.
NOW, THEREFORE, in order to induce the Lender to execute the Loan
Agreement, close and fund the Loan, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the Guarantors, jointly and severally, hereby
represent, warrant, covenant and agree as follows:
1. Definitions and Construction. The following terms, as used in this
Guaranty, shall have the following meanings:
<PAGE>
(a) Definitions.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Assets" of any Person means all assets of such Person that would, in
accordance with GAAP, be classified as assets of a company conducting a business
the same as or similar to that of such Person, including, without limitation,
all real property and personal property, Capital Stock, and, with respect to the
Borrower, the Properties.
"Asset Sale" shall mean any Disposition of Assets or series of related
Dispositions of Assets which yields gross proceeds to any Guarantor, any
Borrower or any of their respective Subsidiaries or any other entity which any
Guarantor or Subsidiary thereof owns an interest (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of notes or
other debt securities and valued at fair market value in the case of other
non-cash proceeds) in excess of $50,000.00.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as
amended, 11 U.S.C. Sections 101 et seq., and the regulations adopted and
promulgated pursuant thereto.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower" and "Borrowers" shall have the meaning set forth in the
preamble to this Guaranty.
"Capital Expenditures" shall mean, for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized repairs
and improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and, for the purposes of this Guaranty, the amount of such obligations at any
time shall be the capitalized amount thereof at such time
<PAGE>
determined in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants, rights or options to purchase any of
the foregoing. "Cash Equivalents" shall mean (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or less from
the date of acquisition issued by any Lender or by any commercial bank organized
under the laws of the United States of America or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial paper
of an issuer rated at least A-2 by Standard & Poor's Ratings Services ("S&P") or
P-2 by Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent
rating by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally, and
maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than 30 days with
respect to securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (b) of this definition; or
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition.
"Closing Date" shall mean the date hereof.
"Collateral" shall mean the Properties and the shares and partnership
interests pledged pursuant to and described in the Pledge Agreement.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Bankruptcy Code.
"Consolidated EBITDA" shall mean, with respect to any Person, for any
period, Consolidated Net Income for such period plus, without duplication and to
the extent reflected as a charge in the statement of such Consolidated Net
Income for such
<PAGE>
period, the sum of (a) income tax expense, (b) Consolidated Interest Expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring expenses or
losses (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business) and (f) any other non-cash
charges, and minus, to the extent included in the statement of such Consolidated
Net Income for such period, the sum of (a) interest income (except to the extent
deducted in determining Consolidated Interest Expense), (b) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income, all as determined on a consolidated
basis.
"Consolidated Fixed Charge Coverage Ratio" shall mean, with respect to
any Person, for the twelve (12) month period immediately preceding the date of
calculation, the ratio of (a) Consolidated EBITDA for such period (calculated on
a pro forma basis acceptable to Lender for properties owned by such Person for
less than twelve (12) months at the time of calculation), including minimum
management fees equal to 4% of gross income of each property owned by such
Person, minimum FF&E reserves of 5% of gross income of each property owned by
such Person and minimum franchisee fees of 4% of gross room revenues (exclusive
of the franchisee's share of the cost of registration and advertising systems)
of each hospitality property owned by such Person, to (b) Consolidated Fixed
Charges for such period, provided that if the date of calculation is less than
twelve (12) months from the date hereof, Consolidated Fixed Charges shall be
calculated on an annualized basis on the basis of the period from the date
hereof to the date of calculation.
"Consolidated Fixed Charges" shall mean, with respect to any Person,
for any period, the sum (without duplication) of (a) Consolidated Interest
Expense for such period, (b) provision for cash income taxes made by such Person
on a consolidated basis in respect of such period, (c) dividends on preferred
stock of such Person and (d) scheduled payments made during such period on
account of principal of Indebtedness of such Person or any of its Subsidiaries
(including scheduled principal payments in respect of the Loan) but excluding a
scheduled payment of principal which is payable in a single installment at the
final maturity of such Indebtedness.
"Consolidated Interest Coverage Ratio" shall mean, with respect to any
Person, for the twelve (12) month period immediately preceding the date of
calculation, the ratio of (a) Consolidated EBITDA for such period (calculated on
a pro forma basis acceptable to Lender for properties owned by such Person for
less than twelve (12) months at the time of calculation), minus minimum
management fees equal to 4% of gross income of each property owned by such
Person, minimum FF&E reserves of 5% of gross income of each property owned by
such Person and minimum franchisee fees of 4% of gross room revenues (exclusive
of the franchisee's share of the cost of registration and advertising
<PAGE>
systems) of each hospitality property owned by such Person, to (b) Consolidated
Interest Expense for such period, provided that if the date of calculation is
less than twelve (12) months from the date hereof, Consolidated Interest Expense
shall be calculated on an annualized basis on the basis of the period from the
date hereof to the date of calculation.
"Consolidated Interest Expense" shall mean, with respect to any
Person, for any period, total interest expense (including that attributable to
Capital Lease Obligations and all accrued interest on construction financing
during the related construction period) of such Person and its Subsidiaries for
such period with respect to all outstanding Indebtedness of such Person and its
Subsidiaries (including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Hedge Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance
with GAAP, but excluding Exit Fees, as provided in the Note, commitment fees and
the amortization of deferred loan costs in connection with mortgage loans which
are treated as an interest expense under GAAP).
"Consolidated Lease Expense" shall mean, with respect to any Person,
for any period, the aggregate amount of fixed and contingent rentals payable by
such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, for such period with respect to leases of real and
personal property; provided, that payments in respect of Capital Lease
Obligations shall not constitute Consolidated Lease Expense.
"Consolidated Leverage Ratio" for any Person shall mean the ratio of
(a) the Consolidated Total Debt of such Person at the time of calculation to (b)
Consolidated EBITDA for such period (calculated on a pro forma basis acceptable
to Lender for properties owned for less than twelve (12) months at the time of
calculation) of each property owned by such Person.
"Consolidated Net Income" shall mean, with respect to any Person, for
any period, the consolidated net income (or loss) of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any other
Person accrued prior to the date it becomes a Subsidiary of such Person or is
merged into or consolidated with such Person or any of its Subsidiaries, (b) the
income (or deficit) of any other Person (other than a Subsidiary of such Person)
in which such Person or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by such Person or
such Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirement of Law applicable to such
Subsidiary.
"Consolidated Net Worth" shall mean, with respect to any Person, at
any date, all amounts which would, in conformity with GAAP, be included on a
consolidated
<PAGE>
balance sheet of such Person and its Subsidiaries under stockholders' equity at
such date, plus 75% of retained earnings and 75% of the net proceeds (after
payment of underwriting and placement fees and other expenses directly related
to such equity offerings) received from all subsequent equity offerings of such
Person.
"Consolidated Total Debt": shall mean, for any Person at any date, the
aggregate principal amount of all Indebtedness of such Person and its
Subsidiaries at such date, determined on a consolidated basis in accordance with
GAAP; provided, however, that with respect to Lodgian, the Crests shall be
excluded from the calculation of Consolidated Total Debt.
"Contractual Obligation" shall mean, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"CRESTS" shall mean those certain 7% Convertible Junior Subordinated
Debentures due 2010 (the "Subordinated Debentures") in the amount of
$175,000,000.00 issued by Servico in June, 1998, together with the Convertible
Redeemable Equity Structured Trust Securities issued by Lodgian Capital Trust I
on June 17, 1998, which evidence an ownership interest in the Subordinated
Debentures.
"Dedham Construction Loan" shall mean the $5,575,000 construction loan
previously made by BankBoston, N.A. to the Dedham Subsidiary relating to the
Residence Inn located in Dedham, Massachusetts.
"Dedham Subsidiary" shall mean Dedham Lodging Associates I, Limited
Partnership, a Georgia limited partnership and a Subsidiary of Impac.
"Default" shall mean any event, act or condition which shall have
occurred and which, with the giving of notice of lapse of time, or both, would
constitute an Event of Default.
"Disposition" shall mean, with respect to any Asset, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof; the terms "Dispose" and "Disposed of" shall have correlative meanings.
"Environmental Permits" shall mean any and all permits, licenses,
approvals, registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"European Joint Venture" shall mean SLB Holdings, L.P., a Delaware
limited partnership, as more fully described on Schedule 4(q).
<PAGE>
"Event of Default" shall mean the occurrence of any of the following:
(a) the failure of any Guarantor to pay any of the Guaranteed
Obligations or any other amount payable under this Guaranty on demand; or
(b) if any representation or warranty made or deemed made by any
Guarantor in this Guaranty or which is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Guaranty shall prove to have been inaccurate in any material respect
on or as of the date made or deemed made; or
(c) any default in the observance or performance of any covenant or
agreement contained in this Guaranty (other than as provided in paragraphs (a),
(b) and (d) through (h) of this definition), and such default shall continue
unremedied for a period of (i) 10 days with respect to covenants and agreements
contained in Section 7(d)(i), 7(g)(i), (iii) and (iv) and Section 8, and (ii) 30
days with respect to other covenants and agreements contained herein; or
(d) if any Guarantor, any Borrower or any of their respective
Subsidiaries shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with respect thereto
and such default is not cured within any applicable grace or cure period; or
(ii) default in making any payment of any interest on any such Indebtedness
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii) or
(iii) of this paragraph (d) with respect to Non-Recourse Indebtedness shall not
at any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii) and
(iii) of this paragraph (d) shall have occurred and be continuing with respect
to such Non-Recourse Indebtedness the outstanding principal amount of which
exceeds in the aggregate $5,000,000.00 and provided further that a default,
event or condition described in clause (i), (ii) or (iii) of this paragraph (d)
with respect to Recourse Indebtedness which is not Recourse Financing and the
payment of which is subject to a bona fide dispute, shall not at any time
constitute an Event of Default unless, at such time, one or more defaults,
events or conditions of the type described in clauses (i), (ii) and (iii) of
this paragraph (d) shall have occurred and be continuing with respect to such
Recourse Indebtedness the outstanding principal amount of which exceeds in the
aggregate $1,000,000.00; and provided further that if any default, event or
condition of the type
<PAGE>
described in clauses (i), (ii) or (iii) of this paragraph (d) has been
unconditionally waived, in writing, it shall not be an Event of Default; or
(e) if (i) any Guarantor, any Borrower or any of their respective
Subsidiaries shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Guarantor, any Borrower or any of their
respective Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against any Guarantor, any Borrower
or any of their respective Subsidiaries any case, proceeding or other action of
a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 90 days; or (iii) there
shall be commenced against any Guarantor, any Borrower or any of their
respective Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 90 days from the entry thereof; or (iv) any
Guarantor, any Borrower or any of their respective Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) any Guarantor, any Borrower or any of their respective Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(f) if any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan
with respect to which no statutory or regulatory exemption exists and applies to
such transaction, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of any
Guarantor, any Borrower or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Guarantor, any Borrower or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Lender is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could, in the sole judgment of the Lender, reasonably be
expected to have a Material Adverse Effect; or
<PAGE>
(g) One or more judgments or decrees shall be entered against any
Guarantor, any Borrower or any of their respective Subsidiaries involving for
the Guarantors, the Borrowers or their respective Subsidiaries taken as a whole
a liability (not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage) of $5,000,000.00 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(h) an "Event of Default" as defined in the Loan Agreement.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"Franchise Agreement" shall mean with respect to any Guarantor, any
Borrower or their respective Subsidiaries, a management agreement, franchise
agreement or similar agreement pursuant to which such Person has the right to
operate a hotel located on each real property Asset under a brand name and/or
hotel system.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, except that for
purposes of Section 8(a), GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered pursuant
to Section 4(g).
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation" shall mean, as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Asset constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Assets, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the
<PAGE>
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
"Guaranteed Obligations" shall have the meaning set forth in paragraph
2(a) below.
"Guarantor" and "Guarantors" shall have the meaning set forth in the
preamble to this Guaranty.
"Guaranty" shall mean this Guaranty.
"Hedge Agreements" shall mean, with respect to any Person, all
interest rate swaps, caps or collar agreements or similar arrangements entered
into by such Person providing for protection against fluctuations in interest
rates or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"Impac" shall mean Impac Hotel Group, LLC, a Georgia limited liability
company, a Wholly-Owned Subsidiary of Lodgian.
"Impac I" shall mean Impac Hotels I, L.L.C., a Georgia limited
liability company and a Subsidiary of Impac.
"Impac I Lender" shall mean Nomura Depositor Trust ST I, Commercial
Mortgage Pass-through Certificates, Series 1998-ST I, acting through LaSalle
National Bank, as Trustee, as assignee of Nomura Asset Capital Corporation,
together with its successors and assigns.
"Impac I Loan" shall mean the $132,459,000.00 mortgage loan made by
the Impac I Lender to Impac I pursuant to the Impac I Loan Agreement.
"Impac I Loan Agreement" shall mean that certain Loan Agreement dated
as of March 12, 1997, by and between Impac I and the Impac I Lender, as amended,
extended, renewed or restated from time to time.
"Impac II" shall mean Impac Hotels II, L.L.C., a Georgia limited
liability company and a Subsidiary of Impac.
<PAGE>
"Impac II Lender" shall mean The Capital Company of America LLC, as
assignee of Nomura Asset Capital Corporation, together with its successors and
assigns.
"Impac II Loan" shall mean the mortgage loan facility in the maximum
principal amount of $163,500,000.00 from the Impac II Lender to Impac II
pursuant to the Impac II Loan Agreement.
"Impac II Loan Agreement" shall mean that certain Loan Agreement dated
as of March 12, 1997, by and between Impac II and the Impac II Lender, as
amended, extended, renewed or restated from time to time.
"Impac III" shall mean Impac Hotels III, L.L.C., a Georgia limited
liability company and a Subsidiary of Impac.
"Impac III Lender" shall mean The Capital Company of America LLC, as
assignee of Nomura Asset Capital Corporation, together with its successors and
assigns.
"Impac III Loan" shall mean the mortgage loan facility in the maximum
principal amount of $100,000,000.00 from the Impac III Lender to Impac III
pursuant to the Impac III Loan Agreement.
"Impac III Loan Agreement" shall mean that certain Loan Agreement
dated as of October 29, 1997, by and between Impac III and the Impac III Lender,
as amended, extended, renewed or restated from time to time.
"Impac Loans" shall mean the Impac I Loan, the Impac II Loan and the
Impac III Loans, or any of them.
"Impac Loan Agreements" shall mean the Impac I Loan Agreement, the
Impac II Loan Agreement and the Impac III Loan Agreement.
"Impac Loan Documents" shall mean the documents, instruments, and
agreements from time to time evidencing, guaranteeing and securing the Impac
Loans, or any of them.
"Impac Affiliated Companies" shall mean those Wholly-Owned
Subsidiaries of Lodgian identified on Exhibit 4(q).
"Indebtedness" shall mean of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property, Assets
or services (other than trade payables incurred in the ordinary course of such
Person's business, provided that such trade payables are paid within 60 days of
the date they are incurred), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all
<PAGE>
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to Assets or property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
Asset or property), (e) all Capital Lease Obligations of such Person, (f) all
obligations of such Person, contingent or otherwise, as an account party under
acceptance, letter of credit or similar facilities, (g) all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital Stock of such Person, (h) all Guarantee
Obligations of such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above; (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any
Lien on any property or Asset (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, (j) all obligations of such
Person in respect of Hedge Agreements, and (k) the liquidation value of any
preferred Capital Stock of such Person or its Subsidiaries held by any Person
other than such Person and its Wholly Owned Subsidiaries.
"Indemnified Liabilities" shall have the meaning set forth in Section
15.
"Indemnitee" shall have the meaning set forth in Section 15.
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent" shall mean a condition of Insolvency.
"Intellectual Property" shall mean the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, technology, know-how and processes,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Joint Venture" shall mean any joint venture, corporation,
partnership, limited liability company or other business entity (a) in which any
Guarantor or any of their Subsidiaries (other than the Borrowers) owns directly
or indirectly a percentage ownership interest of less than 50%, (b) which is not
a Subsidiary or Affiliate of any Guarantor, (c) which owns a hotel or hotels,
and (d) which does not own any other Asset or type of Asset.
"Lender" shall have the meaning set forth in the preamble to this
Guaranty.
"Liabilities" shall have the meaning set forth in Section 2(a).
<PAGE>
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
"Loan Agreement" shall have the meaning set forth in the preamble to
this Guaranty.
"Little Rock Construction Loan" shall mean the $5,680,406.00
construction loan previously made by Bank One, Louisiana, N.A. to the Little
Rock Subsidiary relating to the Residence Inn located in Little Rock, Arkansas.
"Little Rock Subsidiary" shall mean Little Rock Lodging Associates I,
Limited Partnership, a Georgia limited partnership and a Subsidiary of Impac.
"Loan Documents" shall have the meaning set forth in the Loan
Agreement, including without limitations, the Pledge Agreements.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, property, condition (financial or otherwise) or prospects
of the Guarantors, the Borrowers and their respective Subsidiaries taken as a
whole or (b) the validity or enforceability of this Guaranty or any of the other
Loan Documents or the rights or remedies of the Lender hereunder or thereunder.
"Material Environmental Amount" shall mean an amount or amounts
payable by any Person and/or any of its Subsidiaries not covered by insurance,
in the aggregate in excess of $1,000,000.00, for: costs to comply with any
Environmental Law; costs of any investigation, and any remediation, of any
Material of Environmental Concern; and compensatory damages (including, without
limitation damages to natural resources), punitive damages, fines, and penalties
pursuant to any Environmental Law.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances or forces of any kind
defined as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
"Merger" shall mean the transaction described in that certain Amended
and Restated Agreement and Plan of Merger (the "Merger Agreement") among
Lodgian, Servico and Impac dated July 22, 1998 and further amended on September
16, 1998.
"Multiemployer Plan" shall mean a Plan which is a multiemployer
<PAGE>
plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) in connection with any Asset Sale
or any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the
subject of such Asset Sale or Recovery Event (other than any Lien pursuant to
the Loan Documents), distributions to Unaffiliated Third Party Equity Owners
that hold an equity interest in the entity which owns such Asset, provided that
such distributions are mandatory under the organizational documents of such
entity and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
"Non-Recourse Indebtedness" of any Person shall mean all Indebtedness
of such Person and its Subsidiaries with respect to which recourse for payment
is limited to specific assets encumbered by a Lien securing such Indebtedness;
provided, however, that personal recourse of a holder of Indebtedness against
any obligor with respect thereto for fraud, misrepresentation, misapplication of
cash, waste and other circumstances customarily excluded from non-recourse
provisions in non-recourse secured financing of real estate shall not, by
itself, prevent any Indebtedness from being characterized as Non-Recourse
Indebtedness, provided further that if a personal recourse claim is made in
connection therewith, such claim shall not constitute Non-Recourse Indebtedness
for the purposes of this Guaranty.
"Non-Wholly-Owned Subsidiary" shall mean any Subsidiary of a Person
that is not a Wholly-Owned Subsidiary of such Person.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Financing" shall mean leases, licenses or financing
arrangements which contain commercially prudent terms and conditions, with
respect to microwaves, dish and glass washing machines, vans, phone systems,
refrigerators, televisions, washers, dryers, cubers, dispensers, door locks, air
conditioners, filter systems, impressers, ironers or computer systems ("Leased
Equipment") which are readily replaceable without material interference or
interruption to the operation of the related Asset, and for which aggregate
annual lease payments, license fees and debt service is less than $50,000.00
<PAGE>
per annum or, with respect to the hospitality Assets listed on Schedule 1, the
dollar amount per annum set forth on such Schedule for such Asset) for each
hospitality property owned or leased by any Guarantor, any Borrower or their
related Subsidiaries, provided that such Permitted Financing is a Lien only on
the related Leased Equipment, including without limitation, the Permitted FF&E
Financing. For each real property owned or leased by any Guarantor, any Borrower
or their related Subsidiaries, and such amount is an aggregate limit for that
real property on all leasing, licensing or financing by any Guarantor, any
Borrower or their related Subsidiaries.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" shall mean, at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" shall mean that certain pledge agreement dated the
date hereof and given by the Guarantors to Lender, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Purchase Right" shall mean the right of an Unaffiliated Third Party
Equity Owner of a Subsidiary of any Guarantor, or Borrower or of an entity in
which any Guarantor, any Borrower or any Subsidiary owns an interest, to require
the other owners of interests in said Subsidiary or other entity to sell their
interests in such Subsidiary or other entity to such Unaffiliated Third Party
Equity Owner upon the occurrence of certain specified events pursuant to the
terms of the organizational documents of such Subsidiary or other entity.
"Recourse Indebtedness" of any Person means all Indebtedness of such
Person and its Subsidiaries for which recourse for payment may be made against
such Person for the obligations secured thereunder including without limitation,
the entire amount of the Recourse Indebtedness of any Joint Venture which such
Person may own an interest in regardless of such Person's percentage ownership
in such Joint Venture.
"Recourse Financing" of any Person means all Recourse Indebtedness of
such Person which (i) is listed on Schedule 8(b(iii), (ii) is evidenced by a
note, bond, indenture, guarantee, surety agreement, reimbursement agreement, or
indemnity or is related to a loan or borrowed money, (iii) is a Capital Lease
Obligation or (iv) is Permitted Financing.
"Recovery Event" shall mean any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding relating
to any Asset of the Guarantors, the Borrowers or any of their respective
Subsidiaries.
<PAGE>
"Regulation U" shall mean Regulation U of the Board as in effect from
time to time.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss. 4043.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" shall mean the chief executive officer,
president or chief financial officer of the Borrower, but in any event, with
respect to financial matters, the chief financial officer of Lodgian.
"SEC" shall mean the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Servico's Cash Management System" shall mean the "Cash Management
System" as defined in the Loan Agreement.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": shall mean, when used with respect to any Person, that as
of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means an uninsured liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed,
<PAGE>
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of (a) Servico and (b) Lodgian.
"Unaffiliated Third Party Equity Owner" shall mean a Person (a) which
owns, directly, an equity interest in a Subsidiary of any Guarantor, or in an
entity in which any Guarantor or any Subsidiary thereof owns any interest, and
(b) if such Person is not an individual, in which no Guarantor, no Borrower, and
no Subsidiary or Affiliate of any Guarantor or Borrower owns, directly or
indirectly, any interest, and (c) if such Person is an individual, such
individual does not own any interest, directly or indirectly, in any Guarantor
or any other Subsidiary or any Borrower.
"Wholly Owned Subsidiary" shall mean, as to any other Person, all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
All capitalized terms used in this Guaranty and not otherwise defined in
this Section 1 shall have the meaning set forth in the Loan Agreement.
(b) Construction.
(i) Unless the context of this Guaranty clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, the part includes the whole, the terms "include" and
"including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and other similar terms in this
Guaranty refer to this Guaranty as a whole and not exclusively to any particular
provision of this Guaranty. Article, section, subsection, exhibit, and schedule
references refer to this Guaranty unless otherwise specified. All of the
exhibits and schedules attached to this Guaranty shall be deemed incorporated
into this Guaranty by reference.
(ii) Any reference in this Guaranty to any of the following
documents includes any and all alterations, amendments, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable: this
Guaranty, the Loan Agreement, the Pledge Agreements and the other Loan
Documents.
(iii) Neither this Guaranty nor any uncertainty or ambiguity
<PAGE>
contained herein shall be construed or interpreted against the Lender or the
Guarantors by virtue of such party's having drafted the same. Rather, this
Guaranty has been reviewed by each of the Guarantors and the Lender and their
respective counsel and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of both such parties.
(iv) No course of dealing, course of performance, trade usage or
parol evidence of any nature shall be used to supplement or modify any term or
condition of this Guaranty.
(v) Any notice, certificate or other document required by the
terms of this Guaranty to be executed by an officer of any Guarantor, shall be
executed by such officer in his or her capacity as such, solely on behalf of the
respective Guarantor and not in his or her individual capacity.
2. Guaranty.
(a) Unconditional Guaranty. The Guarantors jointly and severally,
hereby irrevocably, absolutely and unconditionally guarantee (i) to the Lender,
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of all of the indebtedness owing by the Borrowers to
the Lender evidenced by the Note, all obligations under, and the due and prompt
performance of all of, the terms, agreements, covenants and conditions of the
Loan Documents (collectively, the "Liabilities"), and (ii) to the Lender, the
prompt payment of all expenses, including reasonable attorneys' fees, and costs
reasonably incurred by the Lender in connection with the collection of the
Liabilities or the enforcement of the Note or any Loan Documents. The term
"indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts and other monetary obligations and liabilities
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined including interest (including any
interest accruing after the commencement of any proceeding by or against the
Borrowers under the Bankruptcy Code, or any other similar law, and any other
interest that would have accrued but for the commencement of such proceeding,
whether or not any such interest is allowed as a claim enforceable against the
Borrowers in such proceeding) required under the applicable Note, and whether
recovery upon such indebtedness and obligations may be or hereafter become
unenforceable against the Borrowers or any debtor-in-possession or trustee under
the Bankruptcy Code or other applicable law. (The Liabilities and all other
expenses and costs to be paid by the Guarantor pursuant to this Guaranty shall
hereinafter be collectively referred to as the "Guaranteed Obligations.") This
Guaranty is an absolute guaranty of payment and performance and not a guaranty
of collection.
(b) Joint and Several Liability. The Guarantors and any other Person
who, in addition to the Guarantors, shall guarantee the payment of all or any
part of the Liabilities or shall guarantee the performance of any other
Guaranteed Obligation, and their respective successors and assigns shall be
jointly and severally bound by the terms of
<PAGE>
this Guaranty and such other guaranty with respect to such guarantied
Liabilities or Guaranteed Obligations, notwithstanding any relationship or
contract of co-obligation by or among such guarantors. The enforcement of the
Guaranteed Obligations by the Lender is not conditioned upon the Lender
obtaining from any other Person a guaranty of all or any part of the Liabilities
or Guaranteed Obligations, any security or any other accomplishment, event or
matter, including, without limitation, the prior collection, from the Borrowers
or any other Person, of any portion of the indebtedness owing from the Borrowers
to the Lender under the Note, the Loan Agreement or any other Loan Documents.
(c) Separate Obligations. The obligations of the Guarantors arising
hereunder are independent of and separate from any and all obligations of the
Borrowers to the Lender, or to any other Person arising under any and all other
Loan Documents executed by the Guarantors and delivered to the Lender. A
separate action or actions may be brought against the Guarantors in respect of
this Guaranty, whether or not the Borrowers or any other party is joined therein
or a separate action or actions are brought against the Borrowers or any other
party. All of the rights and remedies of the Lender are cumulative and not
exclusive, and the rights of the Lender provided by each Loan Document shall
continue without impairment, reduction or excuse on account of the execution and
delivery of this Guaranty. Payments by the Guarantors hereunder may be required
by the Lender on any number of occasions.
(d) Guaranty Absolute. Each Guarantor guaranties that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Agreement, the Note and the other Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Lender with respect thereto. The liability of
each Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any provision of
any other Loan Document or any other agreement or instrument relating to
any Loan Document, or avoidance or subordination of any of the Guaranteed
Obligations;
(ii) any change in the time, manner or place of payment of, or in
any other term of, or any increase in the amount of, all or any of the
Guaranteed Obligations, or any other amendment or waiver of any term of, or
any consent to departure from any requirement of, the Loan Agreement, the
Note or any of the other Loan Documents;
(iii) any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Guaranteed Obligations;
(iv) the absence of any attempt to collect any of the Guarantied
Obligations from the Borrowers or from any Guarantor or from any other
guarantor or any other action to enforce the same or the election of any
remedy by any of the
<PAGE>
Lender;
(v) any waiver, consent, extension, forbearance or granting of
any indulgence by the Lender with respect to any provision of any other
Loan Document;
(vi) the election by the Lender in any proceeding under chapter
11 of the Bankruptcy Code, or the application of section 1111(b)(2) of the
Bankruptcy Code;
(vii) any borrowing or grant of a security interest by the
Borrowers, as debtor-in-possession, under section 364 of the Bankruptcy
Code; (viii) the disallowance, under section 502 of the Bankruptcy Code, of
all or any portion of the claims of any of the Lender for payment of any of
the Guarantied Obligations; or
(ix) any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a Borrower or a Guarantor.
(e) Security. This Guaranty is secured by the Pledge Agreement.
3. Payments. All payments to be made by the Guarantors to the Lender
hereunder shall be made in lawful money of the United States of America, in
immediately available funds, before 1:00 p.m. New York time, on the date due.
The Lender shall apply any payment by or recovery from the Guarantors hereunder
(including any of the Guarantors' security or assets so paid or recovered) to
any Guaranteed Obligation in any order, priority or manner which the Lender may
elect from time to time.
4. Representations and Warranties. Each Guarantor hereby represents and
warrants to the Lender that as of the date hereof:
a. Corporate Existence; Compliance with Law Each Guarantor is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of its organization; (ii) is duly qualified as a foreign (if
applicable) corporation, and in good standing under the laws of each
jurisdiction where such Guarantor owns or operates property, except for failures
which in the aggregate would have no Material Adverse Effect; (iii) has all
requisite corporate, power and authority and the legal right to own, and pledge,
its assets, and to conduct its business as now or currently proposed to be
conducted; (iv) is in compliance with its certificate of incorporation and
by-laws; (v) is in compliance with all other applicable Requirements of Law
except for such noncompliance which in the aggregate would have no Material
Adverse Effect; and (vi) has all necessary licenses, permits, consents or
approvals from or by, has made all necessary filings with, and has given all
necessary notices to, each Governmental Authority having jurisdiction, to the
extent required for such ownership, operation and conduct, except for licenses,
permits, consents or approvals which can be obtained by the taking of
ministerial action to secure the grant or transfer thereof or failures which in
the aggregate would have no Material Adverse Effect.
<PAGE>
b. Corporate Power; Authorization; No Legal Bar The execution,
delivery and performance by each Guarantor of this Guaranty and the other Loan
Documents to which it is a party:
(i) are within its corporate power;
(ii) have been duly authorized by all necessary corporate action,
including, without limitation, the consent of directors, where required;
and
(iii) do not and will not (A) contravene its certificate of
incorporation or by-laws,(B) violate any other applicable Requirement of
Law (including, without limitation, Regulations G, T, O and X of the Board
of Governors of the Federal Reserve System), or any order or decree of any
Governmental Authority or arbitrator, (C) conflict with or result in the
breach of, or constitute a default under, or result in or permit the
termination or acceleration of, any of its material Contractual
Obligations, (D) result in the creation or imposition of any Lien upon any
of its property (other than pursuant to the Pledge Agreement), or (E)
require the consent, authorization by, or approval of, or notice to, or
filing or registration with, any Governmental Authority or any other
Person.
c. Enforceable Obligations This Guaranty has been duly executed and
delivered by each Guarantor and is the legal, valid and binding obligation of
each Guarantor enforceable against it in accordance with its terms except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting the
enforcement of creditor's rights and remedies generally and to general
principles of equity.
d. No Material Litigation There are no pending or, to the knowledge of
each Guarantor, threatened actions, investigations or proceeding affecting any
Guarantor or any of its subsidiaries before any Governmental Authority or
arbitrator other than those that in the aggregate, if adversely determined,
would have no Material Adverse Effect. The performance by each Guarantor under
this Guaranty and under each of the other Loan Documents to which it is a party
is not restrained or enjoined (either temporarily, preliminarily or permanently)
and no conditions have been imposed by any Governmental Authority or arbitrator
that in the aggregate would have a Material Adverse Effect.
e. No Offset. The Guarantors' obligations hereunder are not subject to
any offset, excuse, claim or defense of the Guarantors against the Lender of any
kind.
f. Solvency. After giving effect to the incurrence of the Guarantors'
obligations under this Guaranty, each Guarantor, each Borrower and each
Subsidiary of each Guarantor (other than Saginaw Hospitality L.P. and Macon
Hotel Associates, L.L.C.).
g. Financial Condition. (i) The unaudited pro forma consolidated
balance sheet of Lodgian and its consolidated Subsidiaries as of June 30, 1998
(including
<PAGE>
the notes thereto) (the "Pro Forma Balance Sheet"), copies of which have
heretofore been furnished to Lender, has been prepared giving effect (as if such
events had occurred on such date) to (A) the consummation of the Merger, (B) the
Loan to be made and the use of proceeds thereof and (C) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has been
prepared based on the best information available to Lodgian and Servico as of
the date of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of each of Lodgian and its consolidated
Subsidiaries as of June 30, 1998, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(ii) The audited consolidated balance sheets of Lodgian and Servico,
each as of April 30, 1998 and December 30, 1997, respectively, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Ernst & Young, present fairly the consolidated financial condition of Lodgian
and Servico as of such date, and the consolidated results of their operations
and their consolidated cash flows for the respective fiscal years then ended.
The unaudited consolidated balance sheet of Servico, as of September 30, 1998,
and the related unaudited consolidated statements of income and cash flows for
the 9-month period ended on such date, present fairly the consolidated financial
condition of Servico as of such date, and the consolidated results of its
operations and its consolidated cash flows for the 9-month period then ended
(subject to normal year-end audit adjustments).
(ii) All financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). No Guarantor, Borrower or Subsidiary of
any of the foregoing has any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent financial
statements referred to in this Section 4(g) or listed on Schedule 8(b)(iii),
except for the European Joint Venture. During the period from September 30, 1998
to and including the date hereof there has been no Disposition by any Guarantor
of any material part of its business or property.
h. No Change. Since September 30, 1998 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
i. No Default. No Guarantor, Borrower nor any Subsidiary of any of the
foregoing is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
j. Ownership of Assets; Liens. Each Guarantor, each Borrower and each
Subsidiary of each of the foregoing has title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other Assets, and
<PAGE>
none of such Assets is subject to any Lien except as permitted by Section 8(c).
k. Intellectual Property. Each Guarantor, each Borrower and each of
their respective Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does any Guarantor or any
Borrower know of any valid basis for any such claim. To the Guarantor's
knowledge, the use of Intellectual Property by the Guarantors, the Borrowers and
their respective Subsidiaries does not infringe on the rights of any Person in
any material respect.
l. Taxes. Each Guarantor, each Borrower and each of their respective
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns which are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Guarantors, the Borrowers or their respective
Subsidiaries, as the case may be); no tax Lien has been filed, (except for a
vacant parcel of land of approximately one acre located in Tyler, Texas) and, to
the knowledge of the Guarantors and the Borrowers, no claim is being asserted,
with respect to any such tax, fee or other charge.
m. Federal Regulations. No part of the proceeds of the Loan, or any
other loans, will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U as
now and from time to time hereafter in effect or for any purpose which violates
the provisions of the Regulations of the Board. If requested by the Lender, the
Guarantors will furnish to the Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.
n. Labor Matters. There are no strikes or other labor disputes against
any Guarantor, any Borrower or any of their respective Subsidiaries pending or,
to the knowledge of the Guarantors or the Borrowers, threatened that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect. Hours worked by and payment made to employees of the
Guarantors, any Borrower and their respective Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Guarantors, the Borrowers or any of their respective Subsidiaries on account
of employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Guarantors, the
Borrowers or the relevant Subsidiary.
o. ERISA. Neither a Reportable Event nor an "accumulated funding
<PAGE>
deficiency" (within the meaning of Section 412 of the United States Internal
Revenue Code or Section 302 of ERISA) has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Bankruptcy Code. No termination of a
Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits by a material amount. No
Guarantor, Borrower nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan which has resulted or could
reasonably be expected to result in a material liability under ERISA, and no
Guarantor, Borrower nor any Commonly Controlled Entity would become subject to
any material liability under ERISA if any Guarantor, any Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
p. Investment Company Act; Other Regulations. No Guarantor, Borrower
nor any of their respective Subsidiaries is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. No Guarantor, Borrower nor any of
their respective Subsidiaries is subject to regulation under any Requirement of
Law (other than Regulation X of the Board) which limits its ability to incur
Indebtedness.
q. Subsidiaries. The Subsidiaries and other entities listed on
Schedule 4(q) constitute all the Subsidiaries of the Guarantors (including,
without limitation, the Borrowers) and all of the other entities in which the
Guarantors, directly or indirectly, owns any interest, as of the date hereof,
Schedule 4(q) sets forth as of the Closing Date the name and jurisdiction of
incorporation of each Borrower and Subsidiary and such other entities and, as to
each such Borrower and Subsidiary and such other entity, the percentage of each
class of Capital Stock owned by the Guarantors and any other Person. There are
no outstanding subscriptions, options, warrants, calls, rights or other
agreements or commitments (other than stock options granted to employees or
directors and directors' qualifying shares) of any nature relating to any
Capital Stock of the Guarantors, the Borrowers or any Subsidiary of any of the
foregoing or of any other such entity other than CRESTS and the Purchase Rights
of Unaffiliated Third Party Equity Owners described on Schedule 2.
r. Accuracy of Information, etc. No statement or information contained
in this Guaranty, any other Loan Document or any other document, certificate or
statement furnished to the Lender by or on behalf of any Guarantor, any Borrower
or their respective Subsidiaries for use in connection with the transactions
contemplated by this Guaranty or the other Loan Documents, contained, as of the
date such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a
<PAGE>
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which it was made.
The projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of the Guarantors to be reasonable at the time made, it being
recognized by the Lender that such financial information as it relates to future
events is not to be viewed as fact and that actual results during the period or
periods covered by such financial information may differ from the projected
results set forth therein by a material amount. As of the date hereof, the
representations and warranties contained in the Merger Agreement are true and
correct in all material respects. There is no fact known to any Guarantor, any
Borrower or their respective Subsidiaries that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents or in any other documents, certificates and statements
furnished to the Lender for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
s. Year 2000 Matters. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Guarantors', the
Borrowers' and their respective Subsidiaries' computer systems and (ii)
equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Guarantors', the Borrowers' and their
respective Subsidiaries' systems interface) and the testing of all such systems
and equipment, as so reprogrammed, will be completed by July 1, 1999. The cost
to the Guarantors, the Borrowers and their respective Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Guarantors, to the Borrowers or their respective Subsidiaries will
not result in a Default or a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Guarantors, the Borrowers and
their respective Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue to be, sufficient to permit the Guarantors, the
Borrowers and their respective Subsidiaries to conduct its business without
Material Adverse Effect.
t. No Senior Indebtedness. No Indebtedness of any Guarantor is senior
in payment to any Guaranteed Obligations, and no Indebtedness of any Borrower or
their respective Subsidiaries is senior in payment to the Guaranteed Obligations
of such Borrower or Subsidiary, if any.
u. Knowledge of the Obligor. Each Guarantor hereby acknowledges that
it has its own independent knowledge of the financial condition of the Borrowers
and has had an opportunity to review all other matters pertaining to this
Guaranty and further acknowledges that it is not relying in any manner upon any
representation or statement of the Lender with respect thereto. Each Guarantor
represents and warrants that it has received and has had an opportunity to
review copies of all of the Loan Documents and that it is in a position to
obtain, and it hereby assumes full responsibility for obtaining, any additional
information concerning the financial condition of the Borrowers and any other
matters pertinent hereto that the Guarantors may desire. Neither Guarantor is
relying upon or
<PAGE>
expecting the Lender to furnish to the Guarantors any information now or
hereafter in the Lender's possession concerning the financial condition of the
Borrowers or any other matter.
v. Voluntary. Each Guarantor has voluntarily undertaken the
obligations under this Guaranty and Loan Documents to which it is a party with
full awareness of their significance and risks, and has had the opportunity to
discuss each document with legal counsel.
w. Separate Obligations. Any discussions or transactions between or
among the Lender or any of its agents and the Guarantors, or any other Person,
on matters not clearly and expressly covered by this Guaranty are separate and
independent from this Guaranty. There are no conditions precedent or subsequent
to the obligations of the Guarantors under this Guaranty.
x. Benefits to Guarantors. The Loan that is to be made and extended by
the Lender to the Borrowers is be contemporaneously paid to or used in whole or
in part for the economic benefit of the Borrowers and the Guarantors. It is the
position, intent and expectation of the Guarantors that each Guarantor has
derived and will derive significant, substantial and direct benefits from the
accommodations that have been and are being made by the Lender to the Borrowers.
Moreover, it is the position, intent and expectation of the Guarantors that any
and all payments that the Guarantors may make to or for the benefit of the
Borrowers and which the Guarantors intend to be used to repay the Lender, shall
be used contemporaneously to repay the Lender the sums owed to the Lender. It is
the position, intent and expectation of the Guarantors that, to the maximum
extent permitted by law, these transfers constitute contemporaneous exchanges
for value given to the Guarantors and, therefore, qualify for the protection and
benefits of Section 547(c) of the Bankruptcy Code.
y. Adequacy of Consideration. Each Guarantor has received at least
"reasonably equivalent value" and "fair consideration" (as such phrases are used
in Section 548 of the Bankruptcy Code or any other applicable law, respectively)
and more than sufficient consideration to support the obligations and Liens
created under this Guaranty and the Loan Documents securing such Guarantor's
obligations hereunder and all repayments or other transfers made or to be made
by such Guarantor to the Lender pursuant hereto.
z. Merger. As of the date hereof, the Merger has occurred pursuant to
and substantially in accordance with the terms of the Merger Agreement.
aa. Capital Expenditures. Schedule 4(aa) lists all construction of any
additions or expansions to existing hotels and improvements for which Capital
Expenditures are permitted under Section 8(g) and the related credit facility or
loan.
5. Unconditional Guaranty. Each Guarantor agrees that the liability
hereunder shall be the immediate, direct, and primary obligation of each
Guarantor and shall not be contingent upon the exercise or enforcement by the
Lender of any remedy against the Borrowers, any other Guarantor, or any other
Person, or any security for any Guaranteed
<PAGE>
Obligations. Without limiting the generality of the foregoing, the obligations
of the Guarantors hereunder shall remain in full force and effect without regard
to, and shall not be terminated, impaired or affected by, nor shall the
Guarantors be exonerated or discharged by, any of the following events:
a. Insolvency. Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, death,
liquidation, winding up or dissolution of any Borrower, any Affiliate of any
Borrower, any Guarantor, any Affiliate of any Guarantor, or any other guarantor
of any Liabilities or other Guaranteed Obligations;
b. Limitations. Any limitation, discharge, moratorium or cessation of
the liability of any Borrower, any Guarantor or any other guarantor for any
Liabilities or other Guaranteed Obligations due to any statute, regulation,
decree, judgment, order, stay or rule of law, or any invalidity or
unenforceability in whole or in part of any documents evidencing the Liabilities
or other Guaranteed Obligations or any other guaranty of the Liabilities or
other Guaranteed Obligations;
c. Merger. Any merger, acquisition, consolidation or change in
structure of any Borrower, either Guarantor, or any other guarantors of any
Liabilities or other Guaranteed Obligations or any sale, lease, transfer or
other disposition of any or all of the assets or shares of any Borrower, either
Guarantor, or any other guarantors of the Liabilities or other Guaranteed
Obligations;
d. Transfers. Any assignment or other transfer, in whole or in part,
of the interests in and rights under this Guaranty, including the right of the
Lender to receive payment of the Liabilities or other Guaranteed Obligations, as
the case may be, or any assignment or other transfer, in whole or in part, of
the interests of the Lender in and to any Collateral securing the Guaranteed
Obligations;
e. Defenses. Any claim, counterclaim or setoff, other than that of
prior payment in cash in full or performance, that any Borrower, any Affiliate
of any Borrower, including the Guarantors, any Affiliate of any Guarantor, or
any other guarantors of the Liabilities or other Guaranteed Obligations may have
or assert, including any defense of incapacity or lack of corporate or other
authority to execute any documents relating to any of the Guaranteed Obligations
or any Collateral securing any of the Guaranteed Obligations;
f. Amendments. The amendment, modification, renewal, extension,
cancellation or surrender of any agreement, document or instrument relating to
any Loan Document, any Guaranteed Obligation or any Collateral securing the
Guaranteed Obligations (other than any cancellation or surrender reflecting
prior payment in cash in full or performance), or the exchange, release, or
waiver of any Collateral securing the Liabilities or the other Guaranteed
Obligations;
g. Exercise of Remedies. The exercise, nonexercise or any delay in
<PAGE>
exercise, by the Lender of any power, right or remedy with respect to any of the
Guaranteed Obligations or any Collateral securing any of the Guaranteed
Obligations, including the compromise, release, settlement or waiver by the
Lender with or of any Borrower, any Affiliate of any Borrower, any Guarantor,
any Affiliate of any Guarantor, or any other Person;
h. Actions. The vote, claim, distribution, election, acceptance,
action or inaction by the Lender in any bankruptcy case related to any of the
Guaranteed Obligations, or any Collateral securing any of the Guaranteed
Obligations; or
i. Impairment. Any impairment or invalidity of any of the Collateral
securing any of the Guaranteed Obligations or any failure to perfect any of the
Liens of the Lender thereon or therein.
j. Release of Collateral. The release of any Collateral securing the
Guaranteed Obligations whether pursuant to the release provisions of the Loan
Agreement or otherwise.
6. Additional Consents and Agreements. In addition to each of those items
set forth in subsections 5(a) through (j) above, the Guarantors hereby
unconditionally consent and agree that, without notice to or further assent from
the Guarantors:
a. Amount of Indebtedness. The principal amount of any or all of the
Liabilities and the other Guaranteed Obligations may be increased or decreased
and additional indebtedness or obligations of the Borrowers or any other party
under any of the Loan Documents or the Note may be incurred, by one or more
amendments, modifications, renewals or extensions of any Loan Document or
otherwise.
b. Terms of Payment. The time, manner, place or terms of any payment
under any Loan Document may be extended or changed, including by an increase or
decrease in the interest rate on any Liability or other Guaranteed Obligation or
any fee or other amount payable under any Loan Document by an amendment,
modification, change or renewal of any Loan Document or otherwise.
c. Time for Performance. The time for the Borrowers' or any other
Person's performance of or compliance with any term, covenant or agreement on
its part to be performed or observed under any Loan Document may be extended, or
such performance or compliance waived, or failure in or departure from such
performance or compliance consented to, all in such manner and upon such terms
as the Lender may deem proper.
d. Discharge or Release. The Lender may discharge or release, in whole
or in part, any Guarantor or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any result of such action, and shall not be
obligated to demand or enforce payment or performance upon any of the Guaranteed
Obligations or Collateral securing any Guaranteed
<PAGE>
Obligations, nor shall the Lender be liable to the Guarantors or any other
Person for any failure to collect or enforce payment or performance of any of
the Guaranteed Obligations or to realize on any of the Collateral securing any
Guaranteed Obligation.
e. Other Collateral. In addition to the Collateral securing the
Guaranteed Obligations, the Lender may take and hold other security (legal or
equitable) of any kind, at any time, as collateral for any or all of the
Guaranteed Obligations, and may, from time to time, in whole or in part,
exchange, sell, surrender, release, subordinate, modify, waive or extend such
security and may permit or consent to any such action or the result of any such
action, and may apply such security and direct the order or manner of sale
thereof.
f. Exercise of Remedies. The Lender may exercise, or waive or
otherwise refrain from exercising, any right, remedy, power or privilege
(including the right to accelerate the maturity of the Liabilities and any other
Guaranteed Obligation and any power of sale) granted by any Loan Document or
other document or agreement, or otherwise available to the Lender, with respect
to any of the Guaranteed Obligations, any of the Collateral or other security
for any or all of the Guaranteed Obligations, even if the exercise of such
right, remedy, power or privilege affects or eliminates any right of the
Guarantors against the Borrowers, any Affiliate of the Borrowers, any other
Guarantor or any other Person. If any Borrower shall have taken advantage of, or
be subject to the protection of, any provision in the Bankruptcy Code, the
effect of which is to prevent or delay Lender from taking any remedial action
against any Borrower, including the exercise of any option Lender has to declare
the Liabilities due and payable on the happening of any default or event by
which under the terms of the Note or the Loan Documents, the Guaranteed
Obligations shall become due and payable, and Lender may, as against Guarantors,
nevertheless, declare the Guaranteed Obligations due and payable and enforce any
or all of its rights and remedies against the Guarantors provided for herein.
All of the foregoing actions in this Section 6 may be taken (or not taken) as
the Lender may deem advisable, and all without impairing, abridging, releasing
or affecting this Guaranty or any other rights or security of the Lender.
7. Affirmative Covenants. Each Guarantor hereby jointly and severally
agrees that each Guarantor shall, and shall cause each of its Subsidiaries and
each Borrower to:
a. Financial Statements. Furnish to Lender:
(i) (A) as soon as available, but in any event within 95 days after
the end of each fiscal year of Lodgian, a copy of the audited consolidated
balance sheet of Lodgian and its consolidated Subsidiaries as of the end of
such year and the related audited consolidated statements of income and of
cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising
<PAGE>
out of the scope of the audit, by Ernst & Young or other independent
certified public accountants of nationally recognized standing; and
(B) as soon as available, but in any event within 95 days after the
end of each fiscal year of Servico, a copy of the consolidated profit and
loss statements for Servico and its consolidated Subsidiaries of income,
cash flows and retained earnings for such year;
(ii) (A) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of Lodgian, the unaudited consolidated balance sheet of Lodgian and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous
year, attested to by a Responsible Officer of Lodgian as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(B) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of Servico, the consolidated profit and loss statements for Servico
and its consolidated Subsidiaries of income, cash flows and retained
earnings for such quarter and the portion of the fiscal year through the
end of such quarter, attested to by a Responsible Officer of Lodgian as
being fairly stated in all material respects (subject to normal year-end
audit adjustments);
(iii) (A) as soon as available, but in any event not later than 50
days after the end of each month occurring during each fiscal year of
Lodgian (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of Lodgian and its consolidated
Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and the
portion of the fiscal year through the end of such month, setting forth in
each case in comparative form the figures for the previous year, attested
to by a Responsible Officer of Lodgian as being fairly stated in all
material respects (subject to normal year-end audit adjustments); and
(B) as soon as available, but in any event not later than 50 days
after the end of each month occurring during each fiscal year of Servico
(other than the third, sixth, ninth and twelfth such month), consolidated
profit and loss statements of income, cash flows and retained earnings for
such month and the portion of the fiscal year through the end of such
month, together with operating statements for each Asset of Servico and
each Borrower and each of their respective Subsidiaries, each attested to
by a Responsible Officer of Lodgian as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
<PAGE>
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
b. Certificates; Other Information. Shall furnish to Lender:
(i) concurrently with the delivery of the financial statements
referred to in Sections 7(a), a certificate (or, with respect to Servico
only, an agreed upon procedures letter or an auditor's confirmation letter)
of the independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, and verifying
that the covenants contained in Sections 7(j), 8(a), 8(b), and 8(f) are
complied with at the end of such period, except as specified in such
certificate;
(ii) concurrently with the delivery of any financial statements
pursuant to Section 7(a), (A) an attestation of a Responsible Officer of
Lodgian stating that, to the best of each such Responsible Officer's
knowledge, Lodgian, Servico, each Borrower and their respective
consolidated Subsidiaries during such period has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Guaranty and the other Loan Documents to which it is a
party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such attestation and (B) in the case of
quarterly or annual financial statements, a Compliance Certificate
containing all information and calculations necessary for determining
compliance by Lodgian and Servico, each Borrower and their respective
Subsidiaries with the provisions of this Guaranty referred to therein as of
the last day of the fiscal quarter or fiscal year of Lodgian and Servico,
as the case may be;
(iii) as soon as available, and in any event no later than 50 days
after the end of each fiscal year of Lodgian, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of Lodgian and its respective Subsidiaries as of the end of
the following fiscal year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), and, as soon as available, significant revisions, if any, of such
budget and projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
certificate of a Responsible Officer of Lodgian stating that such
Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;
(iv) within 50 days after the end of each fiscal quarter of Lodgian, a
narrative discussion and analysis of the financial condition and results of
operations of
<PAGE>
Lodgian and its consolidated Subsidiaries for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end of
such fiscal quarter, as compared to the comparable periods of the previous
year;
(v) within five days after the same are sent, copies of all financial
statements and reports which Lodgian, Servico or any Subsidiary of either
sends to the holders of any class of its debt securities or public equity
securities and, within five days after the same are filed, copies of all
financial statements and reports which the Guarantors or the Borrowers or
their respective Subsidiaries may make to, or file with, the SEC;
(vi) as soon as possible and in any event within 10 days of obtaining
knowledge thereof: (A) any development, event, or condition that,
individually or in the aggregate with other developments, events or
conditions, could reasonably be expected to result in the payment by each
Guarantor, any Borrower or any of their respective Subsidiaries, in the
aggregate, of a Material Environmental Amount; and (B) any notice that any
governmental authority may deny any application for an Environmental Permit
sought by, or revoke or refuse to renew any Environmental Permit held by,
any Guarantor, any Borrower or their respective Subsidiaries; and
(vii) promptly, such additional financial and other information as the
Lender may from time to time reasonably request.
c. Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Guarantors, the Borrowers or their respective Subsidiaries, as
the case may be.
d. Conduct of Business and Maintenance of Existence, etc. (i) (A)
Preserve, renew and keep in full force and effect its corporate existence and
(B) take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 8(d) and except, in the case of clause
(B) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and (ii) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
e. Maintenance of Property; Insurance. (i) Keep all property and
systems necessary in its business in good working order and condition, ordinary
wear and tear excepted and (ii) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a
<PAGE>
similar business.
f. Inspection of Property; Books and Records; Discussions. (i) Keep
proper books of records and account in which full, true and correct in all
material respects entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities and (ii) permit representatives of the Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired upon
not less than three (3) business days notice and to discuss the business,
operations, properties and financial and other condition of any Guarantor, any
Borrower and their respective Subsidiaries with the Responsible Officer of
Lodgian or other designated employees of any Guarantor, any Borrower and their
respective Subsidiaries and with its independent certified public accountants.
g. Notices of Certain Occurrences. Promptly give notice to the Lender
of:
(i) the occurrence of any Default or Event of Default;
(ii) any (A) default or event of default under any Contractual
Obligation of any Guarantor, any Borrower or any of their Subsidiaries or
(B) litigation, investigation or proceeding which may exist at any time
between any Guarantor, any Borrower or any of their respective Subsidiaries
and any Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;
(iii) any litigation or proceeding affecting any Guarantor, any
Borrower or any of their respective Subsidiaries in which the amount
involved is $2,500,000.00 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(iv) any default by any Guarantor under (A) any Recourse Financing,
(B) any Recourse Indebtedness that is not Recourse Financing, which is the
subject of a good faith dispute and which has a principal balance in excess
of $1,000,000.00, whether on an individual or aggregate basis, or (C) any
Non-Recourse Indebtedness which has a principal balance of $5,000,000.00,
whether on an individual or an aggregate basis;
(v) the following events, as soon as possible and in any event within
30 days after any Guarantor or any Borrower knows or has reason to know
thereof: (A) the occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (B)
the institution of proceedings or the taking of any other action by the
PBGC, any Guarantor, any Borrower or any Commonly
<PAGE>
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Plan;
(vi) each notice of default under any Franchise Agreement received by
any Guarantor, any Borrower, or any of their Subsidiaries immediately upon
receipt thereof, and notice, not later than 90 days prior to the date of
expiration of the term of any Franchise Agreement, of the Guarantors' or
related Borrower's or any of their Subsidiary's intention either to renew
or to not renew such Franchise Agreement, and if such party intends to
renew such Franchise Agreement, the terms and conditions of such renewal;
(vii) any quality assurance reports or similar reports of inspection
or compliance from the franchisor under any Franchise Agreement, including
without limitation, any property improvement programs; and
(viii) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 7(g) shall be accompanied by a statement of
a Responsible Officer of each Guarantor setting forth details of the occurrence
referred to therein and stating what action the Guarantors, Borrower or the
relevant Subsidiary proposes to take with respect thereto.
h. Compliance with Environmental Laws. In the case of each Guarantor,
each Borrower and their respective Subsidiaries, they shall comply in all
material respects with, and ensure compliance in all material respects by all
tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and ensure that
all tenants and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws; and (ii) conduct and complete
all investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
i. Equity or Debt Offerings and Asset Sales. All Net Cash Proceeds
from any equity or debt offering by Servico or Lodgian shall be immediately paid
to Lender and applied to the payment of the Guaranteed Obligations. All Net Cash
Proceeds from any Asset Sale by any Guarantor, any Borrower or any of their
respective Subsidiaries shall be applied to the payment of the Guaranteed
Obligations (other than those listed on Schedule 7(i), the Net Cash Proceeds of
which may be retained by the seller thereof) shall be immediately paid to Lender
and applied to the payment of the scheduled principal amortization payments due
pursuant to the Note in their inverse order of maturity.
j. Working Capital. Lodgian shall at all times maintain at least (1)
$10,000,000.00 from the date hereof through and including March 31, 1999 and
(ii)
<PAGE>
$15,000,000.00 thereafter (which number in either case shall include the
Replacement Reserve Account required under the Loan Documents with respect to
the Properties) in unrestricted cash and/or in undrawn and available borrowing
capacity under a line of credit for use as working capital (the "Working Capital
Line"). The terms and conditions of any such Working Capital Line shall be
reasonably satisfactory to Lender.
k. Stock. Lodgian shall at all times remain listed and in good
standing on either the New York Stock Exchange, the American Stock Exchange or
NASDAQ.
l. Further Assurances. In the case of each Guarantor and each
Borrower, they shall, from time to time execute and deliver, or cause to be
executed and delivered, such additional instruments, certificates or documents,
and take all such actions, as Lender may reasonably request, for the purposes of
implementing or effectuating the provisions of this Guaranty and the other Loan
Documents, or of more fully perfecting or renewing the rights of Lender with
respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Guarantors or Borrowers which may be deemed to be part
of the Collateral) pursuant hereto or thereto. Upon the exercise by Lender of
any power, right, privilege or remedy pursuant to this Guaranty or the other
Loan Documents which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, the Guarantor will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the Lender may
be required to obtain from any Guarantor, Borrower or any of their Subsidiaries
for such governmental consent, approval, recording, qualification or
authorization.
8. Negative Covenants. Each Guarantor hereby jointly and severally agrees
that each Guarantor shall not, and shall not permit any of its Subsidiaries or
any Borrower to, directly or indirectly:
a. Financial Condition Covenants.
(i) Consolidated Leverage Ratio. Permit, at any time during the term
of the Loan, the Consolidated Leverage Ratio of Lodgian or Servico during the
period ending on the date set forth below to exceed the ratio set forth below
opposite such period.
Consolidated Leverage Consolidated Leverage
Period Ending on Ratio of Lodgian Ratio of Servico
- ---------------- ---------------- ----------------
December 31, 1999 6.75 5.60
the Maturity Date 5.30 5.00
<PAGE>
(ii) Consolidated Interest Coverage Ratio. Permit, at any time during
the term of the Loan, the Consolidated Interest Coverage Ratio of Lodgian or
Servico during the period ending on the date set forth below to be less than the
ratio set forth below opposite such period:
Consolidated Interest Consolidated Interest
Period Ending on Coverage Ratio of Lodgian Coverage Ratio of Servico
- ---------------- ------------------------- -------------------------
December 31, 1999 1.30 1.50
the Maturity Date 1.50 1.50
(iii) Consolidated Fixed Charge Coverage Ratio. Permit, at any time
during the term of the Loan, the Consolidated Fixed Charge Coverage Ratio of
Lodgian or Servico during the period ending on the date set forth below to be
less than the ratio set forth below opposite such period:
Consolidated Fixed Charge Consolidated Fixed Charge
Period Ending on Coverage Ratio of Lodgian Coverage Ratio of Servico
- ---------------- ------------------------- -------------------------
December 31, 1999 1.01 1.01
the Maturity Date 1.01 1.01
(iv) Maintenance of Net Worth. Permit, at any time during the term of
the Loan, the Consolidated Net Worth of Lodgian during the period set forth
below to be less than the amount set forth below opposite such period:
Consolidated Net
Period Ending on Worth of Lodgian
- ------------------ -----------------
the Maturity Date $232,500,000.00
<PAGE>
The Financial Condition Covenants in Section 8(a)(i) through (iv) shall be
calculated by Lodgian on a quarterly basis, and delivered to Lender together
with the financial statements required to be delivered pursuant to Section 7(a)
and (b) for such quarter during the term of the Loan.
b. Limitation on Indebtedness. In addition to any limitations set
forth in the other Loan Documents, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness of any Guarantor or Borrower pursuant to any
Loan Document;
(ii) Indebtedness of any Guarantor or any Borrower to any of
their respective Subsidiaries and of any Guarantor or any Borrower to any
other Borrower or any other Subsidiary which arises solely as a result of
the terms and conditions of Servico's Cash Management System;
(iii) Indebtedness outstanding on the date hereof and listed on
Schedule 8(b)(iii) and any refinancings (including any refinancing in
connection with a securitization) refundings, renewals or extensions
thereof (without any increase in the principal amount thereof or any
shortening of the maturity of any principal amount thereof);
(iv) Non-Recourse Indebtedness in connection with the Investments
permitted under Section 8(h)(vi);
(v) Permitted Financing and Indebtedness otherwise permitted
under the Loan Agreement;
(vi) Indebtedness incurred after the date hereof by Impac III
pursuant to the Impac III Loan Agreement in connection with the refinancing
of the Dedham Construction Loan and the Little Rock Construction Loan;
(vii) Working Capital Line, as it may be refinanced from time to
time upon terms acceptable to Lender;
(viii) additional Indebtedness resulting from the draw down of
unfunded commitments in existence on the date hereof, as described as
Schedule 8(b)(iii);
(ix) Indebtedness in an amount not exceeding $3,000,000.00 under
an existing commitment from Lyon Credit for FF&E financing as described on
Schedule 8(b)(iii); or
(x) guaranties to franchisors of payment of franchise or similar
fees under a Franchise Agreement entered into by a Subsidiary of any
Guarantor or any Borrower, or of the performance of any related property
improvement plans, in each case made in the ordinary course of Guarantors'
business.
<PAGE>
c. Limitation on Liens. In addition to any limitations set forth in
the other Loan Documents, create, incur, assume or suffer to exist any Lien upon
any of its Property, whether now owned or hereafter acquired, except for:
(i) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Guarantors, the
Borrowers or their respective Subsidiaries, as the case may be, in
conformity with GAAP;
(ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith by appropriate proceedings;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(iv) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(v) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Guarantors, the Borrowers or any of their respective Subsidiaries;
(vi) Liens in existence on the date hereof listed on Schedule
8(b)(iii) securing Indebtedness permitted by Section 8(b)(iii)), provided
that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased;
(vii) Liens created pursuant to the Loan Documents;
(viii) Liens created in connection with Permitted Financing or
otherwise permitted under the Loan Agreement; and
(ix) Liens securing the payment of the Working Capital Line
provided that they encumber no Assets other than the Assets listed on
Schedule 7(i).
d. Limitation on Fundamental Changes. In addition to any limitations
set forth in the other Loan Documents, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or
<PAGE>
substantially all of its Assets, property or business, except that:
(i) any Subsidiary of any Guarantor or of any Borrower may be
merged or consolidated with or into a Borrower (provided that such Borrower
shall be the continuing or surviving corporation) or with or into any
Guarantor (provided that such Guarantor shall be the continuing or
surviving corporation); and
(ii) any Subsidiary of any Guarantor or any Borrower may dispose
of any or all of its assets (upon voluntary liquidation or otherwise) to
any Borrower, any Guarantor or any of their respective Wholly-Owned
Subsidiaries, provided that with respect to any merger, consolidation or
disposition permitted under clauses (i) or (ii), after such merger or
consolidation or disposition, Lodgian or a Wholly-Owned Subsidiary of
Lodgian is the sole shareholder of Servico and Servico or a Wholly-Owned
Subsidiary of Servico is the sole general partner and limited partner or
sole shareholder, as the case may be, of each Borrower other than Servico
Centre Associates Ltd., and with respect to Servico Centre Associates Ltd.,
is the sole general partner thereof.
(iii) the Little Rock Subsidiary and the Dedham Subsidiary may
merge with and into Impac III, with Impac III in each case being the
surviving entity, in connection with the refinancing of the Little Rock
Construction Loan and the Dedham Construction Loan, respectively, with
loans to be made to Impac III pursuant to the Impac III Loan Agreement.
e. Limitation on Disposition of Assets. In addition to any limitations
set forth in the other Loan Documents and subject to Section 8(s), dispose of
any of its Assets (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or issue or sell any shares
of such Subsidiary's Capital Stock to any Person, except:
(i) the Disposition of obsolete or worn out property in the
ordinary course of business;
(ii) the sale of inventory in the ordinary course of business;
(iii) Dispositions permitted by Section 8(d)(ii);
(iv) the sale or issuance of the Capital Stock of any Subsidiary
of a Borrower or of a Guarantor to such Borrower or such Guarantor or to
one or more Wholly-Owned Subsidiaries of such Guarantor;
(v) the Disposition of other Assets provided that such
Disposition (A) is pursuant to an arms length contract of sale with a bona
fide independent third party for a price equal to such Asset's fair market
value, (B) is otherwise permitted under the Loan Documents, (C) would not
result in a Default under this Guaranty, and (D) the
<PAGE>
requirements of Section 7(i) are complied with in connection therewith, and
provided further, that the purchase price is paid entirely in cash;
(vi) any Asset Sale or Recovery Event, provided, that the
requirements of Section 7(i) are complied with in connection therewith;
(vii) the transfer of any hotel and related Assets by a
Wholly-Owned Subsidiary of any Guarantor to one or more bankruptcy-remote,
special purpose Wholly-Owned Subsidiaries of the Guarantors in order to
facilitate the securitization or other permitted refinancing of any of the
Guaranteed Obligations or any Indebtedness permitted under Section
8(b)(iii), as contemplated in the Loan Documents or in the Impac Loan
Documents, as applicable; and
(viii) the Disposition of any Asset required to be disposed
pursuant to a Purchase Right that exists as of the date hereof provided
that the requirements of Section 7(i) re complied with.
f. Limitation on Restricted Payments. In addition to any limitations
set forth in the other Loan Documents, declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Guarantor, any Borrower or any
Subsidiary of either, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Guarantor, any Borrower or any Subsidiary
(collectively, "Restricted Payments"), except that:
(i) any Borrower or Subsidiary of any Guarantor may make
Restricted Payments to the respective Guarantor or any intermediate
Subsidiary of such Guarantor;
(ii) each Borrower and each Subsidiary of any Guarantor may pay
dividends to the respective Guarantor to permit such Guarantor to (A) pay
corporate overhead expenses incurred in the ordinary course of business,
(B) pay any taxes which are due and payable by such Guarantor as part of a
consolidated group, (C) pay interest, principal and dividends in connection
with CRESTS, and (D) pay mandatory distributions required pursuant to the
organizational documents of any Non-Wholly-Owned Subsidiary to an
Unaffiliated Third Party Equity Owner which owns an interest in such
Non-Wholly-Owned Subsidiary.
g. Limitation on Capital Expenditures. In addition to any limitations
set forth in the other Loan Documents, make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and the Borrowers' and
Guarantors' respective Subsidiaries in the ordinary course of business provided,
however, that no Capital Expenditure shall be made for the construction of any
new hotel or other improvement on any vacant property or for the construction of
any addition to or expansion of any existing
<PAGE>
hotel or existing improvement on any property; notwithstanding the foregoing,
Capital Expenditures may be made (i) if necessary and required by a franchisor
pursuant to a property improvement plan as a condition to the continuation of
the related Franchise Agreement, (ii) as required to complete construction of
any hotel for which construction has commenced prior to the date hereof and
provided that the related Guarantor or Subsidiary thereof has a committed credit
facility or loan permitted under Section 8(b) which at all times has an undrawn
borrowing capacity equal to or greater than the amount necessary to complete
such construction and (iii) as permitted or required under the Loan Documents;
notwithstanding the foregoing, such committed credit facility shall not be
required for the Assets identified as the Boston Courtyard and the Lake Oswego
on Schedule 4(aa) provided that there is available cash, as set forth in
Lodgian's capital expenditure budget and on Schedule 4(aa), and approved by
Lender, to complete such expansion.
h. Limitation on Investments. In addition to any limitations set forth
in the other Loan Documents, make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting an ongoing business from, or make any other investment in, any
other Person or purchase or acquire any interest in any real or personal
property (all of the foregoing, "Investments"), except:
(i) extensions of trade credit in the ordinary course of
business;
(ii) investments in Cash or Cash Equivalents;
(iii) Investments by either Guarantor or any of their respective
Subsidiaries (other than the Borrowers) in an aggregate amount (valued at
cost) not to exceed $5,000,000.00 at any time during the term of the Loan
in Joint Ventures;
(iv) Investments in Wholly-Owned Subsidiaries in connection with
the securitization or other permitted refinancing of any Indebtedness
permitted in Section 8(b)(iii);
(v) personal property necessary for the operation of properties
owned by the Guarantors, the Borrowers or their respective Subsidiaries, as
a full or limited service hotel, as the case may be;
(vi) extensions of credit by the Guarantors and their respective
Subsidiaries pursuant to Servico's Cash Management System; or
(vii) guaranties to franchisors permitted pursuant to Section
8(b)(xi).
i. Limitation on Optional Payments and Modifications of Debt
Instruments, Etc. In addition to any limitations set forth in the other Loan
Documents (i) make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, any Recourse Indebtedness or Non-Recourse Indebtedness, or segregate
funds for any such payment, prepayment, repurchase, redemption
<PAGE>
or defeasance, (ii) designate any Indebtedness (other than the Guaranteed
Obligations) as "Senior Indebtedness" for any purpose or (iii) amend its
certificate of incorporation or other organizational document in any manner
determined by the Lender to be adverse to the Lender.
j. Limitation on Transactions with Affiliates. In addition to any
limitations set forth in the other Loan Documents, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than the Guarantors) unless
such transaction is (i) otherwise permitted under this Guaranty or, with respect
to the Borrowers, under the Loan Documents, (ii) in the ordinary course of
business of the Guarantors, the Borrowers or their respective Subsidiaries, as
the case may be, and (iii) upon fair and reasonable terms no less favorable to
the Guarantors, the Borrowers or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person which is not
an Affiliate.
k. Limitation on Sales and Leasebacks. In addition to any limitations
set forth in the other Loan Documents, enter into any arrangement with any
Person providing for the leasing by any Guarantor, any Borrower or any of their
respective Subsidiaries of real or personal property which has been or is to be
sold or transferred by any Guarantor, any Borrower or any of their respective
Subsidiaries to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental
obligations of any Guarantor, any Borrower or any of their respective
Subsidiaries.
l. Limitation on Changes in Fiscal Periods. In addition to any
limitations set forth in the other Loan Documents, permit the fiscal year of any
Guarantor or any Borrower to end on a day other than December 31 or change the
Guarantors' or the Borrowers' method of determining fiscal quarters.
m. Limitation on Negative Pledge Clauses. In addition to any
limitations set forth in the other Loan Documents, enter into or suffer to exist
or become effective any agreement which prohibits or limits the ability of any
Guarantor, any Borrower or any of their respective Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its Assets, property or
revenues, whether now owned or hereafter acquired, other than (i) this Guaranty
and the other Loan Documents, and (ii) any Liens permitted under Section 8(c).
n. Limitation on Restrictions on Subsidiary Distributions. In addition
to any limitations set forth in the other Loan Documents, enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, any
Guarantor or any Borrower or any other Subsidiary, (ii) make Investments in any
Guarantor or any Borrower or any other Subsidiary or (iii) transfer any of its
assets to any Guarantor or any Borrower or any other Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (A) any restrictions
existing under the Loan Documents, (B) restrictions contained in any
Indebtedness permitted in
<PAGE>
Section 8(b)(iii) hereof, (C) restrictions existing under the organizational
documents of any Subsidiary of any Guarantor which is required to be a "single
purpose" or "bankruptcy remote" entity in connection with any Indebtedness
permitted under Section 8(b)(iii) and (D) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary.
o. Limitation on Lines of Business. In addition to any limitations set
forth in the other Loan Documents, enter into any business, either directly or
through any Subsidiary, except for the ownership, development, construction and
management of hospitality properties and activities reasonably related thereto.
p. Limitation on Activities of the Guarantors. (a) In the case of
Lodgian, except as otherwise provided in this Guaranty or any other Loan
Document, (i) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than those
incidental to its ownership of the Capital Stock of Servico and Impac and the
Impac Affiliated Companies, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (A)
non-consensual obligations imposed by operation of law, (B) pursuant to the Loan
Documents to which it is a party, (C) the Working Capital Line of Credit, and
(D) obligations with respect to its Capital Stock, or (iii) own, lease, manage
or otherwise operate any properties or Assets (including cash (other than cash
received in connection with dividends made by Servico or Impac and the Impac
Affiliated Companies in accordance with Section 8(f) pending application in the
manner contemplated by said Section) and cash equivalents) other than the
ownership of shares of Capital Stock of Servico and Impac and the Impac
Affiliated Companies; and
(b) In the case of Servico, except as otherwise provided in this
Guaranty or any other Loan Document, (i) conduct, transact or otherwise engage
in, or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital Stock of
its Subsidiaries or, as applicable, (ii) incur, create, assume or suffer to
exist any Indebtedness or other liabilities or financial obligations, except (A)
non-consensual obligations imposed by operation of law, (B) pursuant to the Loan
Documents to which it is a party, and (C) obligations with respect to its
Capital Stock, or (iii) own, lease, manage or otherwise operate any properties
or Assets (including cash (other than cash received in connection with dividends
made by the Borrowers or other Subsidiaries of Servico in accordance with
Section 8(f) pending application in the manner contemplated by said Section) and
cash equivalents) other than the ownership of shares of Capital Stock of its
Subsidiaries.
q. Negative Pledge Covenant. Enter into or suffer to exist, or permit
any Subsidiary to enter into or suffer to exist, any mortgage, deed of trust,
deed to secure debt or other security instrument or any other Lien, or any
agreement permitting or conditioning the creation or assumption of any Lien upon
any Asset, including without limitation, the Capital Stock of any Guarantor, any
Borrower or their respective Subsidiaries, or any trade
<PAGE>
name, trademark, service mark, logo, copyright, good will or other general
intangible owned by any Guarantor, any Borrower or any of their respective
Subsidiaries or used in connection with any Asset other than (i) in favor of
Lender, or (ii) Liens permitted under Section 8(c).
r. Limitations on Stock Transfers. Sell, transfer, assign, pledge,
encumber or issue any Capital Stock of Servico, Lodgian, any Borrower, or any of
their respective Subsidiaries except as permitted by Section 8(d);
notwithstanding the foregoing, Capital Stock in Lodgian may be issued, sold,
transferred, assigned, pledged or encumbered, and options for such Capital Stock
may be issued in the ordinary course of business, provided that such Capital
Stock is publicly traded on the New York Stock Exchange, the American Stock
Exchange or NASDAQ.
9. Tolling of Statute of Limitation. The Guarantors agree that any payment
or performance of any of the Liabilities or other Guaranteed Obligations or any
other act which tolls any statute of limitations applicable to any of the
Liabilities or other Guaranteed Obligations shall also toll the statute of
limitations applicable to the Guarantors' liability under this Guaranty.
10. Waivers. Each Guarantor hereby expressly waives and agrees not to
directly or indirectly assert or enforce (a) diligence, presentment, demand for
payment, protest, benefit of any statute of limitations affecting any Borrower
or any other party's liability under any of the Loan Documents or the
enforcement of any Guaranteed Obligations or this Guaranty; (b) discharge due to
any disability of any Borrower or any other party; (c) any defenses of any
Borrower or any other party to obligations under any of the Loan Documents
(other than the defense of prior payment or performance); (d) the benefit of any
act or omission by the Lender or any other party which directly or indirectly
results in or aids the discharge of any Borrower or any other party from any of
the Liabilities or other Guaranteed Obligations, by operation of law or
otherwise (except to the extent that such discharge results from prior payment
in full in cash of the Guaranteed Obligations); (e) all notices whatsoever,
including notice of acceptance of this Guaranty, of the creation, renewal,
modification, extension or accrual of any of the Guaranteed Obligations, or the
reliance by the Lender upon this Guaranty, or the exercise of any right, power
or privilege of the Lender and the incurring of any Guaranteed Obligations; and
(f) any requirement that the Lender or any other party exhaust any right, power
or remedy or proceed against any Borrower, any of the other companies or any
other party or any other security for, or any other Guarantor of, or any other
party liable for, any of the Liabilities or other Guaranteed Obligations. Each
Guarantor specifically agrees that it shall not be necessary or required, and no
Guarantor shall not be entitled to require, that the Lender or any other party
(i) file suit or proceed to assert or obtain a claim for personal judgment
against any Borrower, any other Guarantor, any of the other companies or any
other party for all or any part of the Liabilities or other Guaranteed
Obligations; (ii) make any effort at collection or enforcement of all or any
part of the Liabilities or other Guaranteed Obligations from any of the
Borrowers, any other Guarantor, any of the other companies or any other party;
(iii) foreclose against, collect or seek to realize upon any collateral or any
other security now or hereafter existing for all or any part of the Liabilities
or other Guaranteed Obligations; (iv) file suit or proceed to obtain or assert a
claim for personal judgment against the Guarantors or any other guarantors or
<PAGE>
other party liable for all or any part of the Liabilities or other Guaranteed
Obligations; (v) exercise or assert any other right or remedy to which the
Lender or any other party is or may be entitled in connection with the
Liabilities or other Guaranteed Obligations or any security or Guaranty relating
thereto; or (vi) file or assert any claim against assets of the Borrowers, the
Guarantors, or any other party before or as a condition of enforcing the
liability of the Guarantors under this Guaranty. The Liabilities and the other
Guaranteed Obligations, shall conclusively be deemed to have been created,
contracted, incurred and permitted to exist in reliance upon this Guaranty.
11. Continuing Guaranty. This Guaranty shall be a continuing guaranty and
shall remain in effect (subject to Section 12 hereof) until the Liabilities have
been paid in full and all other Guaranteed Obligations have been discharged.
12. Subrogation. No payment or performance hereunder by the Guarantors
shall entitle any Guarantor to (a) subrogation to (or any other interest in) the
rights of the Lender to any of the Liabilities or other Guaranteed Obligations,
or (b) to any payment or performance by the Borrowers, except in each case
(subject to Section 15) after payment and performance in full of the Liabilities
and all other Guaranteed Obligations. Upon such payment and performance in full,
and subject to Section 15 and the other provisions of this Guaranty, the
Guarantors shall be entitled to exercise, by way of subrogation, remaining
rights and remedies (if any) of the Lender in respect of any Guaranteed
Obligations, including any Liabilities. If any amount shall be paid to any
Guarantor on account of the foregoing rights at any time prior to the time that
all the Liabilities and other Guaranteed Obligations have been paid in full,
such amount shall be held in trust for the benefit of the Lender and shall
forthwith be paid to the Lender, to be credited and applied to the Liabilities
and the other Guaranteed Obligations, whether matured or unmatured, in
accordance with applicable terms of the Loan Documents.
13. Reinstatement. Notwithstanding any provisions of the Loan Documents to
the contrary, the liability of the Guarantors hereunder shall be reinstated and
revived and the rights of the Lender shall continue if and to the extent that
for any reason any payment by or on behalf of the Borrowers or the Guarantors is
rescinded or must be otherwise restored by the Lender, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid, and all losses, damages, reasonable and customary
expenses (including reasonable attorneys' fees) that the Lender may suffer or
incur as a result of any voided or otherwise set aside payments shall be
specifically covered by the indemnity contained in Section 15 of this Guaranty.
The determination as to whether any such payment must be rescinded or restored
shall be made by the Lender in their sole discretion; provided, however, that if
the Lender chooses to contest any such matter at the request of any Guarantor,
each Guarantors agrees to indemnify and hold harmless the Lender from all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) of such litigation. To the extent any payment is rescinded or
restored, the Liabilities and the other Guaranteed Obligations shall, to the
extent of that payment, be revived in full force and effect without reduction or
discharge for that payment.
<PAGE>
14. Subordination of Indebtedness. Any indebtedness or other obligation of
any Borrowers now or hereafter held by or owing to any Guarantor is hereby
subordinated in time and right of payment to all obligations of the Borrowers to
the Lender. Each Guarantor hereby assigns such indebtedness to the Lender,
including the right to file proof of claim and the right to vote thereon in
connection with any proceeding under the Bankruptcy Code, including the right to
vote on any plan of reorganization, and following the occurrence and during the
continuation of an Event of Default, any payments made on account of such
indebtedness shall be collected, enforced and received by the Guarantors in
trust for the Lender to be paid over to the Lender on account of the Liabilities
of the Borrowers to the Lender, but without reducing or affecting in any manner
the liability of the Guarantors under the other provisions of this Guaranty.
Each Guarantor agrees that until such payment in full of the Guaranteed
Obligation, (a) no Guarantor shall accept payment from any other Guarantor by
way of contribution on account of any payment made hereunder by such party to
Lender, (b) no Guarantor will take any action to exercise or enforce any rights
to such contribution, and (c) if any Guarantor should receive any payment,
satisfaction or security for any indebtedness of any Borrower to any other
Guarantor or for any contribution by any other Guarantor for payment made
hereunder by the recipient to Lender, the same shall be delivered to Lender in
the form received, endorsed or assigned as may be appropriate for application on
account of, or as security for, the Guaranteed Obligations and until so
delivered, shall be held in trust for Lender as security for the Guaranteed
Obligations.
15. Indemnification. Each Guarantor shall indemnify, defend in the manner
provided below, and pay and hold harmless the Lender and any holder of any
interest in the Note, and the officers, directors, employees and agents of and
counsel to the Lender and such holders (collectively, the "Indemnitees" and each
individually, an "Indemnitee") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, causes of action, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel
(including the allocated costs of in-house counsel of the Lender) for such
Indemnitees in connection with any investigative, administrative or judicial
action, suit or proceeding, whether or not any of such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred or suffered by or
asserted against any such Indemnitee, if and to the extent that the same arise
under Section 13 hereof (collectively, the "Indemnified Liabilities"); provided,
however, that (a) the Guarantors shall have no obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent the same arise
from any breach of any representation, warranty, covenant or agreement made by
such Indemnitee under this Agreement or from the gross negligence or willful
misconduct of such Indemnitee, and (b) the rights of any Indemnitee hereunder
against any Guarantor in respect of any act or omission of the Guarantors or any
other Person shall not be limited as a consequence of any act or omission of any
other Indemnitee. Each Indemnitee will promptly notify, or cause to be notified,
the Guarantors of (y) each action, suit or proceeding involving an Indemnified
Liability that is the subject of service of process on such Indemnitee, and (z)
each threatened action, suit or proceeding involving an Indemnified Liability of
which the Indemnitee (and, in the case of any Indemnitee that is a party to the
Loan Agreement, the officer of such Indemnitee who
<PAGE>
is the named person for notices to be sent under the Loan Agreement) has written
notice; provided, however, that the failure to give the Guarantors prompt notice
shall not adversely affect the indemnity rights granted to such Indemnitee
hereunder except to the extent that the Guarantors establish that it has been
prejudiced by such failure to give notice. If any investigative, judicial or
administrative action, suit or proceeding arising from any Indemnified Liability
is brought against any Indemnitee indemnified or intended to be indemnified
pursuant to this Section 15, the Guarantors, to the extent directed by the
Indemnitees or intended Indemnitees, will resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
by the Guarantors (which counsel shall be reasonably satisfactory to the
affected Indemnitee(s), whose approval shall not be unreasonably delayed or
withheld). Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding, but solely at the cost of the
Guarantors. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 15 may be unenforceable because it is
violative of any law or public policy, the Guarantors shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The obligations of the
Guarantors under this Section 15 shall survive the termination of this Guaranty
and the discharge of the other Guaranteed Obligations.
16. Waiver of Rights of Contribution if Guarantors is an Insider.
Notwithstanding anything contained in this Guaranty to the contrary, including
any right of subrogation the Guarantors may have under Section 12, in the event
that (a) the Lender is unsecured or is undersecured by valid and non-avoidable
liens in the collateral, with value equal to or greater than the Liabilities of
the Borrowers included in the Guarantied Obligations or (b) any Guarantor
asserts any claim (contingent or otherwise) against the Borrowers' estate in any
Bankruptcy Case or proceeding with respect to any Guarantied Obligation, the
Guarantors hereby subordinate to the rights and claims of the Lender against the
Borrowers or any security any rights and claims the Guarantors may have or may
hereafter acquire against the Borrowers or any security by reason of any of the
Guarantied Obligations under or relating to this Guaranty, whether arising under
any agreement or implied at law or in equity. The intended effect of this
section is to eliminate any possible impairment of the rights and status of the
Lender as a non-insider arising because of any claim for contribution or
subrogation by the Guarantors in the context of any proceeding under the
Bankruptcy Code involving the Borrowers.
17. Limitation of Guaranty. Any term or provision of this Guaranty or any
other Loan Document to the contrary notwithstanding, the maximum aggregate
amount of the Guarantied Obligations for which each Guarantor shall be liable
shall not exceed the lesser of (a) the sum of the Assets of such Guarantor, at a
fair valuation based upon appraisals or comparable valuations minus the sum of
the liabilities of such Guarantor, and (b) the maximum amount for which such
Guarantor can be liable without rendering this Guaranty or any other Loan
Document, as it relates to such Guarantor, voidable under Section 548 of the
United States Bankruptcy Code or any comparable provision of any state law or
any applicable law relating to fraudulent conveyance or fraudulent transfer.
18. Contribution. To the extent that any Guarantor shall be required
<PAGE>
hereunder to pay a portion of the Guarantied Obligations which shall exceed the
greater of (i) the amount of the economic benefit actually received by such
Guarantor from the Loan and (ii) the amount which such Guarantor would otherwise
have paid if such Guarantor had paid the aggregate amount of the Guarantied
Obligations (excluding the amount thereof repaid by the Borrowers and the other
Guarantors) in the same proportion as such Guarantor's net worth at the date
enforcement hereunder is sought bears to the aggregate net worth of all the
Guarantors at the date enforcement hereunder is sought, then such Guarantor
shall be reimbursed by the Borrowers and the other Guarantors for the amount of
such excess, pro rata based on the respective net worth of the Borrowers and
such other Guarantors at the date enforcement hereunder is sought.
19. Notice. All notices or other written communications hereunder shall be
deemed to have been properly given (a) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof,
(b) one (1) Business Day (hereinafter defined) after having been deposited for
overnight delivery with any reputable overnight courier service, or (c) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to any Guarantor:
At the address set forth in the preamble to this Guaranty, Attention:
Robert Cole
With a copy to: Stearns Weaver Miller Weissler
Aldaheff & Sitterson, P.A.
150 West Flagler Street, Suite 2300
Miami, Florida 33130
Attention: Robert I. Weissler, Esq.
If to the Lender:
At the address set forth in the preamble to this Guaranty
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section, the term "Business Day" shall
mean a day on which the Lender or commercial banks are not authorized or
required by law to close in New York, New York.
Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.
20. No Waiver; Cumulative Remedies. The rights granted the Lender under
this Guaranty or any other Loan Document or allowed to the Lender by law or in
equity shall be cumulative and may be exercised at any time and from time to
time. No failure on the
<PAGE>
part of the Lender to exercise, and no delay in exercising, any right hereunder
shall be construed or deemed to be a waiver thereof, nor shall any single or
partial exercise by the Lender of any right hereunder preclude any other or
future exercise thereof or the exercise of any other right.
21. Benefit of Guaranty. This Guaranty is made and entered into for the
sole protection and benefit of the Lender and its successors and assigns, and no
other Person, including other creditors or general or limited partners of the
Borrowers, shall be a direct or indirect beneficiary of, or shall have any
direct or indirect cause of action or claim in connection with, this Guaranty.
Except for the rights of the Lender and its successors and assigns under the
applicable Loan Documents, nothing in this Guaranty shall directly or indirectly
make any other Person a third party or other beneficiary hereto or to any of the
Loan Documents or create any obligations or duties by the Lender to any such
Person. The Lender shall not have any obligation to any such other Persons in
connection with this Guaranty, and the Lender shall be entitled to exercise (or
to refrain from exercising) any of its rights or remedies against the Guarantors
without regard to any other Persons.
22. Keep Well Covenants. Each Guarantor shall (a) cause each of its
Subsidiaries to be operated and managed in such a manner that it will fulfill
its obligations under the Loan Documents to which it is a party; (b) not file
any petition for relief under the United States Bankruptcy Code or under any
similar federal or state law against any such Subsidiaries; (c) provide funding
to each Subsidiary to the extent necessary to enable each Subsidiary to fulfill
its obligations under the Loan Documents.
23. Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Lender to or for the credit
or the account of the Guarantors against any and all of the obligations of the
Guarantors now or hereafter existing under this Guaranty, irrespective of
whether or not the Lender shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. The Lender agrees
promptly to notify the Guarantors after any such set-off and application made by
the Lender; provided, however, that the failure to give such notice shall not
effect the validity of such set-off and application. The rights of the Lender
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lender may have.
24. Interpretation. At no time shall the prior or subsequent course of
conduct by any of the parties hereto directly or indirectly limit, impair or
otherwise adversely affect any of the rights or remedies of the Lender (or
excuse or affect any of the Guarantors' obligations) in connection with this
Guaranty or detract from or otherwise affect the literal interpretation and
effect of this Guaranty. The descriptive headings in this Guaranty are for
convenience of reference only and shall not affect the meaning of any provision
of this Guaranty.
<PAGE>
25. No Offset or Right of Recoupment. The Guarantors shall not under any
circumstances fail or delay to perform (or resist the enforcement of) any of its
obligations to the Lender in connection with this Guaranty because of any
alleged offsetting claim or right of recoupment or cause of action against the
Lender (or any Indebtedness or obligation of the Lender) which has not been
confirmed in a final judgment of a court of competent jurisdiction (sustained on
appeal, if any) against the Lender, and the Guarantors hereby waive any such
rights of setoff (or offset) or right of recoupment or which it might otherwise
have with respect to any such claims or causes of action against the Lender (or
any such obligations or Indebtedness of the Lender) unless and until such right
of setoff is confirmed and liquidated by such a final judgment.
26. Choice of Law. This Guaranty shall be governed by and be construed in
accordance with the laws of the State of New York and the applicable laws of the
United States of America.
27. Successors and Assigns. This Guaranty shall be binding upon and inure
to the benefit of the Guarantors and the Lender, and their respective permitted
successors, assigns and legal representatives of every kind, character or nature
to the maximum extent of the law and in accordance with any limitations set
forth in this Guaranty, specifically including, with respect to the Lender, any
subsequent holder or holders of the Note or any interest therein, and the term
"Lender" shall include any such holder or holders, including, without
limitation, any Administrative Agent or Co-Lenders, as provided in Section 71 of
the Loan Agreement. The Guarantors shall not assign or delegate any of its
obligations under this Guaranty in whole or in part. The Guarantors acknowledge
and agree that (a) any assignee or transferee of the Lender and any subsequent
assignee or transferee thereof shall be vested with all the rights and powers of
the Lender hereunder; and (b) any assignment or transfer by the Lender or
subsequent assignment or transfer by such initial assignee or transferee shall
in no way whatsoever impair or affect the Guarantors' obligations under this
Guaranty or the Lender' rights, privileges, powers or remedies with respect to
any indebtedness, the Guaranteed Obligations, or contract then existing or
thereafter arising between the Borrowers, on the one hand, and the Lender, on
the other, that is not transferred.
28. Costs and Expenses. The Guarantors shall pay to the Lender all
reasonable and customary costs and expenses (including all reasonable attorneys'
fees and disbursements), incurred by the Lender in connection with the
enforcement or attempted enforcement of, and preservation of any rights or
interests under, this Guaranty.
29. Integration. This Guaranty (a) constitutes the entire agreement between
or among the parties hereto relating to the subject matter hereof, (b) shall
supersede and take the place of all negotiations, drafts, instruments, and
written or oral communications purporting to be an agreement of the parties
hereto relating to the subject matter hereof, and (c) is intended by each of the
parties hereto to be the complete statement of the terms and conditions, and the
final expression, of their agreement relating to the subject matter hereof.
30. Severability. If any provision or provisions, or if any portion of any
<PAGE>
provision or provisions, contained in this Guaranty is or are found by a court
of competent jurisdiction to be in violation of any applicable local, state or
federal ordinance, statute, law, administrative or judicial decision, or public
policy, and if such court should declare any such portion, provision or
provisions of this Guaranty to be illegal, invalid, unlawful, void or
unenforceable as written or applied, then it is the intent of the parties hereto
(i) that such portion, provision or provisions shall be given force to the
fullest possible extent that they are legal, valid and enforceable, including by
virtue of any suspension or stay of such ruling pending appeal or other judicial
review, by virtue of any reversal of such decision by a higher court or by
reducing the amount or degree of any obligation or waiver which is unenforceably
excessive by the minimum amount in order to make the same enforceable, (ii) that
the remainder of this Guaranty shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were either not
contained therein or not applied in such a manner as to be so unenforceable and
(iii) that the rights, obligations and interests of the parties hereto under the
remainder of this Guaranty (including such portion, provision or provisions as
otherwise applied) shall continue in full force and effect.
31. Waiver of Jury Trial. LENDER AND EACH GUARANTOR HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THIS GUARANTY, THE LOAN EVIDENCED BY THE NOTE, THE
LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER OR
ANY GUARANTOR AND THEIR RESPECTIVE OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.
32. Consent to Service. Each Guarantor will maintain a place of business or
an agent for service of process at the address set forth in the first paragraph
hereof and give prompt notice to Lender of any change of address of such place
of business and of the name and address of any new agent appointed by it, as
appropriate. Each Guarantor further agrees that the failure of its agent for
service of process to give it notice of any service of process will not impair
or affect the validity of such service or of any judgment based thereon. Each
Guarantor irrevocably consents to service of process by registered or certified
mail, postage prepaid, to it at its address given in or pursuant to the first
paragraph hereof.
33. Submission to Jurisdiction. With respect to any claim or action arising
hereunder, each Guarantor (a) irrevocably submits to the nonexclusive
jurisdiction of (i) the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York, New York, and
appellate courts from any thereof, and (ii) the courts of the states (or
countries) in which any of the Collateral is located and any United States
District Court located in any of the states in which any of the Collateral is
located, and appellate courts from any thereof, and (b) irrevocably waives any
objection which it may have at any time to the laying on venue of any suit,
action or proceeding arising out of or relating to this Guaranty brought in any
such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
<PAGE>
forum.
34. Jurisdiction Not Exclusive. Nothing in this Guaranty will be deemed to
preclude Lender from bringing an action or proceeding with respect hereto in any
other jurisdiction.
35. Waiver of Election of Remedies. To the extent applicable, each
Guarantor waives all rights and defenses arising out of an election of remedies
by the Lender, even though that election of remedies, such as nonjudicial
foreclosure with respect to the security for a guaranteed obligation, has
destroyed such Guarantors' rights of subrogation and reimbursement against the
Borrowers by the operation of Section 580d of the Code of Civil Procedure of the
State of California or otherwise.
NO FURTHER TEXT ON THIS PAGE
<PAGE>
36. Waiver of Appraisal Rights. The laws of the State of South Carolina
provide that in any real estate foreclosure proceeding, a defendant against whom
a personal judgment is taken or asked may within thirty (30) days after the sale
of any Property located in South Carolina, as defined in the Mortgage, apply to
the court for an order of appraisal. The statutory appraisal value as approved
by the court would be substituted for the high bid and may decrease the amount
of any deficiency owing in connection with the transaction. THE UNDERSIGNED
HEREBY WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL RIGHTS WHICH MEANS THE
HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS
OF ANY APPRAISED VALUE OF THE PROPERTY.
IN WITNESS WHEREOF, the Guarantors have executed and delivered this
Guaranty as of the date first written above.
- --------------------------------------------------------------------------------
LODGIAN, INC. KDS CORPORATION
By: By:
Name: Toni Jones Name: Toni Jones
Title: Vice President Title: Vice President
- ----------------------------------- -------------------------------------------
SERVICO, INC. AMIOP ACQUISITION CORP.
By: By:
Name: Toni Jones Name: Toni Jones
Title: Vice President Title: Vice President
- ----------------------------------- ------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SERVICO OPERATIONS CORPORATION SERVICO ACQUISITION CORP.
By: By:
Name: Toni Jones Name: Toni Jones
Title: Vice President Title: Vice President
- ----------------------------------- -------------------------------------------
SHARON MOTEL ENTERPRISES, INC. PALM BEACH MOTEL ENTERPRISES, INC.
By: By:
Name: Toni Jones Name: Toni Jones
Title: Vice President Title: Vice President
- ----------------------------------- ------------------------------------------
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
BORROWER/LESSEE PROPERTY LESSOR/LENDER ANNUAL
PAYMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SERVICO CENTRE ASSOCIATES LIMITED OMNI HOTEL WEST PALM BEACH, FL FINANCIAL MARKETING SERVICES, INC. $51,007
PARTNERSHIP GELCO CORPORATION D/B/A GE CAPITAL
CHARTER FINANCIAL, INC.
LYON CREDIT
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICO METAIRIE, INC. QUALITY HOTEL METAIRIE, LA TELERENT $59,160
M&SD
CHARTER FINANCIAL, INC.
- ----------------------------------------------------------------------------------------------------------------------------------
ALBANY HOTEL, INC. OMNI ALBANY HOTEL, NY FINANCIAL MARKETING SERVICES, INC. $55,560
CHARTER FINANCIAL, INC.
LYON CREDIT
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICO ROLLING MEADOWS, INC. HOLIDAY INN ROLLING MEADOWS, IL LYON CREDIT $53,976
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICO WEST PALM BEACH, INC. SHERATON WEST PALM BEACH, FL LYON CREDIT $57,272
- ----------------------------------------------------------------------------------------------------------------------------------
MINNEAPOLIS MOTEL ENTERPRISES, INC. HOLIDAY INN ST. PAUL, MN FINANCIAL MARKETING SERVICES, INC. $58,266
M&SD
CHARTER FINANCIAL, INC.
LYON CREDIT
METLIFE CAPITAL
- ----------------------------------- -------------------------------------- ------------------------------------------------------
SERVICO AUSTIN, INC. HOLIDAY INN AUSTIN SOUTH, TX FINANCIAL MARKETING SERVICES, INC.. $59,500
TELERENT
M&SD
CHARTER FINANCIAL, INC.
LYON CREDIT
- -----------------------------------------------------------------------------------------------------------------------------------
IMPAC HOTELS, L.L.C. HOLIDAY INN RIVERSIDE, RIVERSIDE, CA SQUIRREL/SULCUS $51,235
- ------------------------------------------------------------------------------------------------------------------------------------
IMPAC HOTELS, L.L.C. HOLIDAY INN RIVERSIDE, RIVERSIDE, CA FRYE ADVERTISING $51,300
- ------------------------------------------------------------------------------------------------------------------------------------
MELBOURNE HOSPITALITY ASSOCIATES HOLIDAY INN MELBOURNE, FL FINANCIAL MARKETING SERVICES, INC. $71,232
LIMITED PARTNERSHIP GE CAPITAL
CHARTER FINANCIAL, INC.
LYON CREDIT
- ------------------------------------------------------------------------------------------------------------------------------------
FORT WAYNE HOSPITALITY ASSOCIATES II, HOLIDAY INN FORT WAYNE, IN TELERENT $181,560
LIMITED PARTNERSHIP CHARTER FINANCIAL, INC.
LYON CREDIT
SANLYN & ASSOC.
GIAC
- ------------------------------------------------------------------------------------------------------------------------------------
RALEIGH DOWNTOWN ENTERPRISES, INC. HOLIDAY INN RALEIGH, NC MS&D $177,276
CHARTER FINANCIAL GROUP, INC.
GIAC
- ------------------------------------------------------------------------------------------------------------------------------------
APICO INNS OF PITTSBURGH, INC. HOLIDAY INN MONROEVILLE, PA TELERENT $52,184
MS&D
LYON CREDIT
- ------------------------------------------------------------------------------------------------------------------------------------
MOON AIRPORT MOTEL, INC. CLARION ROYCE HOTEL PITTSBURGH, PA FINANCIAL MARKETING SERVICES, INC. $67,056
MS&D
CHARTER FINANCIAL, INC.
LYON CREDIT
- ------------------------------------------------------------------------------------------------------------------------------------
WILPEN, INC. WESTIN WILLIAM PENN, PA AMPLICON FINANCIAL $53,736
- ------------------------------------------------------------------------------------------------------------------------------------
SAGINAW HOSPITALITY LIMITED HOLIDAY INN SAGINAW, MI LYON CREDIT $223,368
PARTNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 2
PURCHASE RIGHTS
The following summarizes the purchase rights under partnership agreements
applicable to the following entities:
1. The following provisions apply to the following partnerships: (i) 1075
Hospitality, L.P., (ii) Fort Wayne Hospitality Associates II Limited
Partnership, (iii) Brecksville Hospitality, L.P. (Holiday -Richfield), (iv)
Saginaw Hospitality Limited Partnership (Crowne Plaza -Saginaw), (v) Sioux
City Hospitality, L.P. (Hilton -Sioux City), (vi) Worcester Hospitality
Associates Limited Partnership (Crowne Plaza -Worcester).
- change of ownership of 50% or more of Servico's
<PAGE>
general partner entity or the stock of the entities which control
it or Servico, Inc. requires the consent of the other partners.
Failure to consent requires the non-consenting partner to acquire
Servico's partnership interests at its "net fair market value".
- either general or limited partners may deliver a Sale Notice (as
such term is defined in the applicable partnership agreement)
stating the amount the party delivering the notice is offering to
sell the partnership interest for. The party in receipt of the
notice is afforded a 10-day period to respond. If the recipient
declines the offer or fails to respond, then the party that
delivers the Sale Notice is provided the opportunity to solicit
outside offers to purchase the partnership's hotel. If an outside
offer is received for an amount that would result in a
distribution to the party delivering the Sale Notice which is 5%
greater than the amount that would have otherwise been received
had the Sale Notice been accepted, then the party in receipt of
the Sale Notice must cooperate with the sale. If an offer is
received that the party delivering the Sale Notice desires to
accept, but does not meet the above criteria, and the offer would
result in a distribution to the partners in an amount adequate to
fully recover their capital, then the party receiving the Sale
Notice may acquire the partnership interest of the party
delivering the notice for the amount that the partner would have
received as a distribution if the sale had occurred or in the
alternative, cooperate with the Sale.
2. Columbus Hospitality Associates Limited Partnership (Holiday Inn -Columbus)
- subsequent to 12/20/97 the limited partners can require Servico's
general partner entity to place the partnership's assets for
sale. The general partner has the option to consent or to
negotiate with the limited partners for the purchase of their
partnership interests. If the partnership receives an offer to
purchase and
<PAGE>
the limited partners want to accept, then the general partner can
cash out the limited partners for the amount of the proceeds they
would have received had the transaction been consummated.
3. SLB Managers LP (the general partner of the European venture)
- Section 5.9 contains buy/sell provisions in the event that both
of the general partners are unable to reach agreement with
respect to any Major Decision (as defined in said partnership
agreement).
SCHEDULE 4(Q)
-------------
<TABLE>
<CAPTION>
OWNERSHIP OF PERCENTAGE
SUBSIDIARY JURISDICTION INTERESTS IN OF
SUBSIDIARY OWNERSHIP
- -------------------------------- --------------------------- ---------------------------------- ---------------------
<S> <C> <C> <C>
12801 NWF Beverage, Inc. TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
3401 AUSTIN BEVERAGE TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
AMIOP ACQUISITION CORP. DELAWARE CORPORATION SERVICO, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ALBANY HOTEL, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
APICO HILLS INC. PENNSYLVANIA SHARON MOTEL ENTERPRISES, 100%
CORPORATION INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
APICO INNS OF GREEN TREE, PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
APICO INNS OF PENNSYLVANIA SHARON MOTEL ENTERPRISES, 100%
PENNSYLVANIA, INC. CORPORATION INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
APICO INNS OF PITTSBURGH, PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
APICO MANAGEMENT CORP. PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ATLANTA-HILLSBORO LODGING, GEORGIA LIMITED SERVICO, INC. 100%
L.L.C. LIABILITY COMPANY
- -------------------------------- --------------------------- ---------------------------------- ---------------------
BRECKSVILLE HOSPITALITY, INC. OHIO CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
BRUNSWICK MOTEL GEORGIA CORPORATION SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
DOTHAN HOSPITALITY 3053, ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
DOTHAN HOSPITALITY 3071, ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
EUROPEAN VENTURE, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
FAYETTEVILLE MOTEL NORTH CAROLINA SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
FOURTH STREET HOSPITALITY, IOWA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
FT. LAUDERDALE MOTEL FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
ASSOCIATES INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
GADSDEN HOSPITALITY, INC. ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
GREAT SOUTHERN MINING CO., ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
GROUPERS AND COMPANY SOUTH CAROLINA SERVICO OPERATIONS CORP. 100%
SEAFOOD RESTAURANT CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
HARRISBURG MOTEL PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
HEARTLANDS GARDEN GRILLE, KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
HILTON HEAD MOTEL SOUTH CAROLINA SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ISLAND MOTEL ENTERPRISES, GEORGIA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
KDS CORPORATION NEVADA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
KINSER MOTEL ENTERPRISES, INDIANA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN AMI, INC. MARYLAND CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN ANAHEIM, INC. CALIFORNIA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN FLORIDA, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN LANCASTER NORTH, PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN MANAGEMENT DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
CORP.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN ONTARIO, INC. CALIFORNIA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LODGIAN YORK MARKET PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
STREET, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MARKETING DESIGN FORCE, FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MAIN AVENUE BEVERAGE TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MC BEVERAGE CORP. TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MCKNIGHT MOTEL, INC. PENNSYLVANIA SHARON MOTEL ENTERPRISES, 100%
CORPORATION INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MINNEAPOLIS MOTEL MINNESOTA CORPORATION SHARON MOTEL ENTERPRISES, 100%
ENTERPRISES, INC. INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MOON AIRPORT MOTEL, INC. PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MULLIGAN'S, INC. ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
NEW ORLEANS AIRPORT MOTEL FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
NH MOTEL ENTERPRISES, INC. MICHIGAN CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
PALM BEACH MOTEL FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
PENMOCO, INC. GEORGIA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
RALEIGH-DOWNTOWN NORTH CAROLINA SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
RALEIGH MOTEL ENTERPRISES, NORTH CAROLINA SERVICO OPERATIONS CORP. 100%
INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ROYCE MANAGEMENT CORP. GEORGIA CORPORATION SERVICO OPERATIONS CORP. 100%
OF GA.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-S SUB, INC. FLORIDA CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-I SUB, INC. GEORGIA CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-II SUB, INC. KENTUCKY CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-III SUB, INC. KENTUCKY CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-IV SUB, INC. FLORIDA CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHG-VI SUB, INC. DELAWARE CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHGV-VII SUB, INC. DELAWARE CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHGV-VIII SUB, INC. FLORIDA CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SECOND FAYETTEVILLE MOTEL NORTH CAROLINA SHARON MOTEL ENTERPRISES, 100%
ENTERPRISES, INC. CORPORATION INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SECOND PALM BEACH MOTEL FLORIDA CORPORATION SHARON MOTEL ENTERPRISES, 100%
ENTERPRISES, INC. INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO ACQUISITION CORP. FLORIDA CORPORATION SERVICO, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO AUSTIN, INC. TEXAS CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO CEDAR RAPIDS, INC. IOWA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO COLESVILLE, INC. MARYLAND CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO COLUMBIA, INC. MARYLAND CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO COLUMBIA II, INC. MARYLAND CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO COLUMBUS, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO CONCORD, INC. CALIFORNIA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO COUNCIL BLUFFS, INC. IOWA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO EAST WASHINGTON, FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO FLAGSTAFF, INC. ARIZONA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO FORT WAYNE, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO FORT WAYNE II, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO FRISCO, INC. COLORADO CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO FT. PIERCE, INC. DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO GRAND ISLAND, INC. NEW YORK CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HILTON HEAD, INC. SOUTH CAROLINA SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOSPITALITY, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOTELS I, INC. FLORIDA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOTELS II, INC. FLORIDA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOTELS III, INC. FLORIDA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOTELS IV, INC. FLORIDA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO HOUSTON, INC. TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO, INC. FLORIDA CORPORATION LODGIAN, INC. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO JAMESTOWN, INC. NEW YORK CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO LANSING, INC. MICHIGAN CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO LAWRENCE, INC. KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO LAWRENCE II, INC. KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MANAGEMENT CORP. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MANAGEMENT TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
CORPORATION (TEXAS)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MANHATTAN, INC. KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MANHATTAN II, INC. KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MARKET CENTER, INC. TEXAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MARYLAND, INC. MARYLAND CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO MELBOURNE, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO METAIRIE, INC. LOUISIANA CORPORATION KDS CORPORATION 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO NEW YORK, INC. NEW YORK CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO NIAGARA FALLS, INC. NEW YORK CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO NORTHWOODS, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO OMAHA, INC. NEBRASKA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO OMAHA CENTRAL, NEBRASKA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO OPERATIONS FLORIDA CORPORATION SERVICO, INC. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO PENSACOLA, INC. DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO PENSACOLA 7200, DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO PENSACOLA 7330, DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO ROLLING MEADOWS, ILLINOIS CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO ROSEVILLE, INC. MINNESOTA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO SAGINAW, INC. MICHIGAN CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO SILVER SPRING, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO SUMMERVILLE, INC. SOUTH CAROLINA SERVICO OPERATIONS CORP. 100%
CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO TUCSON, INC. ARIZONA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO VALHALLA, INC. NEVADA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO VALHALLA II, INC. NEVADA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WEST DES MOINES, IOWA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WEST PALM BEACH, FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- ------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WICHITA, INC. KANSAS CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WINDSOR, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WINDSOR II, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WINTER HAVEN, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO WORCESTER, INC. FLORIDA CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHARON MOTEL ENTERPRISES, PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHC OF DELAWARE, INC. DELAWARE CORPORATION SERVICO OPERATIONS CORP. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SHEFFIELD MOTEL ENTERPRISES, ALABAMA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SIXTEEN HOTELS, INC. MARYLAND CORPORATION AMI OPERATING PARTNERS, L.P. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
STEVENS CREEK HOSPITALITY, GEORGIA CORPORATION SERVICO OPERATIONS CORP. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
WASHINGTON MOTEL PENNSYLVANIA SERVICO OPERATIONS CORP. 100%
ENTERPRISES, INC. CORPORATION
- -------------------------------- --------------------------- ---------------------------------- ---------------------
WILPEN INC. PENNSYLVANIA SHARON MOTEL ENTERPRISES, 100%
CORPORATION INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
1075 HOSPITALITY, L.P. GEORGIA LIMITED STEVENS CREEK HOSPITALITY, 51%
PARTNERSHIP INC.
(GENERAL PARTNER)
SOL VATION, INC. D/B/A SMITH 48%
MANAGEMENT COMPANY
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
1%
WOLVERINE HOSPITALITY
COMPANY, INC.
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
AMI OPERATING PARTNERS, DELAWARE LIMITED AMI ACQUISITION CORP. 100%
L.P. PARTNERSHIP (GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
BRECKSVILLE HOSPITALITY, OHIO LIMITED BRECKSVILLE HOSPITALITY, INC. 51%
L.P. PARTNERSHIP (GENERAL PARTNER)
SOL VATION, INC. D/B/A SMITH
MANAGEMENT COMPANY 48%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
WOLVERINE HOSPITALITY 1%
COMPANY, INC.
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
COLUMBUS HOSPITALITY FLORIDA LIMITED SERVICO COLUMBUS, INC. 30%
ASSOCIATES, L.P. PARTNERSHIP (GENERAL PARTNER)
A GROUP OF 18 INVESTORS 70%
(LIMITED PARTNERS)
(UNAFFILIATED)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
EAST WASHINGTON ARIZONA LIMITED SERVICO EAST WASHINGTON, INC.
ASSOCIATES, L.P. PARTNERSHIP (GENERAL PARTNER)
100%
SERVICO TUCSON, INC.
(LIMITED PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
FORT WAYNE HOSPITALITY FLORIDA LIMITED SERVICO FORT WAYNE II, INC. 51%
ASSOCIATES II, L.P. PARTNERSHIP (GENERAL PARTNER)
SOL VATION, INC. D/B/A SMITH
MANAGEMENT COMPANY 48%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
SPIRE REALTY GROUP 1%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LAWRENCE HOSPITALITY, L.P. KANSAS LIMITED SERVICO LAWRENCE, INC. 100%
PARTNERSHIP (GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MANHATTAN HOSPITALITY, L.P. KANSAS LIMITED SERVICO MANHATTAN, INC.
PARTNERSHIP (GENERAL PARTNER)
100%
SERVICO MANHATTAN II, INC.
(LIMITED PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
MELBOURNE HOSPITALITY FLORIDA LIMITED SERVICO MELBOURNE, INC. 50%
ASSOCIATES, L.P. PARTNERSHIP (GENERAL PARTNER)
A GROUP OF 18 INVESTORS 50%
(LIMITED PARTNERS)
(UNAFFILIATED)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
NEW ORLEANS AIRPORT MOTEL FLORIDA LIMITED NEW ORLEANS AIRPORT MOTEL 50%
ASSOCIATES, L.P. PARTNERSHIP ENTERPRISES, INC.
(GENERAL PARTNER)
A GROUP OF 18 INVESTORS 50%
(LIMITED PARTNERS)
(UNAFFILIATED)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SAGINAW HOSPITALITY, L.P. MICHIGAN LIMITED SERVICO SAGINAW, INC. 51%
PARTNERSHIP (GENERAL PARTNER)
SOL VATION, INC. D/B/A SMITH 48%
MANAGEMENT COMPANY
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
WOLVERINE HOSPITALITY 1%
COMPANY, INC.
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SERVICO CENTER ASSOCIATES FLORIDA LIMITED PALM BEACH MOTEL 50%
LTD. PARTNERSHIP ENTERPRISES, INC.
(GENERAL PARTNER)
A GROUP OF 35 INVESTORS 50%
(LIMITED PARTNERS)
(UNAFFILIATED)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SIOUX CITY HOSPITALITY, L.P. IOWA LIMITED FOURTH STREET HOSPITALITY, INC. 51%
PARTNERSHIP (GENERAL PARTNER)
SOL VATION, INC. D/B/A SMITH 48%
MANAGEMENT COMPANY
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
WOLVERINE HOSPITALITY 1%
COMPANY, INC.
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SOUTHFIELD HOTEL GROUP II, MICHIGAN LIMITED S.A.I. CORPORATION 1%
L.P. PARTNERSHIP (GENERAL PARTNER)
MCKNIGHT MOTEL, INC. 50%
(LIMITED PARTNER)
SOUTHFIELD ASSOCIATES 49%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
WORCESTER HOSPITALITY FLORIDA LIMITED SERVICO WORCESTER, INC. 51%
ASSOCIATES, L.P. PARTNERSHIP (GENERAL PARTNER)
SOL VATION HOSPITALITY, INC., 48%
D/B/A SMITH MANAGEMENT
COMPANY
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
WORCESTER HOSPITALITY 1%
COMPANY, INC.
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. GEORGIA LIMITED LODGIAN, INC. 100%
LIABILITY COMPANY
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #1, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #2, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #3, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #4, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #5, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC SPE #6, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOLDINGS III, L.L.C. GEORGIA LIMITED IMPAC HOTEL GROUP, L.L.C. 100%
LIABILITY COMPANY
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ATLANTA-BOSTON HOLDINGS, GEORGIA LIMITED IMPAC HOTEL GROUP, L.L.C. 100%
L.L.C. LIABILITY COMPANY
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ATLANTA-BOSTON SPE, INC. GEORGIA CORPORATION IMPAC HOTEL GROUP, L.L.C. 100%
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
IMPAC HOTELS I, L.L.C. GEORGIA LIMITED (MEMBER)
LIABILITY COMPANY
IMPAC SPE #1, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
IMPAC HOTELS II, L.L.C. GEORGIA LIMITED (MEMBER)
LIABILITY COMPANY
IMPAC SPE #2, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
DIA LODGING ASSOCIATES, GEORGIA CORPORATION IMPAC SPE #3, INC. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
DIA LODGING ASSOCIATES I IMPAC HOTEL GROUP, L.L.C. 99%
L.P. GEORGIA LIMITED (LIMITED PARTNER)
PARTNERSHIP
IMPAC SPE #3, INC. 1%
(GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LITTLE ROCK LODGING GEORGIA CORPORATION IMPAC SPE #3, INC. 100%
ASSOCIATES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LITTLE ROCK LODGING IMPAC HOTEL GROUP, L.L.C. 99%
ASSOCIATES I, L.P. GEORGIA LIMITED (LIMITED PARTNER)
PARTNERSHIP
IMPAC SPE #3, INC. 1%
(GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
TULSA LODGING ASSOCIATES, GEORGIA CORPORATION IMPAC SPE #3, INC. 100%
INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
TULSA LODGING ASSOCIATES I, GEORGIA LIMITED (LIMITED PARTNER)
L.P. PARTNERSHIP
IMPAC SPE #3, INC. 1%
(GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
DEDHAM LODGING GEORGIA CORPORATION IMPAC SPE #3, INC. 100%
ASSOCIATES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
DEDHAM LODGING GEORGIA LIMITED (LIMITED PARTNER)
ASSOCIATES I, L.P. PARTNERSHIP
IMPAC SPE #3, INC. 1%
(GENERAL PARTNER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
LAFAYETTE LODGING GEORGIA CORPORATION IMPAC SPE #3, INC. 100%
ASSOCIATES, INC.
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 60%
MACON HOTEL ASSOCIATES, MASSACHUSETTS LIMITED (MANAGING MEMBER)
L.L.C. LIABILITY COMPANY
PCG/MACON INVESTMENT 40%
CORP. (NOT AFFILIATED WITH
IMPAC)
(MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
IMPAC HOTEL MANAGEMENT, GEORGIA LIMITED (MEMBER)
L.L.C. LIABILITY COMPANY
IMPAC SPE #4, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOTEL GROUP, L.L.C. 99%
IMPAC DEVELOPMENT AND GEORGIA LIMITED (MEMBER)
CONSTRUCTION, L.L.C. LIABILITY COMPANY
IMPAC SPE #5, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
IMPAC HOLDINGS III, L.L.C. 99%
IMPAC HOTELS III, L.L.C. GEORGIA LIMITED (MEMBER)
LIABILITY COMPANY
IMPAC SPE #6, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
ATLANTA-BOSTON LODGING, ATLANTA BOSTON HOLDINGS,
L.L.C. GEORGIA LIMITED L.L.C. 99%
LIABILITY COMPANY (MEMBER)
ATLANTA-BOSTON SPE, INC. 1%
(MANAGING MEMBER)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SLB HOLDINGS, L.P. DELAWARE LIMITED SLB MANAGERS, L.P. 1%
PARTNERSHIP (GENERAL PARTNER)
SERVICO OPERATIONS CORP. 49.5%
(LIMITED PARTNER)
LBSLB I, INC. 49.5%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
SLB MANAGERS, L.P. DELAWARE LIMITED EUROPEAN VENTURES, INC. 50%
PARTNERSHIP (GENERAL PARTNER)
LBSLB II, INC. 1%
(GENERAL PARTNER)
(UNAFFILIATED ENTITY)
LBSLB III, INC. 49%
(LIMITED PARTNER)
(UNAFFILIATED ENTITY)
- -------------------------------- --------------------------- ---------------------------------- ---------------------
</TABLE>
<PAGE>
SCHEDULE (4(AA))
ALL PERMITTED CAPITAL EXPENDITURES
FOR ADDITIONS OR EXPANSIONS OF EXISTING HOTELS OR IMPROVEMENTS
<TABLE>
<CAPTION>
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
PROPERTY DESCRIPTION OF TOTAL COST OF COST OF COST TO COMPLETE
EXPANSION OR CONSTRUCTION CONSTRUCTION CONSTRUCTION
ADDITION EXPENDED TO DATE
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
PORTLAND MARRIOTT CONSTRUCTION OF $34,302,000 $27,760,601 $6,541,399
PORTLAND, OR 249 ROOM
MARRIOTT
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
LIVERMORE CONSTRUCTION OF
COURTYARD BY 122 ROOM $11,924,630 $6,527,278 $5,397,352
MARRIOTT COURTYARD
LIVERMORE, CA
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
RIO RANCHO HILTON CONSTRUCTION OF $10,214,409 $8,982,309 $1,232,100
GARDEN 129 ROOM HILTON
RIO RANCHO, NM GARDEN
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
DENVER AIRPORT CONSTRUCTION OF $24,494,344 $24,299,892 $194,452
MARRIOTT 238 ROOM
AURORA, CO MARRIOTT
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
LAKE OSWEGO CONSTRUCTION OF $16,631,836 $4,717,665 11,914,171
HILTON GARDEN 181 ROOM HILTON
LAKE OSWEGO, OR GARDEN
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
BOSTON COURTYARD RENOVATION AND $16,078,495 $9,446,640 $6,631,855
BY MARRIOTT ADDITION OF NEW
REVERE, MA 30 ROOM TOWER
- ------------------------ ---------------------- -------------------- ----------------------- ------------------------
</TABLE>
PROPERTY AMOUNT OF SOURCE OF FUNDS
-------- UNFUNDED ---------------
CREDIT FACILITY
- ------------------------ --------------------- ------------------------
PORTLAND MARRIOTT $6,541,399 NOMURA
PORTLAND, OR
- ------------------------ --------------------- ------------------------
LIVERMORE
COURTYARD BY $5,397,352 NOMURA
MARRIOTT
LIVERMORE, CA
- ------------------------ --------------------- ------------------------
RIO RANCHO HILTON $1,232,100 NOMURA
GARDEN
RIO RANCHO, NM
- ------------------------ --------------------- ------------------------
DENVER AIRPORT $194,452 NOMURA
MARRIOTT
AURORA, CO
- ------------------------ --------------------- ------------------------
LAKE OSWEGO 11,642,285 NOMURA
HILTON GARDEN
LAKE OSWEGO, OR
- ------------------------ --------------------- ------------------------
BOSTON COURTYARD $0.00 NONE
BY MARRIOTT
REVERE, MA
- ------------------------ --------------------- ------------------------
SCHEDULE 7(I)
EXCLUDED ASSETS
<TABLE>
<CAPTION>
PROPERTY OWNER CITY STATE
- ------------------------------------------ --------------------------------- ----------------------------------------
<S> <C> <C> <C>
LAND PARCEL ADJACENT TO THE SHERATON SERVICO OMAHA, INC. OMAHA NE
OMAHA
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL ADJACENT TO THE WINDSOR SERVICO WINDSOR, INC. WINDSOR ONT
HOLIDAY INN SELECT
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND & BUILDING, FORMERLY THE HOWARD APICO INNS OF PENNSYLVANIA PITTSBURGH PA
JOHNSON PITTSBURGH AIRPORT INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL LODGIAN ANAHEIM, INC. ANAHEIM CA
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL ATLANTA-HILLSBORO LODGING, HILLSBORO OR
INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL LODGIAN ONTARIO, INC. ONTARIO CA
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL ADJACENT TO THE HOLIDAY IMPAC HOTELS I, L.L.C. DALLAS TX
INN SELECT (APPROXIMATELY 1 ACRE)
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL SECOND PALM BEACH MOTEL W. PALM BEACH FL
ENTERPRISES, INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL SECOND FAYETTEVILLE MOTEL FAYETTEVILLE NC
ENTERPRISES, INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
OFFICE BUILDING ADJACENT TO THE SERVICO MARYLAND, INC. SILVER SPRING MD
HOLIDAY INN
- ------------------------------------------ --------------------------------- ----------------------------------------
HOLIDAY INN LANCASTER NORTH AMI OPERATING PARTNERS, L.P. LANCASTER PA
PRIOR TO CONVEYANCE TO
LODGIAN LANCASTER NORTH, INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
HOLIDAY INN MARKET STREET AMI OPERATING PARTNERS, L.P. YORK PA
PRIOR TO CONVEYANCE TO
LODGIAN YORK MARKET STREET,
INC.
- ------------------------------------------ --------------------------------- ----------------------------------------
LAND PARCEL RALEIGH NORTH ASSOCIATES RALEIGH NC
JOINT VENTURE (SERVICO 50%
OWNER)
- ------------------------------------------ --------------------------------- ----------------------------------------
</TABLE>
<PAGE>
SCHEDULE 8(B)(III)
<TABLE>
<CAPTION>
BORROWER RECOURSE GUARANTOR COLLATERAL LENDER
TO
BORROWER
- --------------------------------- ---------------- ------------------ ----------------------------------- -------------
<S> <C> <C> <C> <C>
ALBANY HOTEL, INC. OMNI ALBANY HOTEL, NY
APICO HILLS, INC. YES LODGIAN, INC. HOLIDAY INN PARKWAY EAST, PA SECORE
APICO INNS OF GREEN TREE, INC. HOLIDAY INN GREENTREE, PA
APICO INNS OF PITTSBURGH, INC. SERVICO, INC. HOLIDAY INN MONROEVILLE, PA
BRUNSWICK MOTEL ENTERPRISES, INC. HOLIDAY INN BRUNSWICK, GA
DOTHAN HOSPITALITY 3053, INC. SERVICO HOLIDAY INN DOTHAN, AL
DOTHAN HOSPITALITY 3071, INC. OPERATIONS CORP. HAMPTON INN DOTHAN, AL
FAYETTEVILLE MOTEL ENTERPRISES, INC. HOLIDAY INN FAYETTEVILLE, NC
GADSDEN HOSPITALITY, INC. SHARON MOTEL HOLIDAY INN EXPRESS GADSDEN, AL
SERVICO CENTER ASSOCIATES, LTD. ENTERPRISES, INC. OMNI HOTEL WEST PALM BEACH, FL
MINNEAPOLIS MOTEL ENTERPRISES, INC. HOLIDAY INN ST. PAUL, MN
NH MOTEL ENTERPRISES, INC. KDS NORTHFIELD HILTON, MI
SERVICO AUSTIN, INC. CORPORATION HOLIDAY INN AUSTIN, TX
SERVICO CEDAR RAPIDS, INC. CROWNE PLAZA CEDAR RAPIDS, IA
SERVICO COLESVILLE, INC. AMIOP TOWN CENTER, MD
SERVICO COLUMBIA, INC. ACQUISITION COLUMBIA HILTON, MD
SERVICO FLAGSTAFF, INC. CORP. HOWARD JOHNSON FLAGSTAFF, AZ
SERVICO FT. PIERCE, INC. HOLIDAY INN FT. PIERCE, FL
SERVICO GRAND ISLAND, INC. SERVICO HOLIDAY INN GRAND ISLAND, NY
SERVICO HILTON HEAD, INC. ACQUISITION FOUR POINTS HOTEL HILTON HEAD, SC
SERVICO HOUSTON, INC. CORP. RAMADA PLAZA HOUSTON, TX
SERVICO JAMESTOWN, INC. HOLIDAY INN JAMESTOWN, NY
SERVICO WINDSOR, INC. PALM BEACH HOLIDAY INN WINDSOR, CANADA
SERVICO MARKET CENTER, INC. MOTEL HOLIDAY INN DALLAS, TX
SERVICO MARYLAND, INC. ENTERPRISES, INC. HOLIDAY INN SILVER SPRING, MD
SERVICO METAIRIE, INC. QUALITY HOTEL METAIRIE, LA
SERVICO NEW YORK, INC. CLARION HOTEL NIAGARA FALLS, NY
SERVICO NIAGARA FALLS, INC. HOLIDAY INN NIAGARA FALLS, NY
SERVICO NORTHWOODS, INC. BEST WESTER CHARLESTON AIRPORT, SC
SERVICO PENSACOLA, INC. HOLIDAY INN EXPRESS PENSACOLA, FL
SERVICO PENSACOLA 7200, INC. HOLIDAY INN UNIVERSITY MALL, FL
SERVICO PENSACOLA 7330, INC. HAMPTON INN PENSACOLA, FL
SERVICO ROLLING MEADOWS, INC. HOLIDAY INN ROLLING MEADOWS, IL
SERVICO ROSEVILLE, INC. COMFORT INN ROSEVILLE, MN
SERVICO WEST PALM BEACH, INC. SHERATON WEST PALM BEACH, FL
SERVICO WINTER HAVEN, INC. HOLIDAY INN WINTER HAVEN, FL
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SHEFFIELD MOTEL ENTERPRISES, INC. YES LODGIAN, INC. HOLIDAY INN SHEFFIELD, AL SECORE
SERVICO SILVER SPRING, INC. DAYS INN SILVER SPRING, MD
AMI OPERATING PARTNERS, L.P. SERVICO, INC. HOLIDAY INN EAST HARTFORD, CT
HOLIDAY INN BELMONT, MD
SERVICO HOLIDAY INN CROMWELL BRIDGE, MD
OPERATIONS CORP. HOLIDAY INN YORK ARSENAL, PA
HOLIDAY INN FREDERICK, MD
SHARON MOTEL
ENTERPRISES, INC.
KDS
CORPORATION
AMIOP
ACQUISITION
CORP.
SERVICO
ACQUISITION
CORP.
PALM BEACH
MOTEL
ENTERPRISES, INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO CONCORD, INC. YES* LODGIAN, INC. SHERATON CONCORD, CA
AMI OPERATING PARTNERS, L.P. HOLIDAY INN GLEN BURNIE, MD BANC ONE
ISLAND MOTEL ENTERPRISES, INC. SERVICO HOLIDAY INN INNER HARBOR, MD
PENMOCO, INC. CONCORD, INC. HOLIDAY INN BWI AIRPORT, MD
HOLIDAY INN LANCASTER EAST, PA
AMI OPERATING HOLIDAY INN JEKYLL ISLAND, GA
PARTNERS, L.P.
(*ON ENTIRE LOAN
UNTIL RENOVATIONS ISLAND MOTEL
COMPLETE, AND ENTERPRISES, INC.
FOREVER ON
$10,000,000) PENMOCO, INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
ATLANTA-BOSTON LODGING, L.L.C. NO N/A COMFORT INN, REVERE FIRST UNION
NATIONAL
BANK
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
LODGIAN, INC.
YES N/A N/A CRESTS
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MACON HOTEL ASSOCIATES NO N/A MACON CROWNE PLAZA IBM
RETIREMENT
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MACON HOTEL ASSOCIATES NO N/A MACON CROWNE PLAZA FIDELITY REAL
ESTATE
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MACON HOTEL ASSOCIATES NO N/A MACON CROWNE PLAZA HOSPITALITY
CORP. OF
MACON
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
DEDHAM LODGING ASSOCIATES I, L.P. NO N/A RESIDENCE INN DEDHAM, MA BANKBOSTON,
N.A.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
LITTLE ROCK LODGING ASSOCIATES I, L.P. NO N/A RESIDENCE INN LITTLE ROCK, AK BANK ONE,
LOUISIANA,
N.A.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BORROWER MAXIMUM AMOUNT UNFUNDED
AMOUNT OUTSTANDING COMMITMENT
- ------------------------------------ --------------- ----------------- ------------------
<S> <C> <C> <C>
ALBANY HOTEL, INC.
APICO HILLS, INC. $265,000,000 $265,000,000 $0.00
APICO INNS OF GREEN TREE, INC.
APICO INNS OF PITTSBURGH, INC.
BRUNSWICK MOTEL ENTERPRISES, INC.
DOTHAN HOSPITALITY 3053, INC.
DOTHAN HOSPITALITY 3071, INC.
FAYETTEVILLE MOTEL ENTERPRISES, INC.
GADSDEN HOSPITALITY, INC.
SERVICO CENTER ASSOCIATES, LTD.
MINNEAPOLIS MOTEL ENTERPRISES, INC.
NH MOTEL ENTERPRISES, INC.
SERVICO AUSTIN, INC.
SERVICO CEDAR RAPIDS, INC.
SERVICO COLESVILLE, INC.
SERVICO COLUMBIA, INC.
SERVICO FLAGSTAFF, INC.
SERVICO FT. PIERCE, INC.
SERVICO GRAND ISLAND, INC.
SERVICO HILTON HEAD, INC.
SERVICO HOUSTON, INC.
SERVICO JAMESTOWN, INC.
SERVICO WINDSOR, INC.
SERVICO MARKET CENTER, INC.
SERVICO MARYLAND, INC.
SERVICO METAIRIE, INC.
SERVICO NEW YORK, INC.
SERVICO NIAGARA FALLS, INC.
SERVICO NORTHWOODS, INC.
SERVICO PENSACOLA, INC.
SERVICO PENSACOLA 7200, INC.
SERVICO PENSACOLA 7330, INC.
SERVICO ROLLING MEADOWS, INC.
SERVICO ROSEVILLE, INC.
SERVICO WEST PALM BEACH, INC.
SERVICO WINTER HAVEN, INC.
- --------------------------------- ---- --------------- ----------------- ------------------
SHEFFIELD MOTEL ENTERPRISES, INC. $265,000,000 $265,000,000 $0.00
SERVICO SILVER SPRING, INC.
AMI OPERATING PARTNERS, L.P.
- --------------------------------- ---- --------------- ----------------- ------------------
SERVICO CONCORD, INC.
AMI OPERATING PARTNERS, L.P. $72,000,000 $72,000,000 $0.00
ISLAND MOTEL ENTERPRISES, INC.
PENMOCO, INC.
- --------------------------------- ---- --------------- ----------------- ------------------
ATLANTA-BOSTON LODGING, L.L.C. N/A $3,551,000 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
LODGIAN, INC.
$175,000,000 $175,000,000 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
MACON HOTEL ASSOCIATES N/A $1,662, 500 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
MACON HOTEL ASSOCIATES N/A $2,712,500 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
MACON HOTEL ASSOCIATES N/A $8,000,000 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
DEDHAM LODGING ASSOCIATES I, L.P. N/A $5,575,000 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
LITTLE ROCK LODGING ASSOCIATES I, L.P. N/A $5,716,881 $0.00
- --------------------------------- ---- --------------- ----------------- ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BORROWER RECOURSE GUARANTOR COLLATERAL LENDER
TO
BORROWER
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
<S> <C> <C> <C> <C>
COMFORT INN, SAN ANTONIO, TX
IMPAC HOTELS I, L.L.C. COMFORT SUITES GREENVILLE, SC
NO IMPAC HOTEL COURTYARD BUCKHEAD, GA NOMURA
GROUP, L.L.C. COURTYARD ABILENE, TX ASSET
COURTYARD FLORENCE, KY CAPITAL
(PERFORMANCE COURTYARD BENTONVILLE, AR CORPORATION
AND COMPLETION DOUBLE TREE CLUB PHILADELPHIA, PA
GUARANTY) DOUBLE TREE CLUB LOUISVILLE, KY
FRENCH QUARTER SUITES MEMPHIS, TN
FAIRFIELD INN VALDOSTA, GA
HOLIDAY INN VALDOSTA, GA
HOLIDAY INN SELECT IRVING, TX
HOLIDAY INN BIRMINGHAM, AL
HOLIDAY INN SUITES MARIETTA, GA
HOLIDAY INN SUNSPREE MYRTLE BEACH, SC
HOLIDAY INN EXPRESS NASHVILLE, TN
HOLIDAY INN ST. LOUIS NORTH, MO
HOLIDAY INN ST. LOUIS WEST, MO
HOLIDAY INN SELECT CLEVELAND, OH
SUPER 8 MOTEL HAZARD, KY
SUPER 8 MOTEL PRESTONSBURG, KY
COURTYARD PADUCAH, KY
- -------------- ------------------- ------------------- ---------------- ----------------------------------- ---------------
HOLIDAY INN CLARKSBURG, WV
HOLIDAY INN MORGANTOWN, WV
IMPAC HOTELS II, L.L.C. NO IMPAC HOTEL HOLIDAY INN FAIRMONT, WV NOMURA
GROUP, L.L.C. HOLIDAY INN FLORENCE, KY ASSET
HOLIDAY INN SYRACUSE, NY CAPITAL
(PERFORMANCE 5 HOLIDAY INN SELECTS WILSONVILLE, OR CORPORATION
AND COMPLETION 4 HOLIDAY INNS BOISE, ID
GUARANTY) HOLIDAY INN MEMPHIS, TN
HOLIDAY INN CINCINNATI, OH
HOLIDAY INN FORT MITCHELL, KY
DOUBLE TREE CLUB HOLLYWOOD, CA
COURTYARD TULSA, OK
HOLIDAY INN NORTH MIAMI, FL
HOLIDAY INN HAMBURG, NY
HOLIDAY INN RIVERSIDE, CA
MAYFAIR HOTEL COCONUT GROVE, FL
MARRIOTT DENVER, CO
MARRIOTT PORTLAND, OR
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
RESIDENCE INN LITTLE ROCK, AR
RESIDENCE INN DEDHAM, MA
IMPAC HOTELS III, L.L.C. NO IMPAC HOTEL COURTYARD LAFAYETTE, LA NOMURA
GROUP, L.L.C. HOLIDAY INN ANCHORAGE, AK ASSET
4 FAIRFIELD INNS MERRIMACK, NH CAPITAL
(PERFORMANCE FAIRFIELD INN JACKSON, TN CORPORATION
AND COMPLETION FAIRFIELD INN AUGUSTA, GA
GUARANTY) FAIRFIELD INN BURLINGTON, VT
4 FAIRFIELD INNS RIO RANCHO, NM
COURTYARD LIVERMORE, CA
HILTON GARDEN LAKE OSWEGO, NY
COMFORT INN BOSTON, MA
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO HOTELS I, INC. NO SERVICO, INC. (AS HOLIDAY INN WEST PHOENIX, AZ COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO HOTELS II, INC. NO SERVICO, INC.(AS RADISSON HOTEL PHOENIX, AZ COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
EAST WASHINGTON ASSOCIATES, L.P. NO SERVICO, INC.(AS HOLIDAY INN SELECT AIRPORT COLUMN
TO NON-RECOURSE PHOENIX, AZ FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO HOTELS III, INC. NO SERVICO, INC.(AS HOLIDAY INN PALM DESERT, CA COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO FRISCO, INC. NO SERVICO, INC.(AS HOLIDAY INN FRISCO, CO LEHMAN
TO NON-RECOURSE BROTHERS
CARVE OUTS ONLY.)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MELBOURNE HOSPITALITY ASSOCIATES, NO SERVICO, INC.(AS HOLIDAY INN MELBOURNE, FL LEHMAN
L.P. TO NON-RECOURSE BROTHERS
CARVE OUTS ONLY.)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
1075 HOSPITALITY, L.P. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE HOLIDAY INN AUGUSTA, GA COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
KINSER MOTEL ENTERPRISES, INC. YES N/A HOLIDAY INN BLOOMINGTON, IN LOCAL
FEDERAL
BANK
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO FORT WAYNE, INC. NO SERVICO, INC.(AS HILTON FORT WAYNE, IN COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
FORT WAYNE HOSPITALITY ASSOCIATES II, NO SERVICO, INC.(AS HOLIDAY INN & SUITES FORT WAYNE, IN LEHMAN
L.P. TO NON-RECOURSE BROTHERS
CARVE OUTS ONLY.)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
NEW ORLEANS AIRPORT MOTEL NO SERVICO, INC.(AS RADISSON HOTEL NEW ORLEANS, LA COLUMN
ASSOCIATES, L.P. TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
NO SERVICO, INC.(AS GMAC
SIOUX CITY HOSPITALITY, L.P. TO NON-RECOURSE HILTON INN SIOUX CITY, IA COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
NO SERVICO, INC.(AS GMAC
SERVICO COUNCIL BLUFFS, INC. TO NON-RECOURSE BEST WESTERN COUNCIL BLUFFS, IA COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO, INC.(AS GMAC
SERVICO WEST DES MOINES, INC. NO TO NON-RECOURSE FOUR POINTS WEST DES MOINES, IA COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MANHATTAN HOSPITALITY, L.P. NO SERVICO, INC. HOLIDAY INN MANHATTAN, KS CITY OF
(LIMITED TO MANHATTAN
$695,300)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
LAWRENCE HOSPITALITY, L.P. NO SERVICO, INC. HOLIDAY INN LAWRENCE, KS CITY OF
(LIMITED TO LAWRENCE
$695,300)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO WICHITA, INC. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE HOLIDAY INN WICHITA AIRPORT, KS COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO OMAHA CENTRAL, INC. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE BEST WESTERN CENTRAL OMAHA, NE COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO OMAHA, INC. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE FOUR POINTS OMAHA, NE COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
WORCESTER HOSPITALITY ASSOCIATES, L.P. NO SERVICO, INC.(AS CROWNE PLAZA WORCESTER, MA LEHMAN
TO NON-RECOURSE BROTHERS
CARVE OUTS ONLY.)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO HOTELS IV, INC. NO SERVICO, INC.(AS HOLIDAY INN SANTA FE, NM COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
BRECKSVILLE HOSPITALITY, L.P. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE HOLIDAY INN RICHFIELD, OH COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
APICO INNS OF PITTSBURGH, INC. NO SERVICO, INC.(AS HOLIDAY INN MONROEVILLE, PA LEHMAN
TO NON-RECOURSE BROTHERS
CARVE OUTS ONLY.)
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MOON AIRPORT MOTEL, INC. NO SERVICO, INC.(AS CLARION-ROYCE PITTSBURGH, PA COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
MCKNIGHT MOTEL, INC. NO SERVICO, INC.(AS HOLIDAY INN MCKNIGHT ROAD, PA COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
WILPEN, INC. NO SERVICO, INC.(AS WESTIN WILLIAM PENN HOTEL, PA COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
WASHINGTON MOTEL ENTERPRISES, INC. NO SERVICO, INC.(AS HOLIDAY INN MEADOWLANDS, PA COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SAGINAW HOSPITALITY, L.P. NO SERVICO, INC.(AS CROWNE PLAZA SAGINAW, MI SAGINAW
TO NON-RECOURSE HOTEL
CARVE OUTS ONLY.) INVESTORS
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
SERVICO LANSING, INC. NO SERVICO, INC.(AS GMAC
TO NON-RECOURSE HOLIDAY INN WEST LANSING, MI COMMERCIAL
CARVE OUTS ONLY.) MORTGAGE
CORP.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
HILTON HEAD MOTEL ENTERPRISES, INC. NO SERVICO, INC.(AS HOLIDAY INN HILTON HEAD, SC COLUMN
TO NON-RECOURSE FINANCIAL,
CARVE OUTS ONLY.) INC.
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
RALEIGH-DOWNTOWN ENTERPRISES, INC. YES N/A HOLIDAY INN RALEIGH DOWNTOWN, NC CREST MOTEL
- --------------------------------- ------------------- ---------------- ----------------------------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BORROWER MAXIMUM AMOUNT UNFUNDED
AMOUNT OUTSTANDING COMMITMENT
- --------------------------------- ------------ ----------------- ------------------
<S> <C> <C> <C>
IMPAC HOTELS I, L.L.C.
N/A $132,459,000 $0.00
- -------------- ------------------- --------------- ----------------- --------------
IMPAC HOTELS II, L.L.C. $163,500,000 $152,595,672 $10,904,328
- --------------------------------- --------------- ----------------- ------------------
ORIGINAL
AMOUNT UP TO
IMPAC HOTELS III, L.L.C. $100,000,000 $35,353,044 $33,746,956
($69 MILLION
APPROVED AND
TIME FOR
APPROVAL OF
ADVANCES IN
EXCESS OF $69
MILLION HAS
EXPIRED)
- --------------------------------- --------------- ----------------- ------------------
SERVICO HOTELS I, INC.
N/A $4,410,165 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO HOTELS II, INC. N/A $2,439,665 $0.00
- --------------------------------- --------------- ----------------- ------------------
EAST WASHINGTON ASSOCIATES, L.P. N/A $10,314,252 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO HOTELS III, INC. N/A $1,782,832 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO FRISCO, INC. N/A $5,077,070 $0.00
- --------------------------------- --------------- ----------------- ------------------
MELBOURNE HOSPITALITY ASSOCIATES, N/A $5,525,365 $0.00
L.P.
- --------------------------------- --------------- ----------------- ------------------
1075 HOSPITALITY, L.P.
N/A $3,811,296 $0.00
- --------------------------------- --------------- ----------------- ------------------
KINSER MOTEL ENTERPRISES, INC. N/A $3,818,138 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO FORT WAYNE, INC. N/A $5,442,330 $0.00
- --------------------------------- --------------- ----------------- ------------------
FORT WAYNE HOSPITALITY ASSOCIATES I N/A $1,874,678 $0.00
L.P.
- --------------------------------- --------------- ----------------- ------------------
NEW ORLEANS AIRPORT MOTEL N/A $4,973,164 $0.00
ASSOCIATES, L.P.
- --------------------------------- --------------- ----------------- ------------------
SIOUX CITY HOSPITALITY, L.P. N/A $5,654,543 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO COUNCIL BLUFFS, INC. N/A $1,531,708 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO WEST DES MOINES, INC. N/A $2,994,905 $0.00
- --------------------------------- --------------- ----------------- ------------------
MANHATTAN HOSPITALITY, L.P. N/A $6,470,000 $0.00
- --------------------------------- --------------- ----------------- ------------------
LAWRENCE HOSPITALITY, L.P. N/A $6,470,000 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO WICHITA, INC.
N/A $4,771,294 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO OMAHA CENTRAL, INC.
N/A $4,800,656 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO OMAHA, INC.
N/A $2,383,200 $0.00
- --------------------------------- --------------- ----------------- ------------------
WORCESTER HOSPITALITY ASSOCIATES, L N/A $7,590,959 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO HOTELS IV, INC. N/A $5,442,330 $0.00
- --------------------------------- --------------- ----------------- ------------------
BRECKSVILLE HOSPITALITY, L.P.
N/A $2,928,074 $0.00
- --------------------------------- --------------- ----------------- ------------------
APICO INNS OF PITTSBURGH, INC. N/A $5,010,951 $0.00
- --------------------------------- --------------- ----------------- ------------------
MOON AIRPORT MOTEL, INC. N/A $3,377,998 $0.00
- --------------------------------- --------------- ----------------- ------------------
MCKNIGHT MOTEL, INC. N/A $3,663,554 $0.00
- --------------------------------- --------------- ----------------- ------------------
WILPEN, INC. N/A $17,640,657 $0.00
- --------------------------------- --------------- ----------------- ------------------
WASHINGTON MOTEL ENTERPRISES, INC. N/A $3,940,998 $0.00
- --------------------------------- --------------- ----------------- ------------------
SAGINAW HOSPITALITY, L.P. N/A $2,043,934 $0.00
- --------------------------------- --------------- ----------------- ------------------
SERVICO LANSING, INC.
N/A $5,555,228 $0.00
- --------------------------------- --------------- ----------------- ------------------
HILTON HEAD MOTEL ENTERPRISES, INC. N/A $7,318,996 $0.00
- --------------------------------- --------------- ----------------- ------------------
RALEIGH-DOWNTOWN ENTERPRISES, INC. N/A $2,107,129 N/A
(CAPITAL LEASE
OBLIGATION)
- --------------------------------- --------------- ----------------- ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BORROWER LOCATION RECOURSE GUARANTOR COLLATERAL LENDER
TO
BORROWER
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
HOLIDAY INN SHEFFIELD, AL
SERVICO, INC. RADISSON PHOENIX, AZ
HOWARD JOHNSON FLAGSTAFF, AZ YES N/A MISC. CHARTER
HOLIDAY INN PALM DESERT, CA FF&E FINANCIAL, INC.
OMNI HOTEL WEST PALM BEACH, FL
HOLIDAY INN MELBOURNE, FL
HOLIDAY INN JEKYLL ISLAND, GA
HOLIDAY INN BLOOMINGTON, IN
FORT WAYNE HILTON, IN
HOLIDAY INN FORT WAYNE, IN
RADISSON NEW ORLEANS, LA
QUALITY HOTEL METAIRIE, LA
HOLIDAY INN ST. PAUL, MN
OMNI ALBANY HOTEL, NY
HOLIDAY INN FAYETTEVILLE, NC
HOLIDAY INN RALEIGH, NC
HOWARD JOHNSON PITTSBURGH, PA
HOLIDAY INN GREENTREE, PA
CLARION-ROYCE HOTEL, PA
HOLIDAY INN MEADOWLANDS, PA
HOLIDAY INN HILTON HEAD, SC
HOLIDAY INN LAREDO, TX
HOLIDAY INN AUSTIN, TX
HOLIDAY INN DOTHAN, AL
HOLIDAY INN PHOENIX WEST, AZ
SERVICO, INC. HOLIDAY INN PHOENIX AIRPORT EAST, AZ YES N/A MISC. LYON CREDIT
SERVICO HOLIDAY INN PALM DESERT, CA FF&E
MANAGEMENT HOLIDAY INN EXPRESS PENSACOLA, FL
CORP. HOLIDAY INN UNIVERSITY MALL, FL
HOLIDAY INN MELBOURNE, FL
HOLIDAY INN EXPRESS FT. PIERCE, FL
HOLIDAY INN JEKYLL ISLAND, GA
HOLIDAY INN AUGUSTA, GA
HOLIDAY INN BLOOMINGTON, IN
HOLIDAY INN FORT WAYNE, IN
DAYS INN SILVER SPRING, MD
CROWNE PLAZA SIOUX CITY, IA
HOLIDAY INN ST. PAUL, MN
HOLIDAY INN MANHATTAN, KA
HOLIDAY INN LAWRENCE, KA
CROWNE PLAZA WORCESTER, MA
HOLIDAY INN SANTA FE, NM
OMNI ALBANY HOTEL, NY
HOLIDAY INN FAYETTEVILLE, NC
HOLIDAY INN RICHFIELD, OH
HOLIDAY INN MONROEVILLE, PA
HOLIDAY INN GREENTREE, PA
HOLIDAY INN PARKWAY EAST, PA
CLARION-ROYCE HOTEL, PA
HOLIDAY INN MCKNIGHT, PA
HOLIDAY INN MEADOWLANDS, PA
NORTHFIELD HILTON, MI
CROWNE PLAZA SAGINAW, MI
HOLIDAY INN HILTON HEAD, SC
FOUR POINTS HILTON HEAD, SC
HOLIDAY INN LAREDO, TX
HOLIDAY INN AUSTIN, TX
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
HOLIDAY INN DOTHAN, AL
SERVICO HAMPTON INN DOTHAN, AL
MANAGEMENT HOLIDAY INN GADSDEN, AL YES N/A MISC. FINANCIAL
CORP. HOWARD JOHNSON FLAGSTAFF AZ, FF&E MARKETING
HOLIDAY INN PHOENIX AIRPORT EAST, AZ SERVICES, INC.
HOLIDAY INN PALM DESERT, CA
OFFICE BUILDING & HOTEL
HOLIDAY INN MELBOURNE, FL
HOLIDAY INN BLOOMINGTON, IN
RADISSON NEW ORLEANS, LA
HOLIDAY INN ST. PAUL, MN
CROWNE PLAZA WORCESTER, MA
OMNI ALBANY HOTEL, NY
HOLIDAY INN GREENTREE, PA
CLARION-ROYCE HOTEL, PA
HOLIDAY INN MCKNIGHT, PA
HOLIDAY INN AUSTIN, TX
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
HOLIDAY INN SHEFFIELD, AL
HOLIDAY INN GADSDEN, AL
SERVICO, INC. HOLIDAY INN PHOENIX WEST, AZ YES N/A MISC. GELCO
RADISSON PHOENIX, AZ FF&E CORPORATION D/B/A
SERVICO OMNI HOTEL WEST PALM BEACH, FL GE CAPITAL FLEET
MANAGEMENT HOLIDAY INN MELBOURNE, FL SERVICES
CORP. HOLIDAY INN BLOOMINGTON, IN
FT. WAYNE HILTON, IN
RADISSON NEW ORLEANS, LA
CROWNE PLAZA SIOUX CITY, IA
BEST WESTERN COUNCIL BLUFFS, IA
FOUR POINTS WEST DES MOINES, IA
HOLIDAY INN LAWRENCE, KA
HOLIDAY INN WICHITA, KA
BEST WESTERN CENTRAL OMAHA, NE
FOUR POINTS OMAHA, NE
HOLIDAY INN FAYETTEVILLE, NC
HOLIDAY INN HILTON HEAD, SC
WESTERN REGION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
BRUNSWICK MOTEL HOLIDAY INN BRUNSWICK, GA YES N/A MISC. TELERENT LEASING
ENTERPRISES, INC. FF&E CORPORATION
SERVICO, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
KDS QUALITY HOTEL METAIRIE, LA YES N/A MISC. TELERENT LEASING
CORPORATION FF&E CORPORATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
KDS HOLIDAY INN AUSTIN, TX YES N/A MISC. TELERENT LEASING
CORPORATION FF&E CORPORATION
SERVICO, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SHEFFIELD MOTEL HOLIDAY INN SHEFFIELD, AL YES N/A MISC. TELERENT LEASING
ENTERPRISES, INC. FF&E CORPORATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOLIDAY INN PHOENIX AIRPORT EAST, AZ YES N/A MISC. TELERENT LEASING
MANAGEMENT FF&E CORPORATION
CORP. AS AGENT
FOR EAST
WASHINGTON
HOSPITALITY, L.P.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOLIDAY INN FORT WAYNE, IN YES N/A MISC. TELERENT LEASING
MANAGEMENT FF&E CORPORATION
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO CROWNE PLAZA WORCESTER, MA YES N/A MISC. TELERENT LEASING
MANAGEMENT FF&E CORPORATION
CORP. AS AGENT
FOR WORCESTER
HOSPITALITY
ASSOCIATES, L.P.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
APICO INNS OF HOLIDAY INN MONROEVILLE, PA YES N/A MISC. TELERENT LEASING
PITTSBURGH, INC. FF&E CORPORATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
APICO HILLS, INC. HOLIDAY INN PARKWAY EAST, PA YES N/A MISC. TELERENT LEASING
FF&E CORPORATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOLIDAY INN MCKNIGHT, PA YES N/A MISC. TELERENT LEASING
MANAGEMENT FF&E CORPORATION
CORP. AS AGENT
FOR SOUTHFIELD
HOTEL GROUP II,
L.P.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO BEST WESTERN CHARLESTON, SC YES N/A MISC. TELERENT LEASING
NORTHWOODS, INC. FF&E CORPORATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SHEFFIELD MOTEL HOLIDAY INN SHEFFIELD, AL YES N/A MISC. M&SD
ENTERPRISES, INC. FF&E
SERVICO FORT FT. WAYNE HILTON, IN
WAYNE, INC.
SERVICO METAIRIE, QUALITY HOTEL METAIRIE, LA
INC.
MINNEAPOLIS HOLIDAY INN ST. PAUL, MN
MOTEL
ENTERPRISES, INC.
RALEIGH HOLIDAY INN RALEIGH, NC
DOWNTOWN
ENTERPRISES, INC.
APICO INNS OF HOLIDAY INN GREENTREE, PA
GREENTREE, INC.
APICO HILLS, INC. HOLIDAY INN PARKWAY EAST, PA
MOON AIRPORT CLARION-ROYCE HOTEL, PA
MOTEL, INC.
SERVICO HOLIDAY INN MCKNIGHT, PA
MANAGEMENT
CORP. AS AGENT
FOR SOUTHFIELD
HOTEL GROUP II,
L.P.
NH MOTEL NORTHFIELD HILTON, MI
ENTERPRISES, INC.
SERVICO AUSTIN, HOLIDAY INN AUSTIN, TX
INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOLIDAY INN FORT WAYNE, IN YES N/A MISC. SANLYN &
MANAGEMENT FF&E ASSOCIATES
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
SERVICO CROWNE PLAZA WORCESTER, MA (2)
MANAGEMENT
CORP. AS AGENT
FOR WORCESTER
HOSPITALITY
ASSOCIATES, L.P.
NH MOTEL NORTHFIELD HILTON, MI
ENTERPRISES, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
KINSER MOTEL HOLIDAY INN BLOOMINGTON, IN YES N/A MISC. MULTI-SYSTEMS,
ENTERPRISES, INC. FF&E INC.
SERVICO FORT FT. WAYNE HILTON, IN
WAYNE, INC.
APICO INNS OF HOLIDAY INN GREENTREE, PA
GREENTREE, INC.
WASHINGTON HOLIDAY INN MEADOWLANDS, PA
MOTEL
ENTERPRISES, INC.
SERVICO BEST WESTERN CHARLESTON, SC
NORTHWOODS, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
MINNEAPOLIS HOLIDAY INN ST. PAUL, MN YES N/A MISC. METLIFE CAPITAL
MOTEL FF&E
ENTERPRISES, INC.
RALEIGH HOLIDAY INN RALEIGH, NC
DOWNTOWN
ENTERPRISES, INC.
APICO INNS OF HOLIDAY INN MONROEVILLE, PA
PITTSBURGH, INC.
WASHINGTON HOLIDAY INN MEADOWLANDS, PA
MOTEL
ENTERPRISES, INC.
SERVICO AUSTIN, HOLIDAY INN AUSTIN, TX
INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
WILPEN, INC. WESTIN WILLIAM PENN, PA YES N/A MISC. HELLER FINANCIAL
FF&E
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOLIDAY INN FORT WAYNE, IN YES N/A MISC. PRIME LEASING
MANAGEMENT FF&E
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
SERVICO HOTELS HOLIDAY INN PALM DESERT, CA YES N/A MISC. GIAC
III, INC. FF&E
SERVICO HOTELS HOLIDAY INN SANTA FE, NM
IV, INC.
APICO INNS OF HOLIDAY INN MONROEVILLE, PA
PITTSBURGH, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
APICO INNS OF HOWARD JOHNSON PITTSBURGH, PA YES N/A MISC. MODERN
PENNSYLVANIA, FF&E COLLECTION
INC. ASSOCIATION
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
WILPEN, INC. WESTIN WILLIAM PENN, PA YES N/A MISC. NTFC
FF&E
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
WASHINGTON HOLIDAY INN MEADOWLANDS, PA YES N/A MISC. DOLLAR BANK
MOTEL FF&E LEASING
ENTERPRISES, INC.
- ----------------- ------------------------------------ --------------- ---------------- ------------------ -----------------
</TABLE>
<PAGE>
AMOUNT UNFUNDED
BORROWER OUTSTANDING COMMITMENT
- ---------------- ------------------ ------------------
Servico, Inc. $507,577 $0.00
SERVICO, INC. $893,751 $0.00
SERVICO
MANAGEMENT
CORP.
- ----------------- ------------------ ------------------
SERVICO
MANAGEMENT $225,311 $0.00
CORP.
- ----------------- ------------------ ------------------
SERVICO, INC. $96,840 $0.00
SERVICO
MANAGEMENT
CORP.
- ----------------- ------------------ ------------------
BRUNSWICK MOTEL $21,531 $0.00
ENTERPRISES, INC.
SERVICO, INC.
- ----------------- ------------------ ------------------
KDS $36,104 $0.00
CORPORATION
- ----------------- ------------------ ------------------
KDS $37,750 $0.00
CORPORATION
SERVICO, INC.
- ----------------- ------------------ ------------------
SHEFFIELD MOTEL $32,063 $0.00
ENTERPRISES, INC.
- ----------------- ------------------ ------------------
SERVICO $50,508 $0.00
MANAGEMENT
CORP. AS AGENT
FOR EAST
WASHINGTON
HOSPITALITY, L.P.
- ----------------- ------------------ ------------------
SERVICO $76,061 $0.00
MANAGEMENT
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
- ----------------- ------------------ ------------------
SERVICO $43,869 $0.00
MANAGEMENT
CORP. AS AGENT
FOR WORCESTER
HOSPITALITY
ASSOCIATES, L.P.
- ----------------- ------------------ ------------------
APICO INNS OF $68,495 $0.00
PITTSBURGH, INC.
- ----------------- ------------------ ------------------
APICO HILLS, INC. $4,578 $0.00
- ----------------- ------------------ ------------------
SERVICO $39,747 $0.00
MANAGEMENT
CORP. AS AGENT
FOR SOUTHFIELD
HOTEL GROUP II,
L.P.
- ----------------- ------------------ ------------------
SERVICO $2,458 $0.00
NORTHWOODS, INC.
- ----------------- ------------------ ------------------
SHEFFIELD MOTEL $233,642 $0.00
ENTERPRISES, INC.
SERVICO FORT
WAYNE, INC.
SERVICO METAIRIE,
INC.
MINNEAPOLIS
MOTEL
ENTERPRISES, INC.
RALEIGH
DOWNTOWN
ENTERPRISES, INC.
APICO INNS OF
GREENTREE, INC.
APICO HILLS, INC.
MOON AIRPORT
MOTEL, INC.
SERVICO
MANAGEMENT
CORP. AS AGENT
FOR SOUTHFIELD
HOTEL GROUP II,
L.P.
NH MOTEL
ENTERPRISES, INC.
SERVICO AUSTIN,
INC.
- ----------------- ------------------ ------------------
SERVICO $57,599 $0.00
MANAGEMENT
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
SERVICO
MANAGEMENT
CORP. AS AGENT
FOR WORCESTER
HOSPITALITY
ASSOCIATES, L.P.
NH MOTEL
ENTERPRISES, INC.
- ----------------- ------------------ ------------------
KINSER MOTEL $23,850 $0.00
ENTERPRISES, INC.
SERVICO FORT
WAYNE, INC.
APICO INNS OF
GREENTREE, INC.
WASHINGTON
MOTEL
ENTERPRISES, INC.
SERVICO
NORTHWOODS, INC.
- ----------------- ------------------ ------------------
MINNEAPOLIS $248,613 $0.00
MOTEL
ENTERPRISES, INC.
RALEIGH
DOWNTOWN
ENTERPRISES, INC.
APICO INNS OF
PITTSBURGH, INC.
WASHINGTON
MOTEL
ENTERPRISES, INC.
SERVICO AUSTIN,
INC.
- ----------------- ------------------ ------------------
WILPEN, INC. $62,631 $0.00
- ----------------- ------------------ ------------------
SERVICO $227,608 $0.00
MANAGEMENT
CORP. AS AGENT
FOR FORT WAYNE
HOSPITALITY
ASSOCIATES II,
L.P.
- ----------------- ------------------ ------------------
SERVICO HOTELS $1,427 $0.00
III, INC.
SERVICO HOTELS
IV, INC.
APICO INNS OF
PITTSBURGH, INC.
- ----------------- ------------------ ------------------
APICO INNS OF $282 $0.00
PENNSYLVANIA,
INC.
- ----------------- ------------------ ------------------
WILPEN, INC. $4,731 $0.00
- ----------------- ------------------ ------------------
WASHINGTON $1,622 $0.00
MOTEL
ENTERPRISES, INC.
- ----------------- ------------------ ------------------
ADDITIONAL GUARANTEE OBLIGATIONS:
4. Servico, Inc. and Lodgian, Inc. have guaranteed the non-recourse
carve-outs in the existing non-recourse mortgage debt otherwise scheduled above
and the Lehman debt extended to the European Venture.
5. Servico, Inc. and Lodgian, Inc. have (and may in the future) provide(d)
indemnities to title companies with respect to taxes and liens encumbering
properties of the Borrower and other subsidiaries of Servico, Inc. and Lodgian,
Inc. over which the title insurers have provided affirmative coverages.
ADDITIONAL DEBT TO BE INCURRED
Servico, Inc. and Credit Lyon have been negotiating a $3,000,000 FF&E line
of credit which is not yet in place.
[SERVICO LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Servico, Inc.
Warren M. Knight
November 9, 1998 Vice President - Finance
(561) 689-9970
SERVICO ANNOUNCES EUROPEAN JOINT VENTURE,
FINANCING COMMITMENT FOR MERGER WITH IMPAC HOTEL GROUP
AND RESIGNATION OF DAVID BUDDEMEYER
WEST PALM BEACH, FLORIDA: Servico, Inc. (NYSE: SER), a nationwide owner and
operator of hotels, announced the completion of a joint venture with Lehman
Brothers for the purchase of several European hotel properties. The joint
venture acquired six hotel subsidiaries of City Hotels located in Belgium and
the Netherlands containing 1,200 rooms. As part of the joint venture, Servico
will manage the day-to-day operations of the European hotels and oversee their
renovation. This off-balance sheet transaction represents Servico's entrance
into the European market.
Servico also announced that it has obtained a financing commitment from
Lehman Brothers Holdings, Inc. in connection with the previously announced
merger with Impac Hotel Group. The financing commitment is subject to the
satisfaction of customary conditions and the merger is expected to close before
the end of the year. The terms of the merger call for Servico and Impac to merge
and form a new company to be named Lodgian. Lodgian will own or manage 143
hotels with more than 27,000 rooms in 35 states, Canada and Europe, making it
one of the largest independent, multi-brand owners and operators of hotels.
The financing commitment from Lehman Brothers in the amount of $265 million
will be used to complete the Impac merger and includes fund necessary to make
payment of
<PAGE>
approximately $31.5 million due as a result of two separate swap transactions
that were entered into by Servico in an effort to manage the interest rate risk
associated with its financing of the Impac merger.
David Buddemeyer, Chairman of the Board and Chief Executive Officer of
Servico, will resign from all his positions with Servico upon the consummation
of the merger.
Once the merger is completed, Robert S. Cole, currently the President of
Impac, will become Chief Executive Officer of Lodgian. Lodgian will also
establish an Office of the Chairman composed of directors Joseph C. Calabro,
John Lang and Michael A. Leven, with Joseph C. Calabro serving as acting
chairman of the Office of the Chairman.
Servico currently owns or manages 90 hotels with more than 18,300 rooms
located in 24 states, Canada and Europe. The hotels are primarily full service,
providing food and beverage service as well as lodging and meeting facilities.
Substantially all of Servico's hotels are affiliated with nationally recognized
hospitality franchises, including Holiday Inn, Crowne Plaza, Hilton, Omni,
Radisson, Sheraton and Westin. With assets in excess of $750 million, Servico is
one of the largest hotel owner/operators in the United States.
Statements in this release may be construed to be forward looking and are
made pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward looking statements
involve risks and uncertainties, including without limitation, risks relating to
the operation and acquisition of hotels, risks that the Impac acquisition will
not be completed, risks relating to the availability of capital and the ability
to refinance debt, risks relating to the historical cyclicality of the lodging
industry and other risks identified in Servico's SEC filings.
[LODGIAN LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Warren M. Knight
Chief Financial Officer
December 11, 1998 (404) 365-4474
SERVICO AND IMPAC HOTEL GROUP COMPLETE
MERGER TRANSACTIO TO FORM LODGIAN
ATLANTA, GEORGIA: Lodgian, Inc. (NYSE: LOD), a nationwide owner and
operator of hotels, today announced closing of the merger of Servico, Inc., and
Impac Hotel Group to form Lodgian, Inc. The merger, which was originally
announced in March, 1998, closed today and creates one of the nation's largest
multi-brand owner/operators of hotels.
Trading in Servico, Inc. common stock with the symbol SER will cease on the
New York Stock Exchange at the close of business today, December 11, 1998.
Trading in Lodgian, Inc. common stock with the symbol LOD will commence on the
New York Stock Exchange Monday, December 14, 1998.
The transaction, which was previously approved by Servico shareholders and
Impac unit holders, creates a lodging company with a substantial portfolio of
full service hotel properties in the mid and upper market segments,
geographically dispersed throughout the United States, Canada and Europe.
As part of the closing, the previously announced $265 million financing
commitment from Lehman Brothers has been fully funded. This financing bears
interest at LIBOR plus 3.25% and has a two year maturity which represents the
nearest term maturity of any significant Lodgian debt obligation.
<PAGE>
Concurrent with the completion of the merger, Robert S. Cole, formerly the
President of Impac, becomes the Chief Executive Officer of Lodgian. Lodgian's
Board of Directors will consist of Joseph C. Calabro, Michael A. Leven, Peter
Tyson and Richard Weiner, all former members of the Board of Directors of
Servico and Robert S. Cole and John Lang, both formerly with Impac. Lodgian has
also established an Office of the Chairman composed of directors Joseph C.
Calabro, John Lang and Michael A. Leven, with Joseph C. Calabro serving as
acting chairman of the Office of the Chairman.
Commenting on the merger, Joseph C. Calabro stated, "We are extremely
pleased to successfully complete this merger. This transaction marks Servico's
entrance into additional major urban markets and creates new franchise
relationships with Marriott and Doubletree. We look forward to completing the
integration of Servico and Impac and to focus on executing Lodgian's 1999
Business Plan."
Robert S. Cole, Lodgian's Chief Executive Officer, stated, "We are looking
forward to creating the premier owner and operator of hotels and a recognized
leader in the hospitality industry. I am very enthusiastic about the
complementary skills of the two organizations. Servico has demonstrated
remarkable operating results unparalleled in the hotel industry while Impac has
utilized its repositioning, development and management expertise to consistently
improve hotel values."
Lodgian owns or manages 143 hotels with more than 27,000 rooms in 35
states, Canada and Europe. The hotels are primarily full service, providing food
and beverage service as well as lodging and meeting facilities. Substantially,
all of Lodgian's hotels are affiliated with nationally recognized hospitality
franchises, including Crowne Plaza,
<PAGE>
Doubletree, Holiday Inn, Hilton, Marriott, Omni, Radisson, Sheraton and Westin.
With assets in excess of $1 billion, Lodgian is one of the largest hotel
owner/operators in the United States.
Statements in this release may be construed to be forward looking and are
made pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward looking statements
involve risks and uncertainties, including without limitation, risks relating to
the operation and acquisition of hotels, risks relating to the availability of
capital and the ability to refinance debt, risks relating to the historical
cyclicality of the lodging industry and other risks identified in Lodgian's and
Servico's SEC filings.
